Succession planning

Planning for a change in leadership can be daunting, as it requires careful selection of the right individual to take charge of a business or department.

A succession plan is regarded as a blueprint, providing the criteria a candidate needs to fit the requirements of a business.

However, formulating a plan can be difficult, particularly if uncertainty surrounds how to prepare for a leadership change.

The approach a business takes to determine its next leader is vital to not only ensure the best skilled person is chosen for the position but that they are also the right cultural fit for a workplace.

What is succession planning and why is it important?

According to The University of Western Australia Management and Organisations Associate Professor Donella Caspersz, succession planning contributes to the lifespan and success of a business.

“Succession planning is when an organisation engages in a process to really provide continuity of leadership or management by developing a process which identifies someone to be able to succeed the person who’s already in the position,” she said.

“When you are engaging in succession planning, you’re really planning the future of the organisation.”

Associate Professor Caspersz said it ensured a smooth leadership transition.

“If you don’t plan to have someone actually able to succeed, especially in leadership and key operational roles, then the organisation becomes vulnerable in terms of facing a gap when the person might leave,” she said.

“This is an extremely bad situation to be in.

“Mitigating your risk is a really important task.”

West Australasian Media Network News Founder, Owner and Editor Ivan Leung said succession was an important part of continuing the direction of the business.

“Succession planning should be on everyone’s mind if they’re running a business,” he said.

“There will be a day when their closest staff leaves or moves on, so there should be a process in place.”

Understanding the goals and impact

Associate Professor Caspersz said preparing a succession plan began with understanding the goals of the current position holder and the company’s vision.

“You really have to understand what the motivations and the aspirations are of the person who’s in the current position,” she said.

“You have to think about where the organisation wants to go and how we best place or position the organisation in terms of the people who are leading and helping the company to grow.”

Mr Leung said there needed to be some consideration of what the business required from the potential new leader, as well as what a potential successor required from the organisation.

“At the end of the day, it’s about the stars aligning on both sides,” he said.

“You need to know based on your experience what the business needs and the elements the company would like to see in its staff.

“You also have to figure out what the potential employee’s expectations of you are and what your expectations of them are too, as well as what both sides see in the future.”

Beginning the process with a conversation

“Quite often, a succession plan starts with a conversation with the accountant or the lawyer, who says ‘it’s most probably time for us to think about where this organisation is heading and how it will keep going without me being in the role’,” Associate Professor Caspersz said.

“Then there’s conversations about the ‘who’ and the ‘what’ with various key stakeholders to the organisation.”

Determining suitable candidates is established by different approaches, including people-centric or data-gathering methods.

“When you meet some people, the way they perform and speak, as well as their attitude and the way they present themselves, clicks,” Mr Leung said.

“We also have a bit of data when it comes to what the qualities we are looking for are, so that’s a good blueprint – you have a map and you know what you’re looking for.

“However, don’t completely rely on instinct – listen to your instinct but, most importantly, listen carefully to the employee you may potentially hire.”

Associate Professor Caspersz said it was not a straightforward approach, with the diversity of approaches being influenced by the type and size of the organisation.

“This is not a step one, step two, step three approach,” she said.

“They often occur together.

“Larger organisations have more resources than smaller organisations in terms of investing in this process.”

The future is key to determining suitability

A succession plan is considered to be successful when a candidate matches an organisation’s requirements to further its current and future business goals.

“More and more organisations look for fit in values, as well as great technical knowledge capabilities,” Associate Professor Caspersz said.

“The values fit is something that is becoming more and more important.

Mr Leung said this success was determined by loyalty between the business and the employer.

“I know the process has worked and we have found the right person when that person stays long and loyal, roots for you and wants the best for your company and is determined to see it through,” he said.

“They grow as a person, they appreciate the opportunity and they don’t take it for granted.

“As an employer, you don’t take them for granted too – it goes two ways.”

Mr Leung said loyalty, along with suitability, often could not be determined immediately, which could result in employing an unsuitable candidate.

“Whether you can do the job is the basic thing, and whether you can fit into the team is also a basic thing – but the third thing is whether your employees fit into future goals, and that’s harder to spot,” he said.

As a result, Associate Professor Caspersz said businesses should not believe a succession plan ended with hiring a new employee.

“It’s not just the one succession plan that you have,” she said.

“If you’re talking about the organisation wanting to have a long-term future, you’re almost in continuous succession planning, which is what it should be.”

Remaining open-minded

While each approach has the ability to achieve the best leader for an organisation, it is important businesses are flexible in their approach.

“Realise which option is the best but don’t just limit it to one process,” Mr Leung said.

“Look at all the options.

“You need to understand what works and what doesn’t work.”

Associate Professor Caspersz said determining the right process to secure the best employee that matched the long-term direction of an organisation was not always simple.