Preserving the future through succession planning

By Sarah Gondoza



REGARDLESS of the context, succession is not a subject that many people are comfortable discussing. It is viewed by many as a topic to be avoided and o

nly to be dealt with when absolutely necessary.


The discomfort arises from varied socio-cultural perspectives. If viewed in negative light, succession seemingly brings closer to home the inevitability of demise which is one of those unpleasant subject areas that most of us would rather imagine as a distant possibility rather than active reality. A more progressive approach is to view succession as a way of proactively ensuring the continuity and preservation of the future.


In business, succession should be properly planned in order to achieve its desired intentions.


Succession planning is a strategic activity concerned with forecasting the organisation’s future human resources requirements using trends. It involves understanding the organisation’s long-term goals and objectives, identifying the workforce’s developmental needs and determining workforce trends.


Succession planning ensures that there are highly qualified people in all positions, not just today, but tomorrow and for years to come.


Succession planning is affected by many factors which include normal attrition and retirement and unexpected events, such as the sudden death or incapacitation of key employees. Poor performance by key employees may necessitate their replacement. Organisational expansions or contractions, entering new markets or mergers and acquisitions may require employees with specific skill to assume responsibility.


Business in Zimbabwe remains extremely challenging and appears to be set to continue being so for a while longer.


Why discuss succession-planning when companies are struggling with survival and are fire-fighting daily? Some may even question the relevance of succession planning in the current operating environment where skills flight has reached alarming proportions. However, the fact that several local companies are currently dealing with unanticipated succession crises illustrates its importance. It is therefore my considered view that succession planning remains a critical activity for companies that have a vision for the future beyond the current economic crisis.


Succession planning ensures that companies have appropriate individuals ready to assume key positions when vacancies either anticipated or unforeseen occur. Experts agree that organisations with clear succession management practices and the capability to carry them out typically outperform the competition. The following discussion considers best practices that leading companies have successfully used to address succession planning:


Continuity


It is inevitable that business leaders and key employees will leave the companies they work for. The departures can be abrupt and unexpected or they can be anticipated, as in a planned retirement. But no matter the reasons behind the departures, a company can better control its destiny if it has a planned, orderly method in place to address vacancies brought on by the departure of key employees.


Companies that have a strong succession plan are less vulnerable during times of leadership transition than companies that have not addressed succession planning. With strong succession plans, companies can fill positions quickly and effectively, ensure high levels of productivity, keep employee morale high, and maintain stakeholder confidence. To assure leadership continuity, companies identify important positions that need to be filled with strong leaders, focus on important competencies for leaders to possess, pinpoint candidates whose skills could be developed to step into key roles, identify more than one individual who could potentially assume each key position, and assess the progress of candidates with leadership potential.


Embracing succession


CEO’s and other executives are faced with daily obligations of running a business, so it is understandable that they find it difficult to find the time to address succession planning. Yet, ignoring succession planning can have dire consequences. Companies that lack clear succession plans face uncertainty that can create problems for stakeholders and stressful situations for the executive leadership team.


The departure of any high-level executive or person holding a key position has a strong impact on a company’s strategy, operations, culture, morale, and ability to execute strategies to achieve its objectives. Chief executives and boards of directors who take an active role in succession and career planning are able to mitigate these risks. At leading companies, the board routinely includes succession planning on its agendas and stays in close contact with individuals in the leadership development pipeline.


Deterniming succession planning


Companies must take the time to understand what factors affect the hiring process for key positions. By staying up-to-date on issues affecting succession planning, companies are better able to respond to or anticipate workforce demographic factors that could affect the hiring process and consider potential situations that might result in a change in leadership or company direction. Today’s population trends mean that statistically fewer individuals are available to fill job vacancies in high-level or key positions.


Talent pipeline


Succession and career planning involves developing internal candidates who will be able to step into key positions when vacancies occur. Companies need to focus on identifying, developing, retaining, and deploying future leaders for key positions within the company. One of the most effective ways to accomplish this is by providing
learning opportunities to key individuals.


Transition


Statistics indicate that more than 50% of organisational knowledge is informal expertise held in the minds of workers and hard to capture and codify. Of this individual professional knowledge, almost 80% is lost when an employee leaves a company. Therefore, knowledge loss is a very real consequence of attrition, creating a significant concern in succession planning activities. When organisations undergo attrition, vast amounts of knowledge and experience walk out of the door as seasoned employees depart. To mitigate the loss of valuable information, companies take steps to extract key knowledge before the possessors of that knowledge leave, and to transfer the expertise to others in the organisation.


In developing an effective succession plans, organisations must consider the four auditable succession planning risks which are:


Vacancy risk — risk of critical positions remaining vacant;


Readiness risk — risk of underdeveloped successors stepping into critical roles;


Transition risk — risk of poor assimilation of executive talent into critical roles and;


Portfolio risk — risk of poor deployment of talent against business goals.


Succession planning is clearly an important aspect of business success and continuity and as illustrated by the foregoing cannot be relegated to “any other business” section of the agenda.


* Gondoza is an advisory manager (human capital & leadership).


Disclaimer: This publication contains information in summary form and is therefore intended for guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgement. Neither PricewaterhouseCoopers Zimbabwe nor any other member of the global PricewaterhouseCoopers organisations can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. For further information or comments please contact Marketing on marketing@zw.pwc.com or 338362-8