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Transition planning on the HR front is a long-term prospect |
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| Planning for succession is becoming an important strategic issue for HR professionals |
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Written by Michael Epstein
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Consultant Michael Epstein says companies must plan for succession not just months, but years in advance of anticipated transitions to ensure all business practices -- recruitment, professional development, industry networking -- are all aligned for success.
Few HR professionals are actually adopting a long-term strategic
approach to addressing the business upheaval that a founder's or
leader's exit may bring. While they may have some foundations in place
through recruitment, professional development programs, and industry
networking, the key for an HR professional is to know how to integrate
all the necessary business processes in order to ensure a successful
transition plan.
With a large number of boomers expected to retire in the next 10 years, business- and ownership-transition planning is becoming an important strategic issue for HR professionals. Laying the groundwork for the inevitable retirement of key executives is not something that can be addressed at the last minute - it should take years of planning. It is especially important to think ahead in cases where the person bowing out of the business is a founding member or senior executive with far-reaching ties to the day-to-day workings of the organization. They are often integral to the ongoing success of the business, whether the glue to customer relationships or the key to critical supplier arrangements.
Ensuring continuity in a changing world
It is far too risky in the current business climate to adopt a one-dimensional view of the transition-planning process. It's simply not enough to look at a typical recruitment strategy once an executive has declared his or her intention to leave. The need for long-term strategic planning is more critical than ever because organizations of all sizes are facing a number of new challenges, including:
- An aging baby boomer population translates into more senior business leaders leaving, with fewer qualified people to fill their roles.
- Widening gaps in skills shortages, as there is a shrinking number of "middle-generation" workers who can train and mentor next-generation employees.
- The shortage of skills also means extremely aggressive competition from other companies, as everyone competes for the same talent.
- The demand for new skill sets - either selecting and grooming a single candidate within a company, or seeking an individual with the same attributes (which is difficult to find) to replace an incumbent - is no longer enough to guarantee a smooth transition.
The role of today's HR professionals must evolve beyond staffing and regulatory-compliance functions to playing the part of facilitator in ensuring a business can fill any potential voids that may develop. They must also have in-depth insight into the profile of the organization, the strengths and weaknesses of the business, industry trends, its people, identification of management-leadership talent within the business, and a clear picture of the skill set needed for future business success. In addition, HR professionals need to have a long-term strategic "talent plan" in place that can be used as a guideline when seeking successors.
Plan early for transitions
When working with businesses on their transition planning, a general rule of thumb is to start at least five years before the plan is needed - preferably 10. This often comes as a surprise to many business owners and management teams, who consider transition planning as something that is put into motion a few months prior to the transition event. The event involves a change in management, leadership, and, many times, ownership. These are complex areas that require the necessary time to be successful.
There are many factors that need to be considered when developing a plan. First, it is important to understand the strengths and weaknesses of the leader who will be transitioning out of the business. How integral is that person to the business' ongoing success, and how hands-on is he or she in the day-to-day operational aspects? For example, replacing a highly involved owner who is key to customer relationships and people relationships, and who has a vested interest in the company, would present a much greater challenge for the HR professional than would a CFO with a shorter tenure and less personal involvement with people and business operations.
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