How to develop senior leaders through succession planning

Effective leadership plays a fundamental role in an organisation’s sustained success and senior leaders are responsible for steering organisations towards their strategic objectives, utilising their vision, experience, and wisdom to drive success and innovation. 

However, changes in leadership teams are inevitable. Whether through retirement, promotion, or unforeseen circumstances, it is vital to adopt a proactive approach to sustain and elevate leadership excellence within an organisation. With a solid succession plan identifying potential future leaders and nurturing their talents, you’ll be well-equipped to effectively deal with leadership transitions.

In this guide, we’ll delve into why succession planning is essential for an organisation's continued success. We’ll also take a detailed look at the most effective succession planning strategies that your company should implement to future-proof your executive recruitment efforts.

Why succession planning is key for long-term success

Succession planning is a crucial process for organisations to ensure a smooth transition of leadership and maintain a pipeline of qualified individuals to fill critical roles. By proactively identifying and developing potential successors, businesses can effectively manage talent, mitigate risks associated with unexpected departures, and foster a culture of continuous leadership development.

Despite the importance of identifying and nurturing future senior leadership talent, many companies neglect to put a solid succession plan in place, leaving themselves vastly underprepared when executives decide to leave their roles. Research from Grant Thornton into FTSE 350 companies revealed that 46% of companies provided scant detail on succession planning, and a mere 29% of them considered succession planning a priority.

Whether it’s due to complacency or a lack of understanding, it seems that many companies are unable to facilitate effective succession planning. Therefore, it is apparent that companies need to do more to implement coherent and detailed succession plans. Failing to do so carries many risks, including:

• Uncertainty and disruption when a leader suddenly departs.
• Demotivation of high-potential employees who may be seeking C-suite roles.
• Concerns from investors and stakeholders.
• A negative impact on decision-making and performance.
• Internal conflicts and power struggles among executives.

In order to mitigate these challenges, it is imperative for businesses to establish well-thought-out succession plans that identify potential senior leaders, address concerns from stakeholders, and ensure a smooth transition when leadership changes occur.

What are the advantages of establishing a succession plan?

With an effective succession plan, your organisation can expect an array of key advantages, particularly in relation to your financial stability. According to research from the Harvard Business Review, better succession planning could help to increase annual company valuations and investor returns by up to 25%. As well as providing enhanced financial value for your organisation, establishing leadership succession plans offers numerous other benefits, such as:

• Continuity and stability: With a well-defined succession plan, your business can expect a swift transition of leadership when key executive positions become vacant. This seamless continuity will help you to maintain stability within your organisation, boosting the confidence of your employees, stakeholders, and customers.
• Maintaining company knowledge: Succession plans typically involve knowledge transfer between outgoing senior leaders and their successors. Ensuring that expertise is passed down to incoming executives is vital for preserving your business’ intellectual capital and preventing the loss of potentially vital information.
• Cost savings: Proactive succession planning can save costs associated with external recruitment processes for executive jobs. Developing internal talent is often more cost-effective than hiring external candidates, as it reduces recruitment expenses and onboarding time.
• Enhanced innovation: Developing a diverse pool of potential leaders through succession planning brings in fresh perspectives and ideas. This diversity of thought can foster greater innovation, making your team better able to overcome unforeseen issues and evolving market conditions.  
• Talent retention: By providing highly talented professionals with senior leadership positions, your organisation will be demonstrating that you reward those who put in the hard work. This culture of recognition will likely encourage exceptional talent to remain at your company.

Attracting and retaining exceptional talent in the field of executive recruitment is no easy feat, not least due to challenges such as a shortage of qualified talent, evolving candidate demands, and fierce competition for top applicants. Read our ‘How to Attract and Retain Talent for Senior and Executive Jobs’ blog to discover more about how your organisation can hire the best and brightest senior leaders.

Nurturing executive talent through succession planning

Recruiting executives can be somewhat daunting, particularly due to the difficulties companies commonly experience when looking for potential senior leaders. Not only are rival companies competing for the same candidates, but many of the most impressive executives are passive candidates, meaning that they are not actively seeking employment elsewhere.

Identifying and nurturing potential senior leaders within your organisation through succession planning is most certainly an effective strategy for overcoming the difficulties associated with external executive recruitment. Figures published in DDI’s Global Leadership Forecast reveal that internally trained leaders succeed 65% of the time compared to 52% for externally hired executives. These insightful statistics suggest companies that place their own high-potential employees into leadership roles experience a higher success level - a compelling reason why your organisation should establish a leadership succession plan.

Here are the key strategies that your business should adopt to develop your exceptional talent to prepare them for executive jobs:

1. Identify employees with the highest potential early on

Identifying employees with high leadership potential is essential when creating a succession plan. By working out which employees may make the best senior leaders and helping them develop their leadership capabilities, you’ll be well-positioned to replace departing executives efficiently and seamlessly. It’s important to bear in mind that leadership potential can show itself in a multitude of ways, so making sure that you adopt a comprehensive approach that considers various skills, behaviours, and indicators is crucial.

High-potential employees can be identified by three key indicators: ability, social skills, and drive. While recognising leadership qualities in team members should be done on a case-by-case basis, these three areas are general markers that signify whether someone has what it takes to become an effective leader.

Here are the top strategies you can employ to spot those who have the skills required to take on executive jobs:

• Conduct performance reviews: Conducting frequent performance reviews that evaluate employees is an effective method for pinpointing exceptional talent among your potential leaders. Look for those who consistently go above and beyond in their roles, take initiative, show problem-solving skills, and demonstrate a strong work ethic.
• Utilise assessment centres: Use assessment centres to evaluate various competencies like decision-making, communication, problem-solving, and teamwork. These simulations or exercises can help identify employees who exhibit leadership traits, allowing you to develop a talent pipeline.
• Offer 360-degree feedback: Gather feedback from peers, subordinates, and supervisors to gain a comprehensive view of an employee's abilities, strengths, areas of improvement, and leadership potential. This way, you’ll get a sense of how your other team members would feel about promoting a high-potential employee to an executive position.

Once you have identified the individuals likely to thrive in your executive team, you can implement your succession plan. If you are finding it challenging to develop a leadership succession plan that aligns with your business needs, reaching out to a third party for expert support in senior and executive recruitment would be an astute move.  

2. Create tailored development plans

When it comes to nurturing the leadership qualities of potential leaders, it is vital to adopt a personalised approach. You should tailor bespoke development plans for the high-potential employees you identify, ensuring each plan covers their individual strengths, pain points, and ambitions. Tailored development plans should be designed to address each employee's unique needs and aspirations, with the goal of supporting them to grow into senior leaders.

Not only does creating development plans help to nurture leadership potential, but they are also effective in boosting talent retention. Research shows that the demand for personalised development plans from employees is growing, with 91% claiming to want bespoke training programs and 94% stating that they would be willing to stay at a company longer if they invested in learning and development.

Executive-level candidates are certainly not exempt from this trend, and employers must consider this fact when it comes to outlining their succession plans.

Here are the key components of a tailored development plan for potential leaders:

• A summary of an employee’s goals and objectives.
• An assessment of strengths and areas of improvement.
• A timeline that identifies development activities and when they should be achieved.
• Opportunities for regular feedback and check-ins with managers or mentors.
• A detailed list of resources that support the employee in learning more about the world of leadership.

3. Provide stretch assignments

Exposing high-potential employees to assessments and scenarios that evaluate how they would deal with real-world managerial challenges is an effective method of testing their leadership skills. Stretch assignments offer opportunities for future senior leaders to step out of their comfort zones, take on challenging tasks, and even acquire new skills that will aid them in their path to becoming C-suite professionals.

Research from the Center for Creative Leadership that looks into the value of experiential learning for executive candidates found that 70% of leadership development occurs through challenging stretch assignments. This key finding indicates just how effective stretch assignments can be in developing an individual’s leadership skills, as they can evaluate how someone would cope with the responsibilities that senior leaders have to deal with daily.

Instead of providing candidates with generic experiential learning tasks, you should take time planning stretch assignments that are specific to your organisation. Be sure to assign them to high-impact projects and roles that are beyond their current responsibilities. These projects should require them to develop new skills, lead diverse teams, manage complex situations, or work on strategic initiatives.

4. Routinely monitor and adapt your succession plan

Routinely assessing and adapting your succession plan to suit the dynamic needs of your organisation is critical. Even the most well-thought-out succession plans are subject to change, especially given the unpredictability of factors such as market changes, technological advancements, and unexpected resignations. By consistently monitoring, evaluating, and adapting your succession plan strategy, you can ensure it remains aligned with your organisation's goals and effectively prepares future leaders to step into key roles.

Succession planning research from LinkedIn reveals that the CEO turnover is currently the highest it has been for the past two decades, with the average tenure of a senior executive being fewer than 5 years. This eye-catching finding highlights the fluctuating nature of executive recruitment and why it is so crucial for companies to be flexible enough to modify their succession plans when rapid and unforeseen change happens.

Here are the steps your organisation should take to ensure that your succession plan remains up to date:

• Carry out regular reviews: Scheduling regular reviews is useful for determining whether your succession plan needs any adjustments. These check-ins could take place quarterly or annually, depending on your company’s needs. Be sure to address these key questions - Are successors adequately prepared? Are there any gaps in the plan that need addressing?
• Gather feedback from employees: Asking your employees about how they view the current succession plan strategy is another valuable way to assess whether changes need to be made. You could send out surveys, conduct interviews, or assemble focus groups to gather a variety of perspectives.
• Continuously assess risk: Unexpected risks such as unforeseen departures or market fluctuation can force your company to implement your succession plan. To remain resilient enough to deal with all eventualities, it is imperative to carry out regular risk assessments of your succession strategy, putting any necessary contingencies in place if required.

Developing senior leaders via succession planning: key takeaways

The significance of effective leadership and robust succession planning cannot be overstated. The successful transition of leadership is pivotal for organisational longevity and sustained growth, and neglecting this critical aspect could lead to a multitude of challenges, including disruptions, talent drain, and diminished performance.

Establishing a comprehensive succession plan is not merely a precaution but a strategic investment in an organisation's future. It not only ensures a seamless transfer of leadership but also cultivates a pool of capable individuals ready to step into key leadership roles.

By embracing succession planning and diligently implementing the strategies we have outlined in this guide, organisations can fortify themselves against disruptions and pave the way for sustained success in the evolving business realm.

Specialists in senior and executive recruitment

Established in 2002, Sellick has been at the cutting edge of providing senior and executive recruitment services for many years. With expertise in matching exceptional talent with executive jobs throughout the country, our specialist team deeply understands how to support companies in hiring stand-out candidates for their leadership positions.

Reach out to us today to learn more about how we can help you achieve your recruitment ambitions.