Succession planning and the role of the board
A recurrent challenge with many businesses globally is the failure to adequately plan for succession. Whilst the reasons for this may vary from one institution to another, there is no gainsaying that failure of leadership to plan for the future has far-reaching consequences that go beyond the organisation itself and impacts on economic sustainability and the society.
Succession Planning entails devising a systematic process for ensuring leadership availability, continuity and the development of an organisation’s leadership talent.
Systematic process – there must be a conscious, documented and pro-active process in place for defining and implementing an organisation’s approach to succession planning.
Availability – the process must identify suitable ‘ready now’ successors for the critical roles and leadership positions within the organisation at any material time.
Continuity – succession planning must be linked with business continuity to ensure that the available human capital is sufficiently cross-trained to assume diverse responsibilities and be able to step in and fill critical positions even if on a temporary basis to ensure continuity.
Development – as the saying goes, “success occurs when opportunity meets preparation”. Management must take advantage of every opportunity to develop existing talent and prepare them to assume future, challenging leadership roles within the organisation or elsewhere.
The Board has the primary responsibility for ensuring that an organisation has a practical and implementable succession planning process in place which is applicable throughout the organisation. Typically, the Board would delegate such responsibilities to a Board Committee (usually the Governance/Remuneration/HR Committee) which would receive and deliberate on reports from Management on employee-related and succession matters. The importance of the Board taking direct responsibility for the succession planning process, particularly as it pertains to the succession to the position of CEO/MD and other key executive roles, cannot be overemphasised. To this end, it is advisable that the Board periodically reviews the company’s leadership development program to ensure that the succession planning program is indeed being implemented.
In preparing its Succession Planning Policy, an organisation should give careful consideration to existing talent and where the requisite capacity is lacking, it should not shy away from looking outside the organisation to fill specific positions. Whatever option is expedient, an organisation’s policy on succession planning must be clearly defined, transparent and properly managed to avoid disgruntled employees sabotaging the process.
As organisations are typically established to subsist in perpetuity, the process for implementing the succession planning is a continuous, on-going one. The process is therefore not time-bound. A good Succession Planning process gives assurance to the organisation’s stakeholders that their interests will not be negatively impacted in the event of sudden exits and that the going concern status of the organisation will not be derailed.
Whether at the Board or at Management level, the talent development and management process is incomplete without opportunities for evaluation. Retaining ineffective employees in the system will ultimately prove detrimental to an organisation’s health. A proactive organisation will therefore structure its performance evaluation system around the attainment of set goals and objectives and ensure that periodic performance evaluation is undertaken to enable Management and the Board identify areas of improvement and note the star performers within the organisation both for reward and to optimize the execution of the organisation’s strategy.
Ownership of the succession planning process by the Board has been proven to enhance both organisational process and outcomes. Increased awareness at the Board level about the significance of succession to organisational sustainability will encourage Board members to focus on their own individual and collective professional development to prepare themselves to assume increased responsibilities, be positioned to identify potential successors to key roles more easily which will foster smoother transition to leadership roles.
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Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comment(s) and reaction(s) to firstname.lastname@example.org. DCSL provides Governance Advisory, Corporate Restructuring & Board Evaluation, Board & Senior Management Training, Retreats & Strategy Sessions, Executive Talent Recruitment, HR Outsourcing, Company Secretarial services.