How to Hardwire Succession Planning Into Your Culture
Article | Accountability Insights
One generation of leaders is soon to retire. Another generation is taking new positions of leadership. But are companies really prepared for this workforce disruption?
Today, people 55 years and older account for about 25% of the total U.S. labor force. Meanwhile, millennials now occupy the largest percentage of the workforce at 35%. These trends will continue as more and more skilled and highly trained people retire within the next five years.
The impact of workforce turnover is very real for companies losing workers and leaders they have either invested heavily in training or who have come to their companies with a lifetime of industry experience.
With this knowledge, how many companies are equipped with the tools, mindset, and wisdom they need to execute a seamless transition? Those that stumble over succession planning risk creating a talent gap in which new hires aren’t equipped with the knowledge necessary to achieve results. This can in turn create a cultural rift across generations, and can even put the organization at financial risk.
Skillful succession planning future-proofs a company from this workforce disruption, positioning it for long-term viability and success. In the face of this mass-scale generational turnover in the workplace, this is not a nice-to-have, but a must.
What do companies do to create an integrated succession plan? Here are the steps you can take to empower and enable your current leaders to pass the baton successfully to the next generation of leaders.
1. Make Succession Planning a Key Strategic Priority
Organizations can prepare for baby boomers’ imminent exit from the workforce by establishing succession planning as a key strategic priority. Key strategic priorities are the means of achieving your Key Results — the three to four meaningful, measurable, and memorable results that your organization must achieve each year. Unfortunately, many companies fail to institute succession planning as a strategic priority because they are stuck in the mindset of short-term thinking, trying to keep up with the rapidly evolving landscape of modern business rather than thinking two, five, or even ten years ahead.
In order to mobilize all employees to deliver consistently on long-term objectives, succession planning must be a well-planned, organization-wide initiative. Identify the critical roles that will be undergoing a transition — and the unique skill sets and competencies required to succeed in these roles — well in advance, and proactively facilitate the effective transfer of knowledge from baby boomer to millennial employees.
2. Choose Talent That Fits Your Culture
Contrary to widely held assumptions, succession planning is not merely a strategic initiative or an HR duty. Instead, succession planning needs to be an integral component of your company’s cultural mindset. In order to make the right hires for long-term success, leaders must first home in on their cultural beliefs, and then strategically select leaders whose attitudes and behaviors align well with those beliefs.
An example of expertly executed succession planning that’s grounded in culture can be seen in the C-suite transition at Starbucks. As CEO Howard Schultz began to consider stepping down from his leadership position, he evaluated his company’s core cultural beliefs. These include inclusiveness, courage, and accountability. Schultz had come to know Kevin Johnson, CEO of Juniper Networks Inc., and recognized that his skill set and personality reflected the cultural beliefs that have come to define Starbucks. In 2014, he first proposed to Johnson that he take over as CEO, promising: “I’ll support you, coach you, and guide you through this process.”
In May 2016, Schultz and Johnson presented the board with a five-year succession strategy plan that the two had developed together. The decision was widely supported, and the plan succeeded primarily because Schultz was deeply in tune with his company’s cultural beliefs.
Starbucks’ success serves as an example for all corporate leaders struggling to mobilize effective succession planning. Leaders should aim to integrate succession planning into the culture of the company, so that the beliefs guiding the transition are top-of-mind for all employees.
When succession planning is firmly rooted in culture — and the company’s cultural beliefs are clearly communicated to every employee — all members of the organization feel personally invested in and willing to take ownership of the transition by bringing new hires up to speed on the organization’s cultural beliefs.
3. Start From the Top
Even if succession planning is an organization-wide key priority that’s been integrated into the culture, it must be driven forward by the executive team. When leaders model the cultural beliefs in which succession planning is grounded, they inspire all employees to hold themselves accountable for its success.
One of our clients, a global automotive manufacturer, has operationalized a top-down succession planning strategy by moving their organization’s leaders into new positions within different departments every three years. By doing so, they create leaders who understand the many dimensions of their company inside and out — and as such, are always prepared to mediate handoffs between generations and skill sets in any department or role.
At the end of the day, succession planning is more than just a strategic move: the C-suite must prioritize it as a cultural cornerstone. Making succession planning a part of our organizational culture is key to ensuring a seamless transition from legacy leaders to rising stars.