As the competition for talent continues to increase, it may be time to rethink the approach to your leadership recruiting process. The traditional approach is to kick off a search as a reaction to an employee's departure but there are a couple of challenges to this method. First, this creates a lag in recruitment and a series of lost opportunities in the meantime. The responsibilities that this person managed are transferred to other team members as a makeshift solution creating a strain in the system and potential frustration among the team. Second, the market currently consists of a lot more opportunities than talent so competition is fierce. As everyone scrambles through the recruitment process, organizations may find themselves making compromises in the hiring decision.
It's time for organizations to consider a more long-term program and invest in strategic external succession planning for key roles across their business. External succession planning, in conjunction with the internal succession plan, is a complex process that requires the organization's commitment but is the key to long-term growth and relevancy. The cost of overlooking your leadership succession planning is much higher than remaining with the traditional approach of replacing employees as they leave. Without an effective succession plan, the organization will be less likely to grow and have difficulty in reaching it's highest possible valuation.
Signs That Indicate You Need External Succession Planning
Yes, succession planning does require a big commitment in time, resources, and funding. While it may be costly upfront, it's a crucial investment for the business and the leaders involved. Similar to investing in a long-term product or technology roadmap, succession planning is a significant part of the business strategy. Unfortunately, this isn't always the case. Here are a few common triggers that you might hear from leaders that indicate the need for a more effective program.
"I need to groom a successor before I can get promoted but there's no one internal who is close to being ready."
"We keep losing momentum each time we need to replace a leader who leaves."
"I want to move into a new role and do something different but the team is too dependent on me."
"We just had a couple of key leaders leave and we are all stressed out and working non-stop."
"We have a lot of cool ideas that we want to get to, but we do not have a bench of leaders ready to take on new initiatives."
"I am very uncomfortable about our future. We do not have the talent for sustainable growth."
"If that leader leaves, we will be losing a lot of knowledge and talent."
"We have a succession planning process but I haven't seem it actually work when we need it to."
How To Build An Effective Succession Strategy
I've developed a 5-step process that I use with clients to build an effective external succession plan. A complete succession strategy will include internal successors as well as external successors. This comprehensive approach will allow the organization to adapt as the business requirements may shift over time. For each key position, the organization should aim to have 3 successors rather than just 1 or 2. At least one of the successors should be external, if not more, in order to provide a broader range of experience and strengthen the talent bench that is accessible to them.
Step 1: We start with asking the hard questions.
An organization's success can only be accomplished by having the right leaders in the right roles at the right time. This is established by understanding the current state of the business, learning the capability gaps and challenges, and orienting the strategic hiring plans toward the future. In essence, we need to know where you are, where you want to go, and finally what talent and capabilities will you need in the future?
This step is typically the largest roadblock for an organization when considering a succession strategy because these are difficult questions to answer. In order to build a program with teeth, we need to examine the organizational strategy, current talent gaps, and future requirements that are needed in order to sustain growth. Defining your future performance is crucial to the process. It's also important to map out the current organizational structure and then develop the projected structure for different milestones in the future that will lead to hiring new talent.
A mentor of mine had once said "A quarterback throws the ball to where the receiver will be, not where he is currently." The succession strategy should aim for that future moment of where the organization will be.
Step 2: We align with internal HR processes.
Each organization is unique and requires a customized approach to their talent strategy. It is crucial that the succession planning process is embedded into the culture and fabric of the organization in order to be effective and maintainable. It should not be viewed as a one-time event that an organization conducts in order to replace a key leader.
Internally, we consider and support the existing processes that focus on performance management, career planning, recognition, and rewards. We help to identify the high-performing talent who can be a part of the organization's long-term growth so organizations can create a development plan for each of them. We get alignment on the external succession process, define clear roles and accountability, and embed the external talent strategy with leaders' performance goals.
Step 3: We provide deep market research.
Talent research is the main component to a strong external succession strategy. It's important to develop market research reports that are targeted and customized to each business and situation. These research reports should provide insights that are relevant to the business and can include competitor comparisons, organizational design, functional alignment, job titling, target experiences, and the identification of emerging leaders. This research guides the succession strategy and creates a talent pipeline for future growth.
Some organizations have internal resources who can conduct deep market research. If not, it's worth the investment to hire an external partner who has the experience and skills to evaluate the data from various angles and identify patterns and trends that can be valuable to the business. This is not a traditional sourcing project. This requires exploring reasons that trigger leadership changes, evaluate annual reports, forecast potential movement, and identify emerging leaders and talent trends.
Step 4: We build a sustainable strategy.
Succession planning is a long-term process that requires building and maintaining relationships with key talent. This only works well if there's commitment and alignment with internal HR and Business Leaders to build and follow through on the strategy. A few common reasons why a succession strategy might fail includes the lack of follow-through, a narrow focus on only a particular level within the organization, a lack of trust between successors and executives in role, and a failure to thoroughly plan for the deliverables. Having an honest and transparent approach can help the strategy endure the challenges that are sure to come.
Step 5: We engage with external talent.
Making the connection between the organization and external talent for the purpose of succession planning can be tricky. At first, leaders might be confused about the purpose or goal which makes it more important to engage with talent in a thoughtful and meaningful way to ensure that the connections are positive from the start.
As a consultant, I am usually the individual who initiates the connection. Whoever plays this role should pay particular attention to how they want to set the foundation or set the right conditions for the leader. This initial phase requires authenticity in order to build trust, openly exchange information, and engage with potential successors.
On an ongoing basis, the relationships should be maintained and nurtured by the executive team members. The potential successors will have direct access and visibility into the work being done and progress of the organization in order to remain excited and engaged in the process. It also helps to schedule routine discussions to keep the momentum of the dialogue and continue to strengthen the relationships.
The Lasting Benefits
Having a well designed and structured succession plan that balances both internal and external talent will provide the organization with a lot of value and lasting benefits.
You increase and strengthen the value of the organization.
You will find that you feel much more confident and secure about the growth and future of the business and team.
Each leader will have room to grow and the business will have flexibility and readiness of a robust talent pipeline.
As leaders exit the organization, you will be able to retain key knowledge and continue to move the business forward with less risk.
You'll have more room for strategic thinking rather than going in circles with reactive recruiting.
Last, you'll be able to attract and retain top talent with the opportunity for continuous growth.
About HEXA Executive Search
An McLeod is an Executive Recruiter and Executive Coach who helps high-growth companies build their leadership teams and bench strength while also preparing the leaders for continued growth and transitioning.
If you'd like to learn more about how I can help you and your organization build an effective executive search strategy and develop an external succession plan, please reach out to anmcleod@hexa-search.com or visit www.hexa-search.com.
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