I read an interesting survey recently conducted by Software Advice. The survey reviewed the impact that having a succession plan has on employee engagement. They examined feelings of engagement by employers (which ostensibly is the executive team) and by employees. In both cases, there was a prevalent feeling of increased engagement when a formal succession plan was in place – 94% of employers felt that way and 86% of employees.
This overall finding didn’t surprise me too much, as it tracks pretty closely with Maslow’s Hierarchy of Needs. Once an employee’s fundamental needs are met – sustenance, safety and social acceptance – the need exists for personal growth and professional recognition. A formal succession plan provides both of those. But what was of greater interest to me was that 1) the 18-34 age group felt most positive about the presence of a succession/development plan and 2) the 55-64 age group felt most strongly about how a succession plan would affect their engagement. The implication is that regardless of which generation an employee belongs to, a succession plan seems to be a driver of engagement.
These findings, of course, make a strong case for succession candidates to be internal. If an organization had a practice of bringing in outside talent to fill each next level of advancement, it would clearly be demoralizing. Additionally, at lower levels within an organization, the demands and responsibilities of a position are less than those are higher levels.
Clearly, as an individual advances, so does their level of responsibility. Their people skills need honing. Their P&L responsibilities begin to expand. And the need for strategic thinking begins to grow. During this period, candidates have the luxury of taking time to develop in each of those areas. Often, leadership assessments and executive coaching are used as tools for making the necessary course corrections to ensure successful development.
But as responsibilities increase, so do the risks to the organization. At some point it becomes more critical to have the best possible person rather than the best available within the company. The succession plan will shift from leadership development that of grooming for a specific position.
If ongoing leadership development has been successful, an internal candidate may be the best choice. Not only will they have the requisite leadership skills, but they’ll also have the advantage of having knowledge of the company’s history, a familiarity and alignment with its culture, and a proven track record of achievement.
But at the higher executive levels, people skills and strategic thinking are more important than industry knowledge. A bright person can easily learn and acquire information, but people skills are neither easily nor quickly developed. At the risk of losing one or more good people, an organization may have to look outside the company to fill a top spot with the right person. Another important consideration is that it may be essential to bring someone in with a fresh strategic perspective in order to take the business to a new level.
Of course, the ideal solution would be to have developed that perfect person from within the ranks. In order to do that effectively, a serious succession plan needs to have been in place. By “serious”, I mean one in which each good candidate is tracked and assessed throughout their tenure with the organization.
The ongoing development effort would identify areas of needed improvement and allow for refinements to take place. This requires regular assessments and leadership development, often by an executive coach. In smaller organizations, a formal development/succession plan is fairly easy to oversee and administer. But as the size of an organization grows, it becomes essential to have a more formalized and structured succession plan in place. Many companies find it beneficial to utilize Succession Planning Software to accomplish this.
In conclusion, it’s best for succession candidates to come from within. But as the stakes get higher, it becomes more important to have candidates who already have the needed interpersonal skills, strategic thinking, and P&L savvy – regardless of whether they come from within the company or from without.