Against a backdrop of disruption and change, succession planning has become a top priority. Organisations must be able to secure a broad and diverse range of talent, and possess the agility to respond quickly to unforeseen circumstances.
Succession planning has acquired such importance at Executive level that it has attracted the attention of regulators and shareholders. In the UK the Financial Reporting Council (FRC) has recommended in its December 2017 consultation on the Corporate Governance Code that the Nomination Committee plays a more active role in overseeing succession at the Executive level.
In this Overture we set out, based on Fidelio’s experience as an Executive Search and Board Development firm, five steps we see our clients and other leading organisations taking to ensure effective Executive succession planning.
1) Establish accountability: Each senior Executive is accountable for her or his formal succession plan. This should clearly be in line with the longer term direction of the organisation. Importantly, each senior Executive should have in place a short term succession plan, in effect contingency cover, ensuring that in unforeseen circumstances a successor is in place. Investors of quoted companies, as well as the Nomination Committee, should be probing this level of accountability and cover.
2) Define the objectives: Succession planning is not just about providing short term cover. It also provides an opportunity to align the Executive talent pool to the future needs of the organisation, ensuring a leadership team that is fit for tomorrow, not just today. This requires clear thinking and heavy lifting up front. Fidelio’s Executive Search process is predicated upon defining the deliverables for a role, and how it aligns with the corporate strategy. For example, in the automotive sector major manufacturers are working hard to attract fresh thinking and experience from Silicon Valley. Laying a clear direction for succession planning is an essential component of the delivering strategic objectives.
3) Evaluate the landscape (internal and external): Effective succession planning requires a comprehensive understanding of where talent resides within the organisation, hence the need for thorough and rigorous mapping. This is key to ensuring that existing skills are being well-deployed, and that broader talents are not being overlooked or kept under a bushel.
With regard to the Executive Committee, one tool for reviewing the pipeline is Evaluation. Drawing upon the experience and learnings from Board Evaluation, Fidelio is seeing increasing interest among leading organisations keen to develop the effectiveness of the Executive Committee and to ensure succession planning through a bespoke Evaluation of the leadership team. In this context Fidelio partners with clients to identify the strengths of the leadership team, and “white spaces” which forms the basis for targeted development and succession planning.
4) Provide development: A critical component of effective succession planning is the development of talented Executives through both formal and informal learning. Organisations that are forward-looking will have a pipeline of talented Executives who have the capabilities to step-up and are outward-looking and open to learning. This “outward-looking” characteristic is important for future business leaders who will need to engage effectively with shareholder and stakeholders, as well as managing their expectations. Increasingly we are seeing corporates nominating their most senior female Executives to attend “A Seat at the Table”, which includes a focus on network and Board learning, as a critical step in their development towards taking on group Executive and board roles.
5) Define the role through deliverables: Succession planning frequently involves turning to the market both to identify fresh skills and experience, and for benchmarking purposes. When hiring, externally organisations must think strategically to attract the best available talent – such talent is typically scarce and therefore cherished. Successful candidate engagement strategies are predicated upon creating a compelling candidate brief.
The candidate brief will market and position the role accurately and should outline how the role supports the corporate objectives. Importantly, the Hiring Committee should be aligned and agreed regarding what the role needs to deliver; this will manage candidate and employer’s expectations for the role and form the basis for defining success. Fidelio takes this as a starting point for each Search, facilitating alignment of the Hiring Committee to define the role and process.
The quality and clarity of attracting external talent is a key component of effective succession planning.
Conclusion
Short term change and disruption is clearly a major challenge for organisations; effective succession planning is a key navigation tool. The focus on succession planning by regulator and government is no coincidence. There is a clear link with achieving diversity. Indeed Fidelio argues that shareholders would do well to interrogate companies more closely regarding the robustness of their succession planning and how it aligns with strategic objectives. This is surely a highly relevant signal for those interested in future outperformance.
Bringing Fidelio’s perspective from Executive Search, this article has outlined the five steps necessary for successful succession planning: establishing accountability, defining the objectives, evaluating the internal landscape, providing development and ensuring clarity.
If you wish to learn more about how Fidelio supports clients in implementing effective succession planning – through Search, Development and Evaluation – then please do get in touch with Emily Baker or call us on +44 (0)207 759 2200.