More than half of businesses in Europe don’t have a succession plan in place, but some simple steps could help them address the future with more certainty. Fabrice Coudray, Managing Director at Robert Half’s Executive Search practice, explores the importance of succession planning and how it can go beyond leadership, and right to the heart of stakeholder confidence.
According to Robert Half’s Boardroom Navigator 2023, which explores attitudes to executive leadership across Europe, the succession planning process is being neglected by more than half of businesses.
Just 47 per cent have a plan in place, with a further 40 per cent saying they don’t, but would like one; 11 per cent say they don’t need a succession plan at all.
It doesn’t matter whether a business is public, private or family-owned; what matters is a clear line of sight for young executives to the C-suite, and a plan to replace departing leaders.
A lack of succession planning creates uncertainty when businesses need the opposite; it’s a vital tool to help employees, customers and investors feel confident about the future.
So, for both corporates and scale-ups alike, here are six succession planning tips to consider:
- The supervisory board should be involved in discussions about new executive leaders. Disruptive growth will need different leadership to a business seeking stability, for example. The board can positively influence the succession process and take an objective view.
- A leadership development programme will help to create a group of potential candidates. The succession story can then be communicated with employees, customers and investors. This will give them confidence, but it will also provide a boost to commercial fortunes by positively positioning a business in its market.
- Existing C-suite leaders might consider executive coaching to help them transition out of their current position into a non-executive role. Sometimes it’s hard for an entrepreneurial founder to step back and hand over the reins. But they will have to respect the mandate of a new leader.
- A time-limited transition period will help. Existing leaders can pass on their knowledge, but new leaders will be clear on exactly when they can take over. The longer the transition period, the longer new leaders might be watched.
- External candidates will need a strong backbone to cope with such situations, but also, a high level of emotional intelligence to empathise with departing leaders. Internal candidates might have to deal with historical power dynamics, but they’ve also had time to build trust and show their skills. In both cases, the supervisory board can play a supportive role.
- Cultural fit is vital in succession planning. The cost of hiring the wrong person is more substantial than the investment of hiring the right one. A well-thought-out plan, and close relationships between the board and its advisors, will help to make the process as smooth as possible.
Succession planning is an effective tool to help the future of any business , instilling confidence in employees, customers and investors. This is especially important when businesses are dealing with the impact of multiple crises and rapid change.
But, either way, developing a long-term succession plan is one of the most important steps they will ever take – not just for themselves, but for everyone else with a stake in their success.
To read Robert Half’s Boardroom Navigator report, and find out more about current attitudes towards succession planning and onboarding, click here.