Building for the Future Must Include a Succession Plan
Matthew Abbatacola March 22, 2023 Executives, HR Strategy, Leadership, Leadership Development, Talent Management
The absence of a clear succession plan can leave an organization at serious risk. Putting in the effort to build out a clear succession plan can, however, significantly reduce that risk.
Why is it Important to Have a Succession Plan in Place?
One of my favorite HBO shows in recent years is Succession. The show follows the drama of the Roy family, a multi-billion dollar media conglomerate that operates the fictitious company, Waystar Royco. The aging patriarch, Logan Roy, has spent much longer in the spotlight than he ever anticipated. His eldest son, Kendall, assumed he was the apparent heir, but his father was blinded by ego, refusing to give up the seat at the head of the table. Add in three other siblings all vying for the top spot in the company and let the power-struggles and backstabbing begin.
While the show is written in the extreme, it undoubtably displays the impact of not having a clearly defined succession plan in place. Whether it’s a highly entertaining television drama, a Fortune 500 company, or a long-time family-owned and operated business, every organization needs a succession plan.
There are many ways in which a company could lose a top leader. A sudden resignation, personal issues, serious illness, or in the worst case, even death can leave an organization with an unplanned vacancy. Organizations that have plans in place to respond to such significant events are able to pivot quickly and seamlessly return to operations.
What Are the Risks of Not Having a Succession Plan?
- Financial Impact
- Losing a key leader can be enough to scare investors away or damage an organization’s public image. That could lead to financial ruin. Some companies may survive this, but many never do. Having a vetted and internally groomed candidate ready to assume a leadership role prevents potential vulnerabilities and reduces the chance of financial loss.
- Cultural Impact
- The loss of a key leader can have negative effects on culture and team morale. This can leave employees feeling unmotivated, disengaged, and without direction. Similarly, a leadership gap could create a competitive situation among other leaders vying for the opening. The chaos that comes from no structured transition can promotes in-fighting and back-room deals. Dysfunction at the top always runs downhill.
- Client/Customer Impact
- When a key role is left vacant, remaining employees are required to take on extra work. This can create a slip in efficiency and productivity. The worst-case scenario is having an impact on clients or customers who may decide to take their business elsewhere.
- Hiring or Promotion Mistakes
- A rushed decision to internally promote or externally hire an individual who is not ready to assume this role can have significant impact on the organization. A lack of experience could cause financial damage. A poor cultural fit could create an exodus within the company. There is also the cost of recruiting and hiring a candidate who may not work out to consider.
- Missing out on Internal Candidates
- Internal candidates who are often able and willing to become a successor could be overlooked. The benefits of promoting a qualified internal candidate include the pre-existing knowledge of the company and culture and the time and cost savings associated with recruiting, marketing, and onboarding. Hiring from within can strengthen the employees’ commitment to the organization, knowing their effort is recognized and rewarded. The company can also avoid any ramp up time needed when hiring externally. Without a clear plan in place, these benefits can be easily missed.
What Are the Key Steps to Developing a Succession Plan?
- Identify Key Roles
- Create a Critical Role Profile for Those Roles
- This is so important and yet can be very difficult. It takes a certain mindset, asking what this role will need to look like three or five years down the road. Success is contingent on understanding what the role will look like and not trying to match the role to a specific person.
- Identify Internal Candidates
- Assess Internal Candidates Based On the Competencies Identified for the Role
- Develop Internal Candidates
- Name a Successor for the Key Roles Identified
Having a process in place, whether it is a planned transition of leadership or an unexpected event, could mean the difference in an organization’s success or downfall.
Keystone Partners: Succession Planning Experts
Keystone Partners has over 40 years’ experience preparing organizations for the future through succession planning. We partner with Boards of Directors, CEOs, and senior leadership teams to customize an approach to meet your specific situation and needs. Don’t wait for a major disruption to occur, effecting your cultural and financial stability, to act. Interested in learning more? Contact us today to find out how we can help your organization realize the full potential of your people.
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