Succession Management As A Risk Management Strategy
Succession management is fundamentally an exercise in business risk mitigation. If you develop a pipeline of leaders who can take on critical roles in your business, you will mitigate the potential risk of not being able to deliver on your business goals. When evaluating the degree of succession risk in your business, consider these dimensions.
Vacancy Risk Start by evaluating which roles are most critical to your business strategy. Then consider: What is the risk of having these roles vacant? Will there be a negative impact on customers, profits, revenue, or employees? Next, assess the degree of risk for each role. If a role is considered to have a high vacancy risk, focus your succession efforts here first.
Readiness Risk What is the risk that your next level of leaders will not be ready by the time a new leadership vacancy becomes available? For many organizations with pending retirements, there is a high readiness risk. There is a low probability that their next level of leaders will be ready to take on vacant positions as they become available. If you have a high risk score in this area, you need to focus your efforts on accelerating leadership talent and managing the integration of newly promoted leaders.
Recruitment Risk What is the probability that you will find external talent in the marketplace to fill your vacancies? If the market is particularly tight, or you require highly specialized skills, there may a high recruitment risk. In this situation, you need to focus on proactively identifying people in the marketplace, and cultivate relationships with them, and you need to accelerate internal leadership development.
Coaching and Development Risk – Do your managers have the skills to cultivate leadership talent? Many succession programs assume that managers have the skills to coach and cultivate talent. This is often a wrong assumption. If you build your succession program around managers with poorly developed coaching and mentoring skills, the program will derail. Spend time understanding how capable your managers are at having development conversation and focus on skill building in this area.
Transition Risk If you promote someone before they are ready and the hire is unsuccessful, what are the potential risks during the transition? For example, if a leader is in a technical role and responsible for managing critical business processes, there could be a significant risk to the business if the transition goes poorly. Your business processes could fail, or you could lose key client relationships. If key roles have a high transition risk focus on integration plans and job shadowing during this delicate period.
Regulation Risk Some industries are highly regulated, such as engineering or the medical profession. It is not realistic to accelerate talent when there are industry regulations which govern how fast someone can develop their capability. In highly regulated industries, organizations must be very proactive in building their leadership pipeline and take a long term view.
Copyright (c) 2010 Natalie Michael