Great leadership is the hallmark of a successful business. In today’s dynamic market, it’s critical to ensure that the right talent is on deck as organizations shift and expand. However, business leaders have a lot of work to do on talent development and succession planning.
In the Global Leadership Forecast 2018 by DDI, The Conference Board and EY, more than 1,000 C-level executives said their biggest concern is developing next-generation leaders (64% globally and 79% in Canada), followed by failure to attract and retain top talent (60% globally and 55% in Canada). Yet, only 41% believe their organization’s leadership development program is high quality.
Human resources professionals’ assessments were lower than the C-suites’ views. Among the 2,500 HR professionals surveyed, 65% do not believe their organization’s leadership development program is of high quality. In addition, only 35% rated their organization’s bench strength—the supply to fill critical leadership positions over the next three years—as strong. On average, HR professionals said only 43% of positions could be filled by an internal candidate immediately.
There are serious risks to not having a succession plan, including financial costs (for example, stock declines due to the sudden departure of a CEO, or the cost of not filling a position quickly); loss of legacy knowledge; culture impact due to internal power struggles or low morale; and employee turnover, as those interested in leadership roles may be overlooked and go elsewhere.
Conversely, there is a wide range of advantages in having a succession plan. Research from Deloitte found that in addition to the obvious benefit of having a steady pipeline of leaders ready to step into new roles, the benefits include: enhanced career development for emerging leaders, driving greater engagement and retention of top talent; a stronger organizational culture; and a “future-proofed” workforce that is better prepared to thrive in dynamic and different conditions. 
There is certainly a pressing need for organizations to make succession planning a top priority, but it can be a complex, time-consuming undertaking. Here are five keys to help ensure a smooth and successful process:
- Start now. The need to find new senior leaders can arise suddenly for many reasons. The sooner a succession plan is place, the less disruption there will be to the business. From a long-term perspective, developing employees for future leadership roles takes time and Identify and develop talent now, so they’re ready to step into leadership roles when the time comes.
- Provide strong support at the C-suite level. HR leaders play a key role in succession planning, from identifying top performers to anticipating future business needs. However, without strong C-suite buy-in and support, the initiative is a non-starter. Senior leaders should provide direction, guidance and support throughout all facets of leadership development and the succession planning process.
- Look beyond senior leaders. Those that identify leadership potential early in people’s careers will reap the rewards. Organizations that extend the development of high-potential talent below senior levels are 4.2 times more likely to financially outperform those that don’t, according to the Global Leadership report. When businesses make a succession plan part of their culture, the result is increased engagement and retention, as everyone is working toward future roles.
- Get guidance from a professional. Many businesses don’t know where to begin or don’t have the time and resources to develop their succession plans. An outside firm can help. Bedford, for example, provides strategic guidance and ongoing support to organizations by proactively building relationships with top talent; providing real-time benchmarks for internal talent; and developing a full talent-scouting research report, to name just a few.
- Commit to the long term. Once you develop a succession plan, make sure you have the time and resources to put the plan into action. Create strategies for implementation and measure for success. Succession planning is not a one-time project: review the plan annually and make the necessary adjustments.
While business leaders certainly think about succession planning, it’s time to put it on the top of the to-do list. As talent continues to be an organization’s key differentiator, a strong succession plan is a roadmap for continued success.