Why most succession plans don’t add any value

At its very core, the problem is that most succession plans are never used. And if not used, it is hardly a controversial to say, that they don’t add value. Many large international companies spend much time and resources on developing a complete success planning program, which intends to identify a person who will take over if the executive is hit by a bus or suddenly leaves the company. I have never actually heard of the famous bus incident so I guess it is for when executives get fired or leave.

There is today very little evidence to support the view that it adds value to have succession plans for top management level, however some case studies and data suggest that this is more valuable for some middle-managers and many specialists. Maybe that’s where the focus should be.

So what to do for the succession plans to add value?

  1. Succession planning works best in organisations where there is little change and a high degree of predictability. No wonder then that the term originates from the military. This is true for some organisations but for most the reality is that they experience so much change, re-organization and lay-offs that succession makes no sense.
  2. The quality of the successors must be very good, which means that a constant gab-analysis and gab-closing exercise must take place. This development project is valid when a successor is needed but wasteful when it is not.
  3. Management must be committed to use the identified successor (which frankly is not the case today, as highlighted in a recent McKinsey study of talent management).

One possible solution to lower cost and improve returns would be to make a Just In Time Succession Plan. When a job is open, find out who is the most suitable and let that person take the role. If any development is needed post hire then spend the money there.

Finally there is the option of asking a executive search company to always have a list of five candidates ready for all of the top management positions and review the list with the search company on a regular basis.

P.S. I would encourage you to read chapter 5 in “Talent on Demand” by Peter Cappelli for more on this subject.

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