I just recently saw the results of a study from Odgers Berntson from 2011 showing some very frightening statistics about executive succession planning. When you look at the numbers below, think about how your organization is handling this issue.
- 17% of organizations expect to lose more than 50% of current leadership by 2016
- 25% expect to lose more than 20% of leadership
- 68% have no executive team replacement strategy
- Next generation of leaders likely to be at least five years younger
- 43% anticipating a shortage of executives by 2016
The first question that comes to mind is, “What are we doing about it?” I would be interested to know if the answers from these same executives have changed since 2011. This shows a clear lack of succession planning, which is something that we see every day. For some reason most organizations don’t do it. As a leader, one of your accountabilities is to find a top-notch replacement for yourself. We all know this, yet it’s often not done effectively.
Think about these statistics and then think about what you can do to ensure you don’t fall into one of them.
As I mentioned in a recent article, there is currently a leadership gap in healthcare. More importantly, there is an issue with succession planning because of this gap. Or to put it more accurately, this gap has been created because of a lack of succession planning in many organizations.
This will lead to increased external hires for key roles moving forward, which in turn will increase the cost of doing business for these healthcare organizations. Hiring externally is not always a bad idea (and in some cases it is necessary), but it should be done by choice (the organization needs a new direction), not by necessity (the organization doesn’t have anyone ready to take over key positions). It will also have a ripple effect in that, if we don’t engage them quickly, key young leaders will leave their organizations to find better opportunities elsewhere.
But all is not lost. We can start right now with developing better succession plans for key roles. Here’s how to get started immediately:
- Identify the critical roles in your organization. Which roles have the most impact on the success or failure of your organization? Hint: These do not have to be only executive positions.
- Determine the critical outcomes for which those roles are accountable. What is the expectation in terms of results (not just what is being done today)? Remember to focus on results and outcomes, not activities and tasks.
- Determine the skills and background required to perform those roles well. Are the skills and expertise different from what is currently required?
- Identify key performers in the organization and assess their capabilities for the best fit. You want to find the right fit for these key performers to challenge them enough to stay engaged where they can learn and have a positive impact.
- Develop a plan for those key roles. This includes assessing the current people in the role and looking at potential candidates for the role (including your key performers identified in step #4). Who needs to be involved in the planning? What is the transition plan? What is the timing for transition?
- Be open and transparent in communicating the selection process, the criteria and the time line for those critical roles. Everyone in the company should have advanced notice of when a new leader will be taking over and what the transition will look like.
- Know the future vision and direction of the company. This will help with the selection process so you can match the leaders’ skill sets with the direction of customers and the business.
- Begin to decentralize some decision-making. Organizations that give employees the ability to make decisions on their own will be better insulated when someone from the top leaves as there is less reliance on them to make all decisions.
Succession planning is one of the key areas that many organizations need to improve upon. Knowing who the next top managers and executives will be allows you to maintain consistency in the direction of the organization and often makes the leadership transition easier.