Succession planning can provide a long-term competitive advantage for businesses operating within the independent social and healthcare sectors. From retirement, natural staff attrition and organisational change to business growth, innovation and shifts in strategic direction, ensuring there is a pipeline of ever-ready internal talent to fill the roles vacated by senior executives leaving is a business imperative.
Yet a surprising number of providers still do not have an effective succession plan in place, leaving their leadership pipeline more to choice than design. So are we on the brink of a leadership crisis?
A report published by EY found that little more than half of all companies across multiple sectors (54%) say they have a strong pipeline of future leadership talent, while just 45% of high performing and 36% low performing organisations agree that their organisations have any such plans in place to address this.
Similarly, Network ROI in 2015 found that 1 in 3 (33.9%) of UK workers say their company would not survive if it were to lose its most senior leaders, but at what cost to the future of these organisations?
In many cases, existing succession planning efforts are largely focused on only a handful of high-potential individuals who represent those that are next-in-line.
Beyond that, however, the second or third tier talent base is given little or no attention. As such, those lower down the organisational chain are sometimes not given the opportunity to develop the skills and gain the experiences that could make them very capable future leaders.
Many businesses fail to implement succession plans because leaders fail to envisage that one day they will be gone, and do not like the thought of handing the reigns over to somebody else. Succession plans can also take years to put into effect, which gives some people the excuse that they do not have the time.
Nevertheless, according to a report by Software Advice, 62% of employees surveyed say they would be “significantly more engaged” in the workplace if their company had a succession plan in place. Indeed, along with reassuring workers, succession planning can also give investors the confidence that the company is still moving in the right direction with a clear vision and hierarchy.
Succession planning is vital, so when it comes to searching for individuals who have the potential to be future leaders, there are a number of factors that should be taken into account.
Firstly, it is important to identify people who share the same norms and values so they can easily be embedded into the company culture. Secondly, a track record of success in the sector is essential to convince others that they have the knowledge and experience to do well. And thirdly, it is vital that individuals who enjoy learning and growing into a role are ultimately the ones identified – as the process could take two or three years.
Identifying the right person takes time, and organisations should be constantly looking at ways to find future leaders. It should therefore be a multi-year process where individuals are identified and given senior roles in anticipation of one day taking on higher levels of responsibility.
Succession planning is often viewed as being the safety net for organisations, providing protection from the risks of losing business-critical talent throughout the leadership and senior management teams. It is a way of ensuring that the organisation can continue to operate in a relatively seamless transition when personnel changes occur and as such, the key to succession planning’s success is about being pro-active, not reactive.
It’s all very well having a very capable leadership team in the here and now, but if the leadership bench is looking vacant there quite simply will be no ‘next generation’ of leaders.