article by Dr. John Sullivan and Master Burnett Succession planning is an interesting concept with great potential ó if only it were used to do what it was designed for. The unfortunate truth surrounding succession plans, however, is that most are nothing more than out-of-date, static documents ó rarely referred to, and with little exception, never executed. From an observer’s perspective, it appears that most succession planning efforts are nothing more than staged processes to lure up-and-coming leaders into a false sense of job security and form part of the business case that lets the leadership development function spend a fortune on career coaches, custom education development, and opulent retreats. This is clearly a case of HR practitioners pandering to the wants of a few versus the needs of the organization, and someday soon such gluttonous actions will wreak havoc. Small- and medium-sized organizations are already very aware of what not developing leadership bench strength can mean to the organization. Across the United States, and the globe for that matter, there are thousands of businesses that today are nothing more than shells of what they once were, thrown into periods of spiraling decline caused by the absence of engaged leadership. The problems which strike family-owned businesses that arise when there is no family left interested in assuming the reins are no different than those that impact large conglomerates, who find that after years of focusing on the product, they haven’t developed any replacement leaders with the right mix of skills and knowledge to run a division or even a facility. Lack of Leadership Bench Strength: A Growing Problem As the second phase of the War for Talent slowly builds momentum, more and more firms are going to experience havoc directly related to the absence of leadership bench strength. The problems that have crippled smaller firms historically will establish a footing in every major enterprise, as the competition for management and leadership talent reaches an all-time high. Driving the demand for such talent are a number of issues, including:
- The impending retirements of baby boomers (i.e. the aging workforce)
- The increased turnover resulting from a growing economy
- The surge in interest of becoming an entrepreneur
- The lack of upward promotions available in recently merged or otherwise “lean” firms
- Continued global expansion, which requires leaders with broader skill sets
Most organizations have no effective strategy that can realistically address this. The dominant strategies and tools that power succession planning were designed around the assumption that your organization has a sufficient volume of internal candidates suitable for development and the opportunities to actually development them as needed. In most cases neither assumption is accurate, regardless of what your firm’s development experts may tell you. Patching a Critical Flaw in Succession Planning The problem with traditional succession planning approaches is that they often rely solely upon the opportunities for development that exist within the walls of their organization (i.e. job assignment) or that can be purchased (i.e. training). While this sounds fair, the scope of all opportunities that exist inside the organization is often not grand enough to impart developing talent with the right skills needed by the organization at the right time. Since many organizations have become ultra lean, it has become more difficult to develop talent through job assignment, a problem that not only impacts skill development, but also job satisfaction. What is needed to remedy this lack of opportunity is a succession plan with a much broader scope ó in short, one that takes into consideration development opportunities such as job assignment outside the traditional boundaries of the organization. This expanded form of succession planning is logically referred to as “external succession planning.” External Succession Planning Is Not a New Idea There are few new ideas when it comes to talent management or succession planning; in fact, most management trends or developments are nothing more than repackaged concepts or processes uncovered by someone bold enough to look back in history and realize that few challenges have yet to be encountered and solved by someone before. While the ideas presented here might seem new, in reality they are practices which drive some of the best succession planning and talent management practices inside global organizations whose names are easily recognizable. What has kept the concept of external succession planning relatively obscure is the boldness of the concept itself. When it comes to talent management, most firms shy away from being bold! What Exactly Is External Succession Planning? The name is pretty much self-explanatory: external succession planning is much like traditional succession planning, with the exception that the scope is expanded to include both external talent and job assignment opportunities for development outside the organization. On the surface, you might think external succession planning is a rarely used tool; however, seeking out external talent for leadership positions is certainly not a new concept. Almost all major organizations routinely use executive search firms to identify external talent for leadership positions. While these efforts are generally undertaken “just in time,” or as a reaction versus a proactive component of the succession planning process, the practice itself is not foreign, just its implementation and coordination with other activities. For example, many Fortune 100 companies identify potential CEO candidates from other firms to supplement their own internal list. These candidates are identified and assessed well in advance of a specific need. Incorporating such talent on the succession plan is without a doubt the most common element of external succession planning in practice, but it is not the most valuable. In addition to incorporating external talent in the succession plan, external succession planning looks for development opportunities in the form of job assignments outside the boundaries of the traditional organization. Such opportunities could occur with customers, vendors, strategic partners, and ó if you are really bold ó even competitors. This component of external succession planning, in conjunction with incorporating external talent, patches a critical flaw in traditional succession planning and leadership development efforts: the shortage of relevant development opportunities. As leaders advance through the ranks of the organization, even relatively flat organizations present a declining number of avenues for development. It’s the nature of the hierarchical organization that gets in the way. Expanding those development opportunities to include job assignments outside the organization removes the barriers imposed by hierarchy and could strengthen the business relationship with the organizations you partner with in the process. This is an implementation of what has been previously called “boomerang” programs, where firms continually track former employees (corporate alumni) and then try to bring them back into the company into leadership roles, post external development. Example: “Up-Out-Up” An oil company utilized an “up-out-up” program for succession planning and talent development. The program required individuals to leave the organization and work inside either a customer or strategic partner before they could be considered for promotion to a senior management role. The goal of the program was to expand the viewpoint from which the participants approached their industry as well as to leverage available skill development opportunities through job assignment that could not be mimicked internally at the time. The company found that this program not only allowed participants to gain valuable skills and knowledge that could be applied internally from the customer or partner organization, but also strengthened the bond between the two organizations. When participants succeeded at the outside firm, it was additional validation of their excellence and their potential. While some would consider this approach risky, it provided the company with well-trained talent that would have taken longer and cost more to develop if done solely on an internal basis. The Advantages of External Succession Planning There are many advantages to including talent and job assignment opportunities that exist outside your organization in your succession planning efforts. Some of them include:
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- A customer or strategic partner might be able to offer opportunities that would involve skill development that your organization could never offer, because their scope or proximity to the end user of the product or service your industry provides is closer.
- Talent that has worked outside your organization could be exposed to management methodologies, systems, and approaches that differ from those used internally, providing a diverse viewpoint from which they could determine what actually constitutes a “best practice.”
- Incorporating talent from outside the organization, even if it is boomerang talent, creates the foundation on which someone may actually question why you do something the way you do, driving innovation.
- By leveraging job assignment opportunities to drive development, you could potentially eliminate expensive training, coaching, and executive education costs.
- Plain and simple: it enables you to better understand the workings of those firms you interact with and identify new ways to work better together.
If you are like most intelligent people, you are probably foaming at the mouth with all of the opportunities such a program could provide your organization right now! Part 2 of this article series will discuss the high-level steps necessary to implement external succession planning in your organization.