Succession planning is prudent - Sprackett

This is according to Michelle Sprackett, partner at PSP Icon, a national management consultancy. Sprackett says it does not matter how certain the future of a business appears; things can change unexpectedly: "Succession planning needs to always be considered as part of a business' strategic planning process as it deals with projecting future changes by anticipating management vacancies and determining how best to meet these challenges."

A worrying trend

Sprackett says that the issue of succession planning taking a backseat is not unique to South Africa, but is a worrying global trend. Latest research conducted by InterSearch Worldwide (2013) reveals that fewer than half - just 45% - of executives from 34 countries around the world have a process for conducting CEO succession planning.

"The data further revealed that company size plays a significant role, with 73% of large companies surveyed (those with annual revenue of more than US$500 million) having a CEO succession plan in place. In contrast only 17% of small companies (those with annual revenue under US$50 million) had a CEO succession plan," says Sprackett.

Expect the unexpected

Failing to plan early and adequately for business succession can have serious implications, says Sprackett: "After a key employee leaves, the company's prospects for long-term survival can be significantly harmed. No matter how good the business is at business or financial projections, no one can truly plan for unexpected changes, which can range from an unforeseen illness, a natural disaster or a CEO's decision to suddenly resign or retire. Thus, the reasons for having a succession plan in place before it is needed are endless."

She warns that smaller businesses are also affected, if not more so: "Succession planning is one of the biggest risks facing entrepreneurs and other investors in smaller businesses. Without a decent succession plan, the business may be forced to close down. In assessing the ideal successor, the small business owner should bear in mind that the attributes of the person who started the business may be quite different to the person who can take it to the next level."

Building the talent pool

Many businesses have the perception that succession planning only benefits the business in the future and do not realise that succession planning benefits the business now, says Sprackett: "Succession plans are no longer only important when leadership is going to change, but can be used to build strong leadership in the present, help a business survive the daily changes in the marketplace, as well as force executives to regularly review and examine the company's goals."

Sprackett says succession planning ensures the proactive management of a business' entire talent pool: "By integrating talent management, leadership development and career development programs, succession planning has gone beyond the reactionary replacement of exiting employees to enable the deployment of a business' talent as needed, now and in the future."

Filling the gap

Sprackett says many local businesses do not have internal career development programs in place so they lack the ability to quickly and easily identify internal candidates with the necessary skills, experience and competencies to fill vacancies when the need arises: "The effort required to establish a development program for future leaders is imperative because it creates a motivated and capable group of employees that are ready to move forward in the business when the need arises."

A systematic process

Although most companies recognise the importance of succession planning in both attracting and retaining excellent employees, few businesses successfully establish a process for doing so, says Sprackett: "Time and resources are the challenges most often cited by businesses who are considering succession planning. Other challenges arise when managers feel their positions threatened when asked to groom their successors.

"Succession planning requires having a systematic process where managers identify, assess and develop their staff to make sure they are ready to assume key roles within the company. Having this process in place is vital to the ongoing success of a business because the individuals identified in the plan will eventually be responsible for ensuring the company is able to tackle future challenges," concludes Sprackett.

Helpful hints

Sprackett provides the following tips for businesses to adequately prepare for succession planning:

• Have the support and backing of the company's senior level management. Managers need to identify the responsibilities, skills and competencies that will be needed by their replacements.
  
• Identify what skills the business will need in five, 10 or 15 years and analyse the existing workforce to identify who will be eligible for retirement within the next five years. Critical positions must be identified and included in the business' succession planning program.
  
• Evaluate the skills and attitudes of everyone in the business to identify who is a candidate for a leadership position.
  
• Identify high performers that are almost ready to step into those critical positions. The skills of potential successors must be developed through work experiences, job rotation, projects and other challenging assignments.