Too many organizations are increasing unneeded risk because their leaders are not informed, they are not committed, and they do not distinguish between replacement and strategic planning. Repetitive replacement planning does a disservice to your employees and constituents and has a potential long-term negative financial impact.
Succession planning is a proactive process and is strategically differentiated from replacement planning, which is geared toward mitigating imminent risk, is limited in scope, and is often reactive. Too many organizations are left without a ready-now leader, which can quickly put the organization at risk because of paused strategic trajectories, limiting scope and authority of the interim CEO, and confusing signals from a board not aligned on what competencies and capabilities are needed in the future CEO.
As baby boomers reach the age of 65 by 2030, boards need to be at the top of their game and engage in strategic conversations and actions to ensure the sustainability and viability of their organizations. The organization is at risk of ignoring the following: plausible truth assumptions that a CEO will be leaving the organization through retirement, or the possibility that they will transition to another role, and the potential of illness, death, or retirement on the job. For every CEO transitioning out of the organization, assuming that at least two executives will leave within one to two years is plausible.
This article distinguishes between replacement and strategic succession planning, hopefully providing a ray of hope for increasing commitments to the sustainability of leadership.
1. Replacement planning is reactive and a narrow approach to filling an immediate need through an interim internal successor, interim external placement, or a fractional executive. Interim CEOs can stay in their role for a few days, a few months, and perhaps as long as two years. Their primary role is maintaining the organization’s operational continuity and the current strategic plan’s stability and execution. The primary responsibility is to ensure all current projects and initiatives are on schedule. The interim CEO communicates frequently with tenured directors to ensure the organization is on track from an initiative perspective.
Strategic succession planning has developed ready-future and -now successors in an open, communicative process with intentional professional development. There are times when the interim CEO does not want to be a permanent one, and there are other times when they wonder why they are not automatically promoted. The latter scenario can cause organizational anxiety.
2. Replacement planning focuses on locating and hiring a replacement in the context of the current position description, which is often outdated. Too often, there is a rush to fulfill the immediate need, missing the opportunity to upgrade or refresh the position description so the organization can meet the current market needs. Too often, the HR leader is directed to find a replacement, and they use the current resource, which is the outdated position description. Often neglected is the strategic opportunity to refresh the position description to be market competitive, maintain the organization's strategic direction, and assume the required impact needed in the role.
Strategic succession planning sets the stage for an intentional process with a broad perspective on the vision, values, strategic plan, new market impacts, expanded responsibilities, and other adjustments. The multiple areas of needed competencies and capabilities are deliberated in strategically focused conversations.
3. Replacement planning will focus on one to three internal potential candidates who can step into the role and keep the wheels on the bus. In addition to stepping into this role, they often continue their original responsibilities and scope of authority while assuming the new ones. The impact of such a decision is a potential watering-down effect in two roles and two functional areas or in the entire organization, as with an interim CEO.
Strategic succession planning intentionally develops candidate talent pools with increasing levels of expertise, experience, emotional intelligence, leadership presence, embodied values, and cyclical leadership opportunities.
4. In its reactive state, replacement planning can force an organization to select the best available person at that time. This person can be internal or found through an external recruiting effort. However, the best available person at that time may not be the best long-term decision, which may mean the organization and the new hire are compromised from the beginning.
Strategic succession planning focuses on the organization’s needs now and in the future. Instead of hiring the best available candidate, it selects the best candidate for each position.
5. Replacement planning can be a quick fix and may not be integrated into learning and development and human resources activities such as training, development, and diversity initiatives.
Succession planning is a visible commitment to developing individuals in the organization.
6. Replacement hiring tends to focus on talent available at a certain salary point.
Strategic succession planning establishes needed competencies, influence, scale and scope of responsibilities, critical and strategic thinking, and the potential to be successful in a new role.
A best-in-class compensation philosophy is integrated into a strategic planning process. Instead of hiring the best available person at a certain salary point, the organization looks at five or more required competency characteristics and expertise areas. Then it backs into the compensation to attract and retain top-tier talent.
7. Replacement planning is a process of identifying three or more people who can assume critical roles in the organization during a crisis or emergency. They are primarily considered backups and short-term employees.
Succession planning results in methodical and specific professional development plans for potentially empowered and developed successors.
8. Replacement planning assumes the replacement steps into a set structure, and the organization design remains fixed. Most replacements have not been trained to understand the influence of the new role, the new working environment, or how to ensure a smooth transition.
Succession planning strategically anticipates when vacancies might occur and prepares for unplanned changes. Potential successors understand the enterprise’s needs and what decisions are within their scope of authority, and their replacement or permanent successor has already been identified and developed.
Summary
Organizations that have a material reactive focus to filling immediate needs for unplanned or surprise vacancies in critical roles are practicing replacement hiring. The replacement comes out of an immediate necessity with less focus on employee and leadership development.
Organizations that look at the future and deliberately decide the competencies and expertise needed, and develop strong bench strength of potential succession candidates are proactively doing succession planning and are strategically responding to an unexpected loss or vacancy.
Which is your organization practicing, consistent replacement or strategic succession?
