why so many companies continue to miss the boat with succession planning

"Our moulting season, like that of the fowls, must be a crisis in our lives," wrote American transcendentalist philosopher Henry David Thoreau, and it's a fitting description, too, for the ritual shedding that goes on at businesses today. When senior executives leave (or get pushed out), in the absence of adequate succession planning processes the result can only be described as a crisis state for the organization.

With such steep costs — all of them avoidable — it's clear that succession planning is an area where many organizations should aim to make improvements. But what does it take to get to best in class? Let's survey the current state of succession planning, and highlight some major misalignments, before turning to three succession planning best practices you can implement at your organization today.

succession planning: a major disconnect

At first glance, perhaps the steep financial costs attributed to poor succession planning should come as no surprise. It stands to reason, after all, that the stability and resilience of an organization should correlate with market confidence and, as an extension of that, shareholder value. Throw a wrench in the works and — mirabile dictu! — all of that can vanish overnight.

What is surprising, however, is the extent to which organizational leaders across the board seem simultaneously keenly aware of the problem and unable to fix it. In a recent survey of select clients from Randstad Professionals, for example, the majority of companies reported that they don’t have succession plans in place for replacing top performers. That finding is especially troubling considering that, in the same survey, a talent shortage or skills gap was the biggest challenge that leaders said they expected to face in 2019.

Likewise, a study by Deloitte revealed that even as 86 percent of organizational leaders described executive succession planning as an “urgent” or “important” business priority, only 14 percent said they were currently doing it well. That chimes with respondents to the study "Leaders in Transition: Stepping Up, Not Off," which included nearly 400 organizational leaders in the U.S., who cited “making a transition at work” as the number-one most challenging thing to do in life (more challenging even than "bereavement," "divorce" or "health issues"). And yet, the study concluded: "Very few leaders feel that organizations are doing the right things to prepare their future leaders."

Even as recent research shows that attracting and retaining talent remain core focus areas and priorities for organizational leaders across industries today, that sense of urgency apparently stops short of the C-suite. Clearly, that's something that needs to change. Let's turn to three best practices to help you reboot the succession planning process at your organization today.

three succession planning best practices

Wherever you are with succession planning today — and most companies appear to be somewhere between "immature" to "evolving" — there are simple best practices than can help you pivot to best-in-class. Start with these three.

practice ongoing "emergency succession" drills

What are "emergency succession drills," exactly? The idea isn't so far removed from, say, the disaster preparedness exercises regularly carried out by hospitals, or the war games that have long been a staple of military training. And the goals are similar: By challenging the board of directors to prepare for the possibility (actually, the inevitability) that senior-level departures on an ongoing basis, the board will therefore be able to act quickly, strategically and with far greater confidence when that takes place in reality.

However, to be effective, you'll need to conduct these drills regularly — a quarterly basis would be a wise place to start. What's more, these drills must be treated as if they're the real deal, with active engagement and serious brainstorming from stakeholders, and not just another compliance box to check off.

prioritize mentorship and training for executives

Considering how much talk there is about mentorship and training at organizations today, it's odd that these same opportunities rarely permeate the upper echelons of management. In fact, only around seven percent of companies right now are formally assigning director-level resources to mentor senior executives, according to a study jointed conducted by The Conference Board, Institute of Executive Development and Stanford University.

That's something that needs to change. Why? For one, grooming talent from within can improve your employer brand value, and in turn move the needle on key HR metrics around engagement, attrition and retention. But to effectively promote internal talent to leadership roles, you'll need to start planning well in advance of a high-level vacancy. And that means not only having robust processes in place for identifying and developing potential successors, but also mentoring them to enhance their leadership capabilities over time. This won't be a quick fix, in other words, but it should contribute measurable value over the long run.

lean on a strategic partner

When senior-level vacancies emerge, you don't have time to waste. We mean it: That isn't just an anecdotal truth, it's a fact that research has confirmed objectively. For instance, studies have shown that the more time companies take to hire new organizational leaders, the worse the companies subsequently perform relative to competitors. Intuitively, that makes a lot of sense.

That's why strategic executive search partners can deliver clear bottom-line value for any businesses in the midst of a succession crisis. Leading executive search firms today have deep relationships with large networks of diverse candidates, including "passive" talent, which means you'll gain access to a superior talent pool — and candidates you simply won't find on your own. Moreover, they can deliver temporary leaders, shoring up operational gaps and ensuring business continuity in the near term so that you can continue to search for the best long-term replacement.

executive summary

When companies don't have adequate succession planning processes in place, the penalties rapidly escalate, as we have seen, holding them back from strategic goals and badly hurting bottom-line performance. So getting out ahead on this is a crucial challenge, and the effort needs to start today.

Fortunately, we can help.

At Tatum, we'll support your end-to-end succession planning efforts, expediting the transition from "immature" to "evolving" and ultimately "best-in-class." Whatever your business needs may be, from on-demand talent to strategic advisory, we offer customized solutions that can solve for any of your most pressing pain points.

Connect with us today to learn how we can prepare you to not only overcome business obstacles but adapt and thrive — today as well as tomorrow.