Most senior executives believe succession planning is a critically important business issue, but the majority of them don’t think their organizations are doing enough to identify and develop leaders to fill inevitable gaps. And only half of companies are grooming someone to replace the current CEO.
Those are the findings in a recent report by Stanford University and the Institute for Executive Development. The report authors also provided a list of five key problems companies face in creating an effective succession plan and seven tips for improving programs.
Why companies aren’t ready
In interviews, the report authors discovered five key issues:
- Companies don’t know who’s next in line to fill senior executive positions. Companies aren’t identifying the criteria and traits required for success in C-Suite roles and, therefore, aren’t identifying candidates.
- Companies don’t have an actionable process in place to select senior executives. There is no open, honest discussion about executive performance and no time allocated to identifying successors.
- Companies plan for succession to “reduce risk” rather than to “find the best successors.” Succession management is about setting a company up for future success, but many companies that are doing succession planning focus on reducing risk.
- Roles aren’t defined and often they aren’t followed. Most companies don’t have an assigned succession planning committee with defined roles.
- Succession plans aren’t connected with coaching and internal talent development programs. Succession planning is often treated as a stand-alone activity, disconnecting it from other development programs.
What companies need to do
The report recommends these seven steps to create an effective program:
- Map the future operating and leadership skills and capabilities required of each executive position and benchmark executives against these.
- Cast a wide net. Be aware that future leadership needs may differ from today’s. Nurture and develop accordingly.
- Be comprehensive and continuous. The process should be ongoing because transitions can happen at any time.
- Assign ownership and roles. Someone needs to own this process.
- Connect CEO and senior executive succession plans with coaching and internal talent development.
- Assign coaches and mentors from outside the organization.
- Get strategic assistance when necessary.
The challenges and solutions are similar to those we identified in two-part blog series here and here. We also created our own how-to guide, 4 Steps to Effective Succession Planning, to help companies improve their process, or get them up and running if they have nothing in place. You can download it here.
Does your company have a succession program? Is it working? Share your thoughts in the comments section.