There are essentially two roads to take with succession planning. The first, which involves creating a formal succession plan, leads to orderly change. With a solid plan, the departure of a key employee becomes a manageable event for your firm, rather than an organizational crisis. Meanwhile, the second road, which involves making no plan, can lead straight to chaos.
More specifically, when finance and accounting leaders fail to create a succession plan for themselves and other key roles in their department, they risk subjecting the business to:
- Disruptions in organizational productivity
- Loss of legacy knowledge
- Delays in strategic decision making
- Impaired internal professional development
Making a succession plan is clearly the better road to follow. However, a recent Robert Half Management Resources survey found that nearly half (48%) of CFOs have not yet identified a successor for their positions. The top reason cited for their lack of action: They are not planning to leave their company soon. That’s fine, except that no one can predict the future.
With that fact in mind, answer the following six questions to determine whether or not you are on the right track with succession planning for your organization:
1. Are you prepared to respond to the unexpected?
Sometimes, you’ll know well in advance if a hard-to-replace team member is going to leave the firm — a planned retirement is a good example. But other times, you’ll be caught off-guard by a sudden and potentially disorienting staff departure, such as when one of your top performers quits. So, as an initial step in your succession planning, it’s a good idea to consider all the key roles on your team and answer the following questions:
- What’s the day-to-day impact of X position on the finance department?
- If the person currently in X position left, how would that impact our operations?
- If we were to hire for X position internally, which employees would be the strongest candidates for stepping into this role?
- Would those candidates need training? And, if so, what type?
Once you have a handle on the ripple effects (or waves) that an employee’s departure might cause, you can start investing in the professional development of team members who could potentially step into that role, or at least take on some of the responsibilities. Mentoring programs and job rotation are just two ways to spread knowledge and experience around. Such initiatives are good practice anyway, as a well-rounded finance and accounting team will be more adaptable to change.
2. Are your team’s job descriptions current — and relevant for the future?
The skill set required to do any job evolves, especially as technology continues to transform how accounting and finance professionals work. Already, automation is taking over data entry in many organizations, accounting functions are shifting to the cloud, and artificial intelligence (AI) is transforming compliance roles. So, when updating job descriptions as part of your succession planning efforts, consider adding language that makes clear that people should be comfortable with both financial matters and technology.
Also, be sure to outline the hard skills and soft skills required to meet the day-to-day demands of each position in your department. Robert Half’s Jobs and AI Anxiety report predicts a need for enhanced interpersonal skills as technology frees up finance workers for more strategic roles. Ask workers or their immediate supervisors to update a list of their skills and responsibilities quarterly, so you always have the most recent insight on hand.
Learn about other workforce management and technology trends in our latest Benchmarking Accounting and Finance Functions report, which you can download here.
3. Do you know your employees’ professional goals?
You may have your top business analyst in mind for a senior management role, but who’s to say she’s interested in taking the job when the time comes? Don’t assume you know how people on your team view their professional future. Get to know your team’s career aspirations and discover where they may fit into the succession plan for your organization. Learn about their career steps, professional strengths, and the skills they should or would like to improve.
Talking with your staff one-to-one about their career goals will also help you to spot the rising stars in your midst. Also, talking with your staff openly about succession planning could help with retention efforts. After all, employees interested in career advancement are more likely to stay put if they know you have bigger and better things in mind for them.
4. Do you have a succession planning team?
Depending on the size of your organization, you may want to form a succession planning team of directors, managers, supervisors and other key staff. You can work closely together to identify lines of succession and prepare backup plans in case the original plan doesn’t pan out. Make sure everyone is on the same page by meeting quarterly to share updates and notes on top performers.
5. Are interim resources part of your strategy?
Don’t overlook specialized consultants when creating your succession plan for accounting and finance roles. These professionals can step up to the plate and keep daily operations running smoothly during staffing transitions. Interim management resources can even cover senior-level and executive positions — including the CFO role — while the firm either recruits and trains new hires or gives existing employees tapped as successors time to ramp up in their new roles.
Staff members aren’t fixed assets, and change is inevitable. However, even though you may not always be able to predict a valued team member’s departure from the firm, succession planning can help you to meet the challenge of change head-on — and avoid the road to chaos.