By, Stuart R Levine

Published in, Forbes

Succession planning is a major challenge for most companies. A recent study by Deloitte Insights (DI) found that although 86% of the leaders they surveyed thought succession planning was urgent or important, only 14% felt they did it well. Succession planning is a thorny problem because it can involve emotion and apprehension, unlike other business planning activities.

Yet smart CEOs know effective succession planning enhances shareholder value. For them, succession planning is not just a process for identifying replacements for management that will advance, leave or retire. It is one more way to infuse the organization’s culture with a win-win environment that engages employees and makes succession planning work.

Organizations have a hard time with succession planning, however. As one of our clients jested as they embarked on the strategic and succession planning process: “If we have a succession plan, it’s a well-kept secret”. Until it undertook the comprehensive strategic planning process that included succession, it had been a problem for this organization, as with countless others. More often than not, if it’s done at all, succession planning is a check-the-box exercise. Managers do not see an immediate pay-off, and because there is usually lack of accountability for it, it’s a low priority.

Regrettably, poorly done succession planning can actually undermine the organizational culture. Emotions and fear about the future of one’s career are surfaced. It is threatening when managers, especially senior leaders, not only come to understand that they are not indispensable, but are forced to plan for, and possibly train, someone to replace themselves. For those climbing the ladder, there are often feelings of being unfairly judged. How many times have organizations realized that instead of a comprehensive data-driven opportunity to create leadership for the future, the process is overseen by a small group who “know best for the company”, and the decisions appear to reflect politics, a person’s likeability, or the impression that “it’s their turn”.

Senior leaders must create a different reality and address the barriers that have inhibited effective succession plans. Instead of succession planning striking fear or appearing as a system of haves and have-nots, it can shape a true opportunity to reinforce a healthy culture – one that promotes organizational vision and core values. Moreover, a succession plan is an essential integral driver of your strategic plan. Like your strategy, people planning must envision where the organization is going, while taking a in-depth view of where it is now. This strategic talent development plan creates an intentional win-win dynamic where people realize that there are truly more and better opportunities for them. When employees ask, “What’s in it for me?”, they see a path of learning, personal development, and advancement.

The commitment to succession planning starts at the top. Senior leadership must forcefully advocate for it, assign clear responsibility, and hold those responsible accountable. In fact, the strength of the succession plan is a good indicator of the strength of the C-suite. For organizations that truly focus on shareholder value, a succession planning mindset permeates the entire organization, not just the C-suite and the immediate layers below.

People are identified for their potential to guide the organization in the future as much as for their current strengths. Those in the “pipeline” and their managers must be conscious of cultivation, development and growth through targeted learning and “stretch” assignments. A culture of continuous learning that persistently increases leadership capacity of the employees has succession planning in its DNA. As an accomplished gardener will tell you, “Home grown tomatoes are tastier and more resilient”. This is especially relevant when DI survey data indicate that 30% of newly hired executives fail within 18 months.

A successful plan requires discipline. The business area and people responsible must be clearly defined. Responsibility may reside with human resources, the business unit, or another business area. Clarity on who has responsibility is more important the area where responsibility lies. Awareness of who is responsible also means knowing who is held accountable, and leaders must be relentless in focusing on accountability. Relatedly, management performance metrics for those responsible incorporate how effectively they have developed and prepared capable employees to assume leadership roles. This can be particularly important, but sometimes awkward, when a leader is grooming a successor.

Straight-forward leadership decisions support an effective process. For example, at a financial services client, the CEO set his retirement date to create certainty around the timeline of his own succession. This orderly process, overseen by the Board, gave the company every opportunity for continuity of the visionary leadership that was embodied by this well-respected CEO, a proven value creator. The employees, the Board in their fiduciary role, and shareholders all benefited.

At another client, a technology firm with a “flat” management structure, senior management made clear to employees that lateral succession was necessary and desirable to develop talent and leadership. The company effectively tied components of its compensation system to a manager’s success in preparing people for new roles. The rewards sent a strong signal for aligning individual and company goals, which was especially important when personnel changes resulted in turnover in a that manager’s business area.

At another client the Board chose a new CEO from a series of quality candidates, each with a history of success and significant past achievements. The Board focused on the future needs of the company and selected a leader whose talents best matched those needed to face future challenges.

Succession planning in a culture of continuous employee learning and development gives your people the possibility to thrive. It is not just about forming a pipeline of people ready for new roles; it is a chance to engage and advance a workforce that is committed to the organization’s values and vision. It is not just about the C suite; it’s about opportunity that is explored throughout the organization. It’s not just about the jobs people are ready for today; it is about preparing the workforce of tomorrow.