Turnover is inevitable, so you need to know exactly who's going to step up and how.
Staff turnover happens – sometimes planned, sometimes not.
Many industries are facing an aging workforce and the possibility of losing decades of knowledge, experience, and organizational memory as retiring employees depart. Valued employees jump ship in search of calmer waters when their employer enters a turbulent transition. In any such event, there is a disruption that can damage a company's ability to serve today's needs and meet future goals.
The challenge can be worse in the sales arena. Sales staff interact with current customers to encourage ongoing purchases and with prospective customers to open new business paths. An effective sales team will generate considerably more revenue than the cost of the team's compensation. Consequently, loss of successful sales personnel can affect the company's bottom line more than departures from other areas, and the potential loss of the sales leader (director, VP, etc.) should be particularly worrying to company executives.
These turnover hardships can be managed through succession planning, especially when paired with employee development. Yet, many companies are unprepared: Based on a survey by XpertHR of more than 500 executives, 40 percent of organizations have no formal succession planning process, and 20 percent lack confidence that they have adequate talent to back up critical positions.
The basic process is not complicated. These are the primary steps to create a succession plan:
- Determine which positions would create the most disruption to the business should a gap occur.
- Identify one or more candidates to step into each of these key positions if they were vacated.
- Prepare the candidates to fulfill those roles through training, mentoring, job assignments and/or other development opportunities.
The planning steps and the employee development must go hand in hand. If backfill candidates are identified for the key positions but they are not ready to step in when needed, then the system has failed.
Here are six tips to create a strong and effective succession plan.
1. Do it now.
Be proactive in defining and establishing the system. Development of an employee to take on new or expanded responsibilities can take months or even years. If you wait until an employee leaves, it'll already be too late. Do not feel that the system must be perfect from day one – be flexible, get the basics started, and work toward improvements over time.
2. Make it systemic and multilevel.
A succession plan that focuses only on the CEO or C-suite is incomplete and at risk. It is critical to create a system that spans the whole organization both vertically and horizontally – the viability and resilience of a business depends on a leadership capability that permeates the organization. This depth helps ensure against the dilemma experienced by Kerzner International in 2006 when the solitary, handpicked CEO successor was killed in a helicopter crash, leaving the company struggling for leadership and at a loss on a project crucial to the company's future.
3. Provide sincere support at the top.
Though HR might maintain the tools and keep the records, succession planning and employee development is not HR's job. The process requires the involvement of employees and managers throughout the company, supported by commitment from the CEO. Without management's sincere acknowledgment of the program's value, it might gain only peripheral interest and will likely be doomed to collapse. According to Bridges' 2016 survey of 144 leaders from 38 organizations, the No. 2 reason for failure of strategy implementation (after poor communication) is lack of leadership. Former Procter & Gamble CEO A.G. Lafley said, "Nothing I do will have a more enduring impact on P&G's long-term success than helping to develop other leaders."
4. Develop through experience.
Though training can play a part, it is generally recognized that development through experience is more effective than classroom learning alone. Such experience could be gained through job rotation, special assignments, or action learning where employees (typically from cross-functional groups) are engaged in strategic or tactical problem-solving. As former Nissan CEO Carlos Ghosn noted, "You have to take the ones with the most potential and send them where the action is … Leaders are formed in the fire of experience."
Take the case of the sales leader. Potential successors might be deputies in sales who have shown promise, or even exceptional managers outside of sales who are destined for executive leadership. The candidates might be assigned high-impact duties or projects under the tutelage of the sales leader to develop their skills and test their judgment.
5. Make the process transparent.
A fully documented and published process maintains consistency and eliminates mystery, thereby supporting the employee's trust in and understanding of the system. The best source of information for succession planning and development is often the employees themselves – they know their own capabilities and ambitions. Employees appreciate knowing where they stand in the organization and what assignments might be coming their way. However, keep the succession plans realistic, since implausible plans communicated to employees result in frustration when their development expectations are not met.
6. Measure program results.
Typically, what gets measured gets done. A study by ATD Research and i4cp indicates that effective succession planning may rest on the application of proper metrics, including the number of positions filled by succession candidates, the number of candidates identified and ready, and the degree to which managers are held accountable for succession planning.
Succession planning and employee development provides advantages for both the company and employees. Business continuity is better protected, and it is easier to recruit and retain the best employees when it is known that the company values its people and is diligent about development. Transitions are rarely seamless and trouble-free, but you can minimize disruption with the right planning and preparation. Every company can benefit. Though smaller organizations might not have internal candidates available to step into every potential vacancy, the what-if planning and some elemental cross-training still bring value.