Succession management isn't just for the C-Suite

We would likely be concerned by any company that does not have a strategic business plan. Yet we often find organizations that don't have a strategic succession plan.

Besides this just being good business practice, there's a confluence of factors that require leaders to take a closer look at their succession plans:

• We have an aging workforce at the top of the house. The average S&P 500 CEO is 58, according to public company intelligence firm MyLogIQ - and younger talent leaves to gain promotions faster.

• We also have a lack of diversity at this level. Only 15% of S&P 500 CEOs are women, according to the World Economic Forum, and barely 1% of the Fortune 500 are Black, NPR reports. Without intentional focus deeper into the organization, more diverse leadership candidates can be overlooked.

• Hiring outside is expensive, time-consuming and can negatively impact employee engagement and morale. Research from the University of Pennsylvania indicates that outside hires cost 18-20% more and perform poorly in the first two years compared to internal staff in the same position.

• Even companies that do have a succession plan often lack one that addresses their entire leadership pipeline. Strategic succession planning needs to extend beyond the top of the house to include those outside the C-level.

Overall, succession management limits risks in an organization from the impact of losing a leader and not having anyone ready to step in and be highly effective. All too often, a business founder starts the succession process too late and the costs associated with this are extraordinary. Taking a holistic perspective of succession planning that accounts for these factors allows you to make higher quality decisions around promotions and development investments, rather than scrambling to fill a vacant role.

By building an organizational muscle of talented, versatile future leaders, you can increase engagement, diversity, retention and create greater organizational stability, which in turn increases shareholder and market confidence.

Business leaders can take a few strategic steps to begin or beef up their succession management plan.

• Clearly identify what will be needed for success in each critical role. Go beyond what you would put in a job description. What are the most important skills, experiences and capabilities that will be needed in this role over the next three years. What type of culture and values do we want them to foster?

• Perform objective assessments of employees against your success criteria. This minimizes bias and means you're not just promoting high performers and those that managers personally prefer but may not have the right skills for that next level. Take an inventory of how each successor candidate stacks up against the critical success factors needed for the role.

• Take a personal interest in each employee's "career story." It's important to understand the narrative that each employee sees for themselves. What do they want? How do they want to grow and develop? What future job roles interest them and why? Succession is a two-way street with both company and employee working together to create a purposeful, individualized plan.

• Put an intentional focus on development at every level. Nobody is too fresh or too experienced for personal and professional development. Put an emphasis on habit building, experiential learning and coaching. These elements are more potent techniques than traditional learning experiences.

• Paul Eccher, Ph.D., is president and CEO of The Vaya Group in Warrenville.