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How to Reduce the Risk of Future Failure by Using Effective Succession Planning

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How to Reduce the Risk of Future Failure by Using Effective Succession Planning

Thursday, June 26th, 2014

When succession planning it is important to choose a successor that fits well within the organisationThe recent debacle at Manchester United shows how important the need for succession planning is. The decision to allow Sir Alex Ferguson to anoint his “chosen one” successor, David Moyes in the role without a full and open recruitment process did not prove to be a success. Obviously there were other mitigating factors contributing to the failure but it does look from the outside that perhaps the wrong person was chosen.

Those with longer footballing memories will remember the debacle of Brian Clough’s forty four day tenure at Leeds Utd when he replaced Don Revie (who in turn was not an amazing success in the England job!). It was clear now that there was a colossal clash of cultures with Clough going to Elland Road, so just choosing the then most successful manager, to run the then most successful club wasn’t as obvious decision as it appeared at the time. In fact Leeds lost their position of dominance as a result.

So it’s clear that either handing succession planning to the current incumbent or just grabbing what you think is the best candidate out there without a considered approach is probably not the best idea.

How to Choose the Right Person to Succeed You

Interestingly most organisations don’t succession plan very well. This probably goes back to the fact that many don’t do thorough risk management. Within a process of evaluating risks the issue of what happens to key staff should loom large. The chance of this happening, the effect of it, plus the proposed solution and who is responsible for carrying it out is essential as part of the risk management process.

This risk management is essential both in owner managed “family” businesses and particularly charities, where all too often the Director of Chief Executive leaves and the Chair is left holding the baby after the notice period has been served and before a new incumbent can be found. This places even more pressure on the recruitment process and the temptation to “cut corners”. In a family business it’s key to be developing family members over a long period of time so that they can build up the knowledge and experience to be a success in the roles they and the owner would want them to do. It’s also essential that they are supported by the right cadre of senior staff to make their appointment a success.

Risk management should be part of the “Management Review” system that is built into the processes and procedures that determine the operation of the enterprise.

So the key to start with in succession planning must be to have evaluated the risks to the enterprise of key staff leaving and have a plan in place both temporary and long term to manage it. Both the Chair and The Chief Executive should discuss this at regular intervals to determine strategy.

When a key member of staff leaves it’s not always straightforward that the individual is replaced by a “clone”. It could be an opportunity to change the management structure or bring in someone with a different set of skills and approaches that will help develop the enterprise strategically. Aligning the recruitment to strategic direction is key. “Buggins’ turn” or promoting from within or grabbing someone quickly from outside will not do.

The 9 Keys to Effective Succession Planning

1.   Have key staff positions as an integral part of the risk management process

2.   Evaluate and quantify the risks of losing key staff

3.   Have a plan in place to deal with those risks that is in alignment with the strategy of the enterprise

4.   Structure times to regularly review the plan

5.   If it happens take the time and effort to manage the recruitment (or promotion) process properly

6.   Make sure that the definition of the role and the experience and personality of the person to do that role aligns with the strategy

7.   Use external help or opinion to test and evaluate your thoughts and approach

8.   Consider restructuring your team as part of the process. A person leaving can be an opportunity not only a threat.

9.   Make sure that the person recruited fits the dynamic of the team and the way you want the team to develop.

 

image via toddwshaffer

Read more about Succession Planning in our white paper which explains what organisations can do to help implement a plan.

 

Download our succession planning white paper

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David Seall - Chairmen of the Board of Practice for Ramsey Hall

David Seall is well known to many businesses across London and the South East as an Independent Director and Chartered Engineer specialising in the Manufacturing and Engineering sectors. David worked for many years in the Aerospace and Defence industry and was Chief Executive of the Engineering Employers Federation for London and the South East (EEF South) for over 10 years, working with hundreds of companies.


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Ramsey Hall’s Succession Planning Article – Building the Organisation of the Future

Tuesday, December 6th, 2011

Are you looking at the future of your business? Why not read our article on Succession Planning, published in December issue of Executive Grapevine.

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 Succession Planning Article

Objective Succession Plans Improve Business Performance

Friday, October 21st, 2011

 

When organisations complain that they cannot get the skills they need and are hampered by their inability to ‘import ‘ talent from abroad, they need to step back and see how they can grow their own capabilities for long term success.  More often than not, CEOs complain to us that their bench strength is insufficient, yet many insist on promoting employees on the basis of ‘craft skills’ alone.  This should be avoided as leadership requires much more than this and invariably organisational performance suffers.

Our tip is to take a futuristic approach by taking a strategic look at the future needs of the business and to identify the key roles and ‘pools ‘of jobs required for organisational success. You need to either design or review your competency framework to provide an objective basis for assessment, development and, if required, recruitment.  Once a pool of potential candidates is identified, we would recommend a capability development centre is designed to assess the participants against your required competencies.

When this objective data is gathered it can be compared against actual performance and appraisal data to identify high potential.  We call this a ‘Bench Strength Review.’ At the same time individual participants can be given their personal development plan from which to begin the capability development process.

Is it worthwhile in such unpredictable times? Well without a succession plan you risk failing to identify and harness your best talent.  Or worse, your competitors reach out and attract your best talent leaving your organisation back at square one!

We have prepared a more detailed paper on succession planning.  If you would like a copy please call, Matthew Davis on 02380 236944 or email medavis@ramseyhall.com

Understand your Talent…

Friday, January 14th, 2011

Only a few days into 2011 and we are witnessing a sea change in thinking from clients who have realised that the best way to make efficiency improvements is to maximise the performance of their people. Rather than simply look for cuts in HR, marketing or operational expenditure as a way of improving ‘bottom line’ performance, talent management is taking off.

Historically, difficult times means retrench and cease ‘non essential spending’.  The sea change we are seeing is that many organisations are looking at how they can support their teams to exceed customer expectations. The net effect is that the client retains its customers, whilst also developing the capability and performance of their teams and the business as a whole. It’s a ‘win win’ situation where business performance is placed high on the corporate agenda and the development of people offers career opportunities for employees.

60% of senior hires are externally sourced

Research shows that for senior hires a typical firm will recruit 40% from within and 60% externally.  Our research shows that when benchmarking internal applicants against a wider external pool, a large percentage of the 40% are less equipped that their external counterparts in areas such as leadership and management competencies. Rather they rely on ‘craft skills’ which have made them valuable to the organisation to date. Promote this 40% into roles that they are ill equipped for and the result; poor job performance, low morale and possible damage to business performance and growth.

Typically it costs £15,000 + for a senior hire. It’s expensive, time consuming and costs can escalate when many poor performers, who have been over promoted and under supported, leave the business.

Great news for our Executive Search Practice but is it good for your business?

Understand the capabilities

What is surprising is that a large number of organisations do not appear to understand the capabilities and development needs of their own managers and leaders.  Without this knowledge,  it is difficult to make informed decisions about their top talent, let alone enable those businesses to address long term performance issues.

Businesses may claim to understand the current performance level of their people but how many firms do you know who truly understand the potential of their people?

Addressing people issues

Ramsey Hall and The OPG has extensive experience of working with clients to address people issues such as poor performance, low staff engagement and leadership challenges.  The journey starts with an objective assessment of current capability, future business needs and an understanding of what it takes to succeed in client organisations.  Typically this is through development centres, psychometrics or 360 degree feedback and is supported with a structured executive appraisal/competency interview.  We then prepare individual feedback reports for participants and an overall organisational development report with a Gap Analysis where appropriate.  At board level this can include corporate governance advice and guidance.

At a more tactical level , the service generally includes organisational development advice such as job redesign, succession planning and learning & development guidance by analysing the data obtained.  Increasingly popular is our personal development planning and executive coaching consultancy which helps participants self develop through increased awareness and guidance what can be achieved through changing behaviours.

M & A activity

Using objective assessment is not just about current performance or activity.  Our services include expertise as part of mergers and acquisitions (M & A) activity, particularly as part of the management due diligence process or preparation for business sale.  After all, would you invest in a poorly managed business without having the knowledge to make changes given the importance of your human resources to company success? Do you need to develop your senior people before selling to maximise return?

For more information call Matthew Davis on 02380 236944