Dos and don't s of succession planning

Succession planning is a critical area that determines the direction in which an organisation travels in, say the next fifty years. Most companies say they understand the importance of succession planning. But their actions tell a different story.

Companies tend to overlook or postpone succession planning till the need becomes imminent, or it is never done for key individuals, thus resulting in a compromise to the vision of the company. The fact remains that succession planning needs to be constant process for all key roles that influence the direction of the company, whether you envision an imminent change or not.

Very few organizations have a formal process for actively grooming successors for top leadership roles. Most try searching their available internal or external candidates pool after someone puts in their papers.

It's risky to let succession planning slide, according to experts.  Not having somebody in place when someone in the top management decides—or is forced—to leave can lead to reduced performance and a drop in shareholder confidence.

Here, then, are some key do's and don'ts on how to get succession planning right:

1. Don't wait for a vacancy to start looking. Start the search for a successor the day the new executive starts. Today's volatile markets, rapid technology changes and even burnout due to mounting public pressure can result in the need for a quick change in executive leadership.
2. Do align succession planning with compensation. Stock-based compensation that vests over the long term, meanwhile, helps retain potential successors who might otherwise be tempted to flee for greener pastures. Some companies base top management bonuses in part on how well they plan for succession.
3. Don't look in the rearview mirror. Companies that are performing well have the tendency to pick successors who have behaviors and attributes similar to the current chief executive.

Remember that the company needs different approaches at different times. The best candidate, however, is someone who is aligned with the future business strategy, not the present or the past.

1. And because business needs change frequently, so too should the pool of potential candidates. There is no guarantee that the anointed successor won't leave, so it's always good to have a rolling and updated list of candidates who could eventually fill top positions.
2. Do look for social-media skeletons in the closet. Perform a thorough background check on potential candidates, and make sure it includes social-media outlets such as Facebook and Twitter.

According to Thomas Flannery, leader of the board-services practice at executive-search firm Boyden: "When you're in a public company, there really isn't any privacy."

1. Don't keep succession plans A secret. Corner-office transitions can be risky, so reassure stakeholders yours won't be rocky by including details of the succession plan in regulatory filings, the Conference Board says.

Things to include: roles in the succession process, an outline of the company's career-development program and a description of selection criteria.

1. Do consider soft skills. Because chief executive officers need to be able to understand and work with different types of people, it's important to look for candidates with mental agility and empathy—skills that will make them well-suited to today's rapidly changing global business environment. Leading a company is not only about leadership qualities, but also about the ability to leverage empathy to motivate a wide variety of constituents.