Succession planning for large businesses
Robust succession plans can enable a Board to ensure their organisation remains in good hands for years to come, address any potential skills gaps, and reap the benefits of increased diversity.
A proactive, top-down and bottom-up approach to succession planning should consider both the makeup of the board and senior management. This should entail a joined-up approach with established HR processes, wider business strategy and the organisation’s risk profile.
What does robust succession planning look like?
Skills
what key skills and experience would be lost with the departure of any given individual and are any other current NEDs or senior managers able to fill that gap? Consideration should be given as to whether any skills gaps for potential successors can be bridged in the short term through training and coaching.
Additionally, the Board should consider whether the breadth and depth of the NEDs’
knowledge is adequate to suitably scrutinise and challenge the changing nature of risks that the organisation faces, including cyber risk.
Therefore, it is important to look ahead to ensure that the skills mix is also fit for the future. A clear business strategy (and, if applicable, a transformational roadmap) will inform the skills that the collective board and senior management require to take the business forward.
Consideration of NEDs’ tenures
A proactive approach is required to find the best available successors in good time prior to a NED’s required departure, and the phasing of potential departures – multiple departures will serve to exacerbate the risks of knowledge drain.
Board members’ roles
Consideration should be given to which committees the directors chair and/or attend.
Length of service and notice periods
where an internal successor for senior management roles is not possible a short notice period may lead to significant urgency in hiring an external replacement – the ongoing challenges in recruiting high-calibre talent are well known.
Associated timings and transition plans
How long would be required to get successors up to speed and what training and interim actions are required?
Emergency / short-term / long-term successors
More than one successor can be considered for each role with consideration given to who could step into the role ‘immediately’, in ‘two years’ or ‘five years’, for example.
Diversity
Has consideration been given to diversity within the pool of potential senior
management successors? Is diversity a factor in decisions around external (non)executive appointments? If there is a lack of diversity within this pool, are there other high-potential employees that, with the right exposure, opportunities and training, could join the pool of viable successors?
Diversity is often overlooked as part of succession planning but the potential benefits are now undeniable. Often a lack of action can be attributed to a lack of patience – executives and shareholders often want quick results, and building diversity can be a slow burner – the solution will be generational, not overnight.
The bottom line
So, if businesses are genuinely serious about promoting diversity and willing the walk the talk, then proactive and ongoing effort is required. Business leaders must foster a culture that allows for the development and retention of diverse, high-calibre talent. Once potential successors are identified for each role, consideration should be given to the demographic of those individuals, including factors such as gender, ethnicity and disabilities. For those roles where a less diverse pool is identified, consideration should be given to whether there are high-potential individuals at more junior levels who could be given opportunities to develop further with a view to longer-term succession.
Foresight + Diversity + Talent = Success(ion)
For more information about our succession planning service, please contact us.
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