Succession planning is an essential risk management strategy that helps companies prepare for the departure of key figures like managers and executives. Yet surprisingly, just 35 percent of companies today actively practice succession planning.
Clearly, that’s not ideal. In 2018, 17.5 percent of the world’s 2,500 largest companies saw CEO departures, according to a PwC study. And encouraging longer CEO tenures isn’t the whole solution: Successors to the longest-serving chief executives tend to have underwhelming track records.
Well-executed succession planning is not a single event, but rather a state in which a company has ongoing processes for considering internal resources as its next leaders. Companies discover the best candidates when they continually invest in their employees, nurture team-oriented and trustworthy individuals, and allow employees to share ideas for improvement.
The principles that underlie good succession planning aren’t exclusive to large businesses. Here’s a look at how companies can develop a robust succession strategy, with lessons from the scouting movement, the Navy SEALs, and Veep.
1. Put Employees in the Best Position to Succeed You
Borrowing from an old Scouting motto, software engineers have a mantra to “leave your code better than you found it.” That’s the background I come from.
Today, I do less coding and more managing, but I’ve found that it’s incredibly important to apply this same logic to succession planning. Managers who supervise the next group of company leaders have a responsibility to enhance their individual and collective capabilities.
One of the best ways to spur that growth is to practice inversion of control. This means trusting employees to work toward company goals with their own abilities and solutions. It means encouraging employees to cooperate and help each other along the way. This arrangement promotes personal accountability, increases self-reliance, and opens up natural leadership opportunities.
One final thought about setting employees up for success: Employees are the most important members of a company because they do most of the work and come up with the solutions to problems.
Because of that, managers should take a servant leadership approach to succession planning, meaning they should prioritize employees’ needs and help them achieve their full potential. In the context of succession planning, this results in employees gaining the skills and tools they need to take over in the future.
2. Prioritize Trust Over Productivity
Many companies identify succession candidates based on individual performance. For example, a manager might use sales quotas to determine who to promote into higher positions.
But the truth is, the person who works the best does not always lead the best.
Take it from the Navy SEALs, one of the nation’s most elite institutions. Their philosophy for membership is that they would rather have someone who meets minimum performance standards and can be trusted than someone with top performance scores who’s untrustworthy.
Similarly, companies should look for people who are well-liked by their peers and possess team-oriented qualities, such as:
- Willingness to take responsibility.
- Ability to communicate constructively.
- Openness to new ideas and feedback.
The ideal candidate is someone who won’t only look out for their own best interests, but also those of their colleagues and the company as a whole.
3. Create an Environment Where All Views Are Welcome
In the political comedy Veep, Julia Louis-Dreyfus plays a fictional vice president in an administration where everyone around her panders to get on her good side. As a result, she becomes self-absorbed and regularly throws tantrums without facing any resistance.
This kind of positive echo chamber can be detrimental for any organization, especially when it comes to succession planning. It can incentivize the wrong behaviors and prevent the best candidates from rising to the top.
Current leaders must ensure that employees can share ideas on how to improve the company, especially if those ideas go against the status quo. Dissenting views, while uncomfortable in the moment, can help companies improve in the long run.
Welcoming such views also sets a precedent for future leaders to welcome free expression.
The employees with the greatest leadership potential are those who can push back on the way things are and also offer meaningful solutions. To find these people, companies must create an environment that welcomes thoughtful dissent.
Practicing inversion of control — since it gives employees great freedom about how they work toward company goals — goes a long way toward building this environment.
Succession Planning Can Make or Break Your Company
An unexpected change at the executive level can send shockwaves throughout your organization. Succession planning is an ongoing, full-team effort that helps keep your company moving forward in the face of turnover. It’s about running your organization in a way that positions current and future employees to become the next generation of leaders.
Done right, it not only prevents one of the biggest upheavals any business can face, but also makes an organization stronger, more flexible, and more durable for the long term.