Success and Succession Planning in the Year 2016

Most companies are still mediocre or worse when it comes to succession planning. I think this weakness is going to harry and haunt them in the course of the next 5 to 10 years.

Let’s look at two recent studies. First, there’s a new study conducted by the American Management Association/Corporate Learning Solutions that shows only a third of companies are committed to succession planning.  Perhaps even worse, there’s not even agreement on what succession planning is. As reported in Chief Learning Officer, Sandi Edwards, Senior Vice President for AMA/Corporate Learning Solutions, stated, “There is little consensus among the more than 1,000 organizations we surveyed on what succession planning actually consists of, or even what it ideally ought to be.”

The ugly state of affairs is confirmed by another report, this one published in 2010 by the American Society for Training and Development (ASTD). That study, in which I was a coauthor, found that a mere 14% of respondents described their organizations’ succession planning efforts as effective to a high or very high extent. Like the AMA study, it also found a lack of consensus on many issues, from the degree to which succession planning is integrated with other talent management programs to the degree to which metrics are used to gauge success.

The ASTD study also found some huge gaps between the degree to which respondents said their organizations use certain strategies and the degree to which they should use them. For example, just 30% say their organizations, to a high or very high extent, provide regular performance/development feedback to succession candidates, but a full 92% say their organizations should do so.

This is despite the fact that succession planning – or, as some prefer, succession management – has become one of the most critical issues faced by businesses today. That is, it’s viewed as highly important and yet is an area where few companies think they excel. That’s bad news indeed. Companies that lack a well-defined succession planning process are also less likely to perform well in the marketplace, according to the ASTD report.

Given the fact that the oldest members of the Baby Boomer generation turn 65 this year – potentially kicking off the start of one of the greatest exoduses of leadership talent of all time – it’s likely that the next five years will help determine the long-term health of leadership teams in many organizations.

Here are four scenarios that vary by the approaches that today’s organizations take toward succession planning:

Scenario One: Top Talent Excels

In this scenario, a company takes two critical steps: it integrates its succession planning (SP) program with its larger, more inclusive talent management system and it takes pains to establish performance-related succession planning metrics. The integration and measurement of these plans increases the likelihood of a robust leadership pipeline that, in turns, establishes the foundation for excellent market performance well into the future.

Scenario Two: Mixed Reviews

In this scenario, an organization establishes metrics for succession planning but also keeps the program separate from other talent management practices. This makes it harder to link SP metrics to other areas such as learning and development, performance management and compensation. Not only do the metrics become less powerful, they become less convincing to others in the organizations, making it harder to build a case for the value of succession planning. Senior executives look at the data on succession planning but it doesn’t get their complete attention or win their devotion.

Scenario Three: Uncertain Success

In this scenario, performance management is integrated with the larger talent management system but there are few, if any, performance-related metrics associated with it. As a result, the leadership team and others in the organization are divided in their opinions of the success of the program. Some consider it an annual slog and a waste of time while others are convinced that it plays a crucial role in leadership development and contingency planning.

Scenario Four: Leadership Failures

In this scenario, succession planning is viewed as just something to check off the “do do” list every year. The people who are part of the plan do not receive any special development assignments or coaching. Even worse, their performance reviews are never linked to the plan itself. Candidates are placed in the pipeline in a haphazard way, usually based on corporate politics rather than performance metrics. As a result, when people are promoted based on succession plans, they often fail in their assignments. This undermines belief in the program at all levels.

Conclusion

If there were ever a time to get serious about succession planning/management, it’s now. In many companies, such plans will have a major impact on corporate success over next 5 to 10 years.


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