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 organization 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 organization’s leadership talent.
- Systematic Process – there must be a conscious, documented and pro-active process in place for defining and implementing an organization’s approach to succession pla
- Availability – the process must identify suitable ‘ready now’ successors for the critical roles and leadership positions within the organization 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 organization or elsewhere.
The Board has the primary responsibility for ensuring that an organization has a practical and implementable succession planning process in place which is applicable throughout the organization. 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 overemphasized. 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 organization should give careful consideration to existing talent. To enable the Board undertake an assessment of middle management capacity, this cadre of staff should have periodic interaction with the Board – reporting responsibilities at Board and Committee meetings. The responsible Board Committee should periodically review internal capacity and plans to bridge identified gaps. Adequate training, coaching and mentoring programmes should be put in place and carefully executed.
Where the requisite capacity is lacking, the Board should not shy away from looking outside the organization to fill specific roles in the event of unanticipated exit. Whatever option is expedient, an organization’s policy on succession planning must be clearly defined, transparent and properly managed to avoid disgruntled employees sabotaging the process.
As organizations are typically established to subsist in perpetuity, the process for implementing the succession planning is a continuous, ongoing one. The process is therefore not time-bound. A good Succession Planning process gives assurance to the organization’s stakeholders that their interests will not be negatively impacted in the event of sudden exits and that the going concern status of the organization 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 non-performers in the system will ultimately prove detrimental to an organization’s health. A proactive organization 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 organization both for reward and to optimize the execution of the organization’s strategy.
Ownership of the succession planning process by the Board has been proven to enhance both organizational process and outcomes. Increased awareness at the Board level about the significance of succession to organizational sustainability will encourage Board members to focus on their own individual and collective professional development to be positioned to identify potential successors to key roles more easily which will foster smoother transition to leadership roles.
On Thursday, 4th October 2018, DCSL will be hosting a Masterclass themed “Enthroning Good Corporate Governance for Microfinance Banks”. Kindly contact ntaiwo@dcsl.com.ng or 08037699347 for registration and further details.
Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comments and reactions to badeyemi@dcsl.com.ng.