Many companies have put succession planning on the back-burner as they struggle through the recession. But companies cannot put off succession planning for too long. The process of identifying and managing successors is vital to a company’s long-term stability.
Our recent research shows that there is a serious gap in companies' succession planning efforts. The research found that, for the majority of companies, less than one-quarter of executive positions have identified succession candidates. In other words – over three-quarters of executives have no successors identified. This is an alarming gap! (See our 2009 Talent Management Factbook report for more information.)
Without a formal succession management process, companies cannot adequately prepare for the future. These organizations will find themselves responding reactively to changes in leadership and having to rely on the external market for succession candidates – or on ill-prepared internal candidates. This poses a significant risk to the organization, particularly in the light of impending Baby Boomer retirements.
Identifying successors is a necessary step, but it is not the end of succession planning. Successors then need to be developed and prepared for their roles, so they can step in when necessary. But this process is also broken. Our research found that only 30% of companies said that identified successors typically fill their intended positions.
If vacancies are frequently not filled by one of the identified succession candidates, the organization needs to review its process for identifying and developing successors. Of course, there will always be times when a candidate does not take the role for which he/she is being groomed – because he/she is not yet ready, because a more qualified candidate becomes available, or for a host of other reasons. But the process should work as planned most of the time. If not, the organization should look at the way it identifies successors, how it develops successors, and the way it communicates with successors. (For more information, read our High Impact Succession Management report, which describes best practices in succession management.)
So companies need to take a hard look at their succession management processes. An ideal time for succession planning is with a change in business strategy, so this is actually a great time for many companies to start this process. Remember that succession management secures a strong pipeline of leadership over time, ensuring that the organization has the talent necessary to meet future business demands.