If we asked you the question, ‘does your business have the next generation ready to fill roles at all levels of your company?’, what would your answer be?
While developing internal talent is a key priority for many organisations, BIE research revealed that 66% of CFOs believe their successor will come from external sources. At least in the finance function, it seems that organisations aren’t taking succession planning seriously.
A forward-thinking approach is critical for ensuring your business is well-equipped to thrive against a backdrop of constant change. And this includes creating a development plan for people to move up in your organisation.
All organisations, from SMEs to corporate giants, need succession planning. If one of your top leaders was to leave tomorrow, what gap would they leave, and what impact would this have on the performance of other employees? And how long would it take to bring in someone new, and get them up to speed?
Now add in all the other challenges modern businesses are facing to this conundrum. New technologies are driving change at an unprecedented rate, and you need to be ready to respond at all times. A hole in one area of your business can be the difference between sink and swim. But with a succession plan in place, you’d be able to fill the gap quickly to keep you afloat, while having a minimal impact on performance.
Many organisations haven’t appropriately invested in succession planning. It may be talked about verbally and socially, but nothing formal is put in place. But there are significant benefits to a more formalised system. First, all managers know who the key employees are to consider when a new role opens up. And if it happens at short notice, you’ve got someone who can make an impact quickly.
A more formal system also creates a greater commitment to development, and employees value this. People want to know that there are opportunities to progress within the company and knowing the organisation’s plans for their next potential opportunity reinforces their drive to succeed. As your company grows and adapts in line with changes in technology, you need prepared employees who are ready to step in and enable this to happen.
What’s more, we’re at a point of seeing five generations in the workforce, from Gen Y up to Baby Boomers and the Silent Generation. But with the older generations retiring, having a formal succession plan in place means future leaders can capture this knowledge before it leaves the office.
As humans, we’re predisposed to be drawn towards like-minded people, and recruiting people ‘just like us’ is a trap many organisations fall into. You’ve been successful as a leader, so assume someone with the same skills and personality traits as you will be the best person for the job. And you see something in a potential successor that reminds you of a younger version of yourself.
But it’s time to stop producing mini-me's. The future leaders of your business will head up a very different type of organisation; one that is more agile, dynamic and based on technology than ever before. And you need successors who will thrive in this new climate.
Succession planning needs to be a group activity involving both the C-suite and HR, rather than something that happens within silos. A mix of perspectives helps you break through any unconscious bias and think about how roles and capabilities might change in two, five, or ten years' time.
When it comes to identifying high-performing individuals who may fit the bill, it can pay to think outside the box. The obvious successor, like the second in command, may not be the best fit. Look for people within your organisation with the skills, knowledge and experience required to succeed as a leader. However, don’t rule out those who don’t. As long as someone has the drive and potential to progress, with the right development plan in place, they can make great leaders.
Succession planning is a critical task for organisations wanting to succeed. Ultimately, you need leaders who are forward-thinking and who are ready to tackle new challenges. These people may already exist within your organisation - you just need to invest in finding them.
In our Finance Succession Planning and Transformation Survey 2018, we investigated how organisations are dealing with succession planning within their finance function. To download your copy of the report, click the link below.