In developing a succession plan, is it smart to inform successors that they are indeed, the successors?
There are a lot of pros/cons for informing successors of their status within an organization. Some argue that informing successors can lead to an increase in poaching of high potentials. Others argue that not informing successors can lead to anxiety. Some of the pros of informing successors include communicating openness, motivating employees to further develop themselves, and providing reason behind different development initiatives.
Succession is a really REALLY tricky thing in the corporate world. Stacy's input is sound and good, but I think it skips a step.
Step 1 - get it straight in your head.
You need to know what you're doing, why you're doing it. How much of your motivations for exit are going to affect the successors? how much mapping and KT do you need to plan for the handoff? If you've got a board and standing executive, succession isn't going to be your problem anyway. Some real questions you need to sort out before you talk to anyone (presuming you're in a relatively flat-world scenario with a small or non-existent board:
- do you want the corp structure to remain the same? are there any changes to bilaws and house-keeping that need to be done before you start announcing your plans?
- how strong is the internal candidate pool? in the interest of everyone who depends on your organization for food and rent money, do you honestly think you can name a successor internally, or should you consider looking outside?
- is there a kit or hand-off for the "unwritten rules" in your chair? make a list of 8-10 things most likely to blindside the successor after you've left (sorted according to what's going to happen first/second/third/etc NOT most important or most complicated).
- do you have impartial help in the selection process? do you need impartial help? do you know how to tell if you need help or not?
- what's your preferred timeline for all of this to transpire?
Get those answers sorted FIRST, before talking to anyone. Then (and only then) are you ready to start looking at step 2.
Step 2 is a lot of what Stacy Tapper mentions. Open up, solicit input, prep the stage...
I agree with Stacy on the open communication and allowing successors to be a part of the planning, but I also understand your reasons for being wary - those reasons have little to do with good/bad leadership, but the nature of the relationship between successor and predecessor. In fact, the dynamics between why the succession planning is actually happening, as well as company culture play significant roles in how much you reveal and when.
The answer will always be "it depends". When will the successor take over? If it's in 5 years, is s/he the type of person who will be motivated as time passes or will complacency set in? If it's in less than a year, are you at risk of losing this person if you don't speak up? Openness is both ways, if leaders are willing to be vulnerable about succession planning, then perhaps employees would be more inclined to be open as well. For example if they're leaving the field they'd worry less about being fired, and you'll know you need another successor.
I've seen orgs crumble after M&A simply because management assumed mid-management would accept whatever came. I err on the side of open, but the variables matter.
Hope this helps!
The answer depends on whether you are considering a private family company, a private non-family company or a quoted public company.
For a private family company, the successor(s) should be chosen and prepared for succession several years before the expected changeover date. A last minute choice usually results in the failure and subsequent sale or liquidation of the company because the successor has not been sufficiently instructed on how to manage and to own a company. The learning curve should include not only how to manage the company but how to be an owner. In the latter capacity, the successor should attend meetings to discuss shareholders agreements, wills, trusts etc..
For a private company, the successor should be chosen and informed about six months to a year before the planned change over. He or she should also be told that the succession will not be automatic but will be competitive as the board will also be looking for an outsider to take the job if the "successor" proves to be not up to the job. In the meantime, the successor should be given additional responsibilities by which he or she can satisfy the board that he or she can be relied upon to manage the whole company efficiently and profitably.
For a public company, the process should be the same as for a private company. In fact, if a public company does not have an established succession plan, shareholders will be concerned and this could have adverse effect on the share price.
In the latter two cases, there is always the possibility that good employees, marked as successors, may be poached by competitors. In fact, if competitors would not wish to employ them, they probably are not much good. However, the choice to leave is always with the employee and it is better to find out sooner rather than later whether or not they can be relied upon to stay with the company. It is better to increase the remuneration of the successor if they are worth it rather than to lose a potential successor at the moment of planned change over.
In summary, successors should always be informed and then trained and motivated to do the job to the best of their ability. If it seems doubtful that this can be achieved, then it is better to use headhunters to search for a replacement.
Succession planning on the human side is an art because of the many factors involved. There are no hard and fast rules because every situation is different in terms of company culture, people involved, public vs private co., family business, reasons for succession, timing of succession.
So with that caveat, with my business succession clients (whom are private companies), I've recommended an approximate 5-phased approach.
Phase 1: The discretion and discussion stage where everything is confidential with current leader(s) and frankly all options are on the table of which succession is one option. Others are sale, ESOP, close, merge, outside hire, and so forth.
Phase 2: Decision has been made to go for a successor. Draw up a list of candidates. Begin in depth assessments of strengths and weakness and preparations needed for each to assume the responsibility and lead. Still keep things quiet. Weed and feed.
Phase 3: Discuss plans with identified candidates. Get a sense of where they are with the company / team. At this point, the word will creep out to the rest of the employees who and what. So get ahead of the curve and put a plan in place to manage the information flow. Increase willing candidates responsibilities and add mentoring (inside and outside mentors).
Phase 4: Strike a deal for succession compensation and deal with the right candidate. Spell expectations and standards out clearly.
Phase 5: Announce selection and time frame for completing the succession plan.
In the end, what you need is a defined process upfront. What I've provided above is a chassis – how you build out the succession plan from there is subject to the uniqueness of the situation and people.
One fundamental twist; your question says "is it smart to inform". What if the successor you have chosen does not want to be your successor.
With that in mind:
Step 1) ASK the potential successor if they want to be your successor.
Step 2) Identify gaps and build a plan to close those gaps
One other caution, especially in the corporate world... just because they are identified as your successor does not guarantee them the role when you change roles. That needs to be clear as you are usually not the final decision maker of choosing your successor. High probability, but not guaranteed.
There are actually two activities here: one is succession planning in which you determine the degree a person is ready for movement within the organization and the second is leadership development. If a person is considered part of the future leadership, he or she needs to be prepared to meet that challenge otherwise their promotion will lead to failure. Being considered for leadership development hints at succession planning without stating it formally. However, springing a sudden promotion on someone without preparation is harmful to the organization and the individual.
Hi Michael - your question, as stated, has an easy answer ... with serious implications re: timing.
Is it smart to inform successors? Absolutely and for all the reasons mentioned below by many other qualified responders.
Timing is key. And it frequently depends on whether the organization is guided by their strategic 'Human Resources', or by reactive 'Personnel' group (true function, not department title). My focus here is on strategic, enlightened HR.
My 35+ years successful leadership experience (from the back room to the Boardroom and as a coach) strongly points to up front transparency. I even encourage enlightened organizations to encourage openness in succession planning right from the new-hire/on boarding stage. That way, everyone is guided by what serves them and the organization best, working together, effectively and consistently, to contribute to each other's growth.
How soon will you let me know how I can be of further service to you now?
In my view when people find out/know that they are the successors they show it clearly with their actions if they should be or not. I think it is a good idea to tell them in advance and let them earn it as they go along. This period will say a lot about them and their intentions therefore, future success. If they are not suitable they can be replaced - turnover is inevitable anyway..
I think sharing nurtures engagement for the right people. If they want to leave they will leave sooner or later.
I also saw people who were taken aback instead of being happy when they found out that they were successors as they have been building up resentment for the organisation while waiting for their next step.
I think transparency is an admirable goal. However, there are some downsides that have to be considered. First, a company must have crystal clear criteria on how successors are identified so that to eliminate biases, discrimination, etc.. They need to work hard to reduce tensions that could be created through transparency. They also need to have a process for developing and engaging all their employees and not just identified successors.
Where there is a short term external intervention such as a community development project with little initial structure and local politics, it is a very good idea to fix succession early and tie it to personal development targets. In this way it is motivating, allows you to change if the choices do not perform, you can build a clear future structure around the local management to be, and at the same time avoid any unseen under currents and tensions that would only show during exit. So in that specific situation to inform is always best. It may not be so in other situations. But my take is the more structure in place the less risk of resistance to transition. If its a really well developed and structured business it may simply be best to ask the Senior Management to decide a fixed policy as they will have the best insight and it will reduce anxiety.
I would say definitely yes. As well as the reasons you mention, that person would need to be set up for the post and that might require training or mentoring or even an apprenticship activity. In addition, what would happen if you picked someone that:
Later turned out to be unsuitable?
Moved on to a competitor?
Refused or did not want to be a successor?
You would need the proviso to be able to change the successor originally selected.
This does not mean that one has to inform everyone else and their dog regarding the succession plan of course. Only those required to know.
Yes, it is important to inform the successors because it involves them . This will make the succession plan visible, at least at the senior positions. A development plan for each of the candidate (say two candidates) can then be made and agreed on. The plan can include: a mentoring process, a training plan, a performance objectives and a perform review process.
If your succession plan doesn't include working with the successor to get them ready to step up it's not much of a plan, is it?
Not telling them also risks a misalignment between your plans for an individual and theirs which may not include progressing in your company or a time limit on how long that will stay if they don't see a clear pathway.
Top talent are top talent and they know it and know that they have options.
Timing is everything. Succession is most successful when there is a plan with time that is not rushed but does not linger. It takes a plan but makes sure the gaps are least likely be compromised and also have a communication ring that works down and around the organization. I'd warn it doesn't matter as much which choices you make for who knows what when so long as they are your choices.
Since you are in the developing stages of the succession plan you should focus on how you will transition the candidate(s) whom you are considering to succeed the particular position. By notifying this person early, it may indeed disrupt their focus for the position. So to maintain the stability of this opportunity, I would advise that you develop this plan thoroughly and make sure you include how you will train and develop the person(s) further along until it is time for them to step into this position fully. You want to make sure you bring this person into the position with the understanding of their responsibilities and expectations. For more information, feel free to contact me for further discussion. Thanks.
In developing a successful succession plan it is important to have the input of everyone that is involved. If the plan is developed in secrecy it could inhibit those that are involved in the plan from feeling comfortable with the organization and the value that is placed on their input. A true leader will feel comfortable hearing the input from colleagues, especially those that are influential enough to lead future generations of the organization.
Having a succession plan is a necessity these days and maintaining Transparency and Full disclosure always safeguards misunderstandings and maintains clarity of Corporate direction and vision
You can also start training & coaching the successors to be adept of their future responsibilities and enable a smooth transition when it is inevitable to transition leadership successfully and without any major problems
I would say yes. They should be somewhat of an understudy so the show continues to go on. Also, buy a life ins. policy for the business to inherit to keep it solvent while the successor finishes getting their wings. The less the successor know, the bigger the policy should be.
Think of it from your point of view. How would you be a better manager - being knowledgeable and prepared or not?
There is no one to walk you through the life. Leo Tolstoy wrote "War and Peace", but at the end he said, everybody will live his/her own life. Tolstoy's contemporary colleagues critiqued his way of presenting the war. The following wars and peaceful time proved that everything goes in a different way to compare to the writers' work. But the czar, czar's court always was and will be. You asked a question about technical system. Technical system destroys itself very quickly by the interaction with a social system. This may be the answer.
I agree with the comments about being open with your staff as a leader.
From my experience succession planning is normally completed at Senior Management level. The majority of the times it may not filter down simply because it can cause problems with your staff and you want to be transparent in your promoting and selection.
If you do share the information it is key that the successor understands the criteria and that when the position becomes vacant the selection and hiring process must be satisfied.