Succession planning is key to professional services organizations
INSIGHT ARTICLE |
One of the biggest challenges for many business professional services organizations is how to prepare for the next generation of management. Organizations frequently indicate they should have a succession plan in place but don’t know where to begin. In a 2015 study, the National Association of Corporate Directors found that two-thirds of American public and private companies had no succession plan at the ready. That’s staggering when you consider the disruption a business can experience due to a sudden departure of a key leader or subject matter expert, as well as the loss of essential knowledge and brain power of this critical employee. This is especially concerning for professional services organizations, unlike other industries that have a widget that can continue to be produced and sold. In a professional services organization the product is their people, their knowledge and client relationships. A health emergency or an unexpected exit of an employee can delay projects, put client relationships in jeopardy and impact other employees, causing an organization to tailspin, sometimes taking weeks or months to recover. In the case of key employee departures to other firms, how often do you see clients follow their preferred client server to other professional services organizations? Or, further still, experience existing firm employees questioning their own tenure when a star performer exits?
To prevent disruption in your organization, implement a strategic succession plan, one that’s comprehensive, vetted and ready for you when you need it. Just as you have a business continuity plan for your information technology areas and key business systems, so too must you have a plan in place that addresses departing leadership and key employees. Where to start? Consider the following.
- Complete an organizational assessment and update growth objectives and appropriate initiatives. Following that, create a formal succession plan and make sure it’s integrated into your organization’s overall strategic plan.
- Identify key positions that align with your organizational goals. You’ll need succession plans in connection with these roles, but remember, while key executive and client server roles should be considered, also look at other levels within the organization. For instance, in professional services organizations, risk managers, schedulers, report writers and other operational roles can be critical positions in an organization. Make sure you have people at the ready to step into these types of roles as well.
- Develop a leadership program for up-and-coming leaders to identify future leaders and nurture their talents. In developing the program, confirm employee career aspirations and desires, and provide corresponding programs. Keep in mind, not all employees wish to be leaders. Those individuals may be suited for other non-leadership roles in the organization. Identify potential employees to fill positions and provide the internal mentoring they’ll need to understand and embrace the culture and passion of the organization. Recruit candidates from top schools, but remember the right education and experience is one thing; you must provide the relevant and appropriate training to nurture their leadership abilities.
- Provide ongoing development and training to meet the increased responsibilities as your select leaders mature in their roles within the organization. Quite often in professional services organizations, if training is not part of their career journey, they may leave for greener pastures in other organizations.
- Formalize your evaluation process to include periodic check-ins, reviews and communication with key successors to address challenges or training needs.
- Engage successors with members of the management team, when appropriate, providing formal and informal mentors.
- As part of your overall plan, have a communication strategy in place when successors are placed in their new roles to achieve buy-in and acceptance among employees, clients and third-party relationships.
- Revisit your succession plan as part of your overall strategic plan, and adjust as needed given organizational changes and shifts in initiatives.
Benefits of a succession plan
There are some immediate benefits to succession planning. First, it helps organizations retain high performers. Additionally, it provides a voice and increased sense of ownership among these budding leaders and other employees within the organization. And, succession efforts often position an organization so they serve their clients better by avoiding disruption if someone suddenly leaves. Succession planning also enhances collaboration across the organization, departments and employees, as well as encourages the organization to more easily accept change when it becomes necessary.
Although we can’t predict the future, creating a comprehensive succession plan can provide the organization a level of protection. Start early though; succession is best when the plan is developed early on, mentoring and training are integrated into your efforts, and are part of the organization’s overall strategy and culture.
Get additional related insights by visiting our business succession resource center.