Succession Planning

Succession planning, internal promotions, and external hires. This is what we'll be talking about today on How to Lead, the podcast for CEOs, founders, and leaders who want the perfect balance of authority and empathy.

I'm Kate Waterfall Hill, and I'll be sharing some ideas from over 30 years of working in business and leadership development. Before we start the show, a quick reminder that if you want to learn how to become a better leader, you can sign up to my free leadership guide, grab a copy of my book, how to lead, or even sign up to one of my coaching programs and get my personal support with your leadership challenges. All the information can be found at waterfallhill.co.uk.

So let's kick off with my alter ego, Linda the Bad Manager, and this time she is on the other end of some bad management by her boss, William.

“Linda, good to see you. I've been thinking, I want to promote myself to chairman and find myself a new CEO. As soon as I thought of this brilliant idea, I thought, I know who I need to speak to. I need to speak to Linda. She'll find me a good replacement. But I don't really want to spend too much money on the whole thing, and in actual fact, perhaps I don't even want to do a process at all.

Perhaps you could just speak to Derek for me, I think he's probably the right candidate, don't you? He's always been my favourite. Plays a good game of golf, does Derek.”

So this time it's William, who might have left you wincing. But today we're going to be diving into the fascinating world of internal promotions versus external hiring, or as I like to call it, the grass is always greener syndrome versus better the devil you know disorder.

Let’s start with a rather sobering statistic. According to Deloitte, while 86 percent of leaders believe succession planning is vital, Only 14 percent believe they do it well. That's rather like saying you believe in dental hygiene, but only brush your teeth once a month. Now, you might think this is just a big corporate problem, but in my experience, it's often more acute in small and medium sized businesses, the SMEs that I so often work with.

After all, when Sandra from Accounts announces she's retiring after 30 years, taking with her the only knowledge of that mysterious Excel spreadsheet that somehow keeps the entire company running, that's when panic typically sets in.

Let's break this down into three key areas. Three's my favourite number, as you probably know if you've listened to previous episodes. We're going to cover succession planning, internal promotions, and external recruitment.

First up, succession planning. You might call this preparing for the inevitable while pretending it won't happen. Many organisations treat succession planning like writing a will. They know they should do it, but they keep putting it off because it feels a bit uncomfortable. Here's a practical approach.

Another three step plan. Number one, knowledge mapping. Spend some time creating a detailed map of critical knowledge areas in your organisation. Who holds this key information? What processes are documented? And which ones aren't? It's like creating an inventory of your organisational brain, if you will.

Number two, do a bit of a risk assessment. Identify which roles would really cause you the most trouble, the most disruption, if suddenly vacant. And this isn't just about senior positions. remember Sandra from Accounts and her mysterious Excel spreadsheet?

Number three, development planning. I really urge you to spend some time creating individual development plans for potential successors.

And this isn't just about sending them on a leadership course and crossing your fingers. It's about deliberate exposure to different parts of the business, mentoring relationships and stretched assignments. Give them just a bit of an extra challenge. Now let's move on to how you fill the gaps when you've identified them.

You've got two options, internal promotions and external hires. Well, the benefits of promoting internally are rather like having a favourite pair of shoes. You know, they're already broken in, they know their way around, and they don't require an extensive orientation period to find the coffee machine or work out the tech.

Internal candidates understand your culture, know your systems, and have established relationships. But there is a catch. Just because someone excels in their current role doesn't mean they'll naturally shine in a leadership position if you're thinking of promoting them. It's the classic Peter Principle.

Promoting people to the level of their incompetence. You've seen it, I'm sure. Your brilliant software developer gets promoted to a team leader and suddenly spends more time wrestling with personality conflicts than actually writing code, which is their area of expertise.

The solution, create a leadership development pipeline. This isn't just about identifying high potential employees. It's about actively preparing them for future roles. Think of this as an apprenticeship for leadership, if you like. So give them projects to lead, teams to manage, and problems to solve before they're thrown into the deep end.

My advice here, though, is to plan your internal promotions carefully. Don't just pick your favourite like William does to get all the best jobs. It's likely to breed resentment to those who weren't chosen, and puts the person getting the promotion in that awkward position of being delighted to have got the step up, but facing a team who aren't exactly over the moon that someone who was their peer is now their boss.

I urge you to take this seriously. So devise a proper job description, advertise it internally, and do a proper selection procedure. If you do this, then the person who's selected starts with a bit of a spring in their step. You know, they've got the job, they went through the relevant hoops, and they know they've got it fair and square.

Likewise, the team know that their new boss really earned the role after due diligence and a proper process.

And hopefully, they'll give the promoted person the due respect they deserve from successfully securing the role.

It's less likely that the new person will be received with that undercurrent of resentment you might get otherwise. Now let's move on to external recruitment. Sometimes, despite your best internal development efforts, you do need fresh blood. New perspectives can be invaluable, particularly when your industry is evolving rapidly or you need specific expertise that you're lacking in your current team.

However, external hiring comes with its own challenges. Culture fit is crucial. I've seen brilliant candidates fail spectacularly because they were used to corporate processes and couldn't adapt to an SME flexibility or chaos depending on your perspective.

The key is to be crystal clear here about what you actually need. Are you hiring for certain skills and capabilities that can be taught, or is it about things that take years and years to develop?

Are you looking for someone to maintain the status quo or do you need a change agent? It's a bit like dating, I suppose. If you don't know what you're looking for, you might well end up disappointed. If you want an example, there's Alan Jope. He became CEO of Unilever. He was an internal promotion with 35 years at the company. However, he actively brought in external talent for his leadership team to create a balance of institutional knowledge

And fresh perspectives. It's about finding the right mix for your organization.

Let's look at another group of three practical tips for implementation. Number one, the 70 20 10 development rule. This theory suggests that 70 percent of development should come from on the job experiences with 20 percent from relationships and feedback and 10 percent from formal training.

It's about creating deliberate opportunities for potential leaders to stretch themselves while providing support.

Number two is succession planning timeline. Create a three year rolling plan for key positions. This isn't about promising specific roles to specific people. It's about ensuring you're never caught off guard when someone moves on.

And then number three, having a good internal external balance. Consider a portfolio approach. Aim to fill about 70 percent of leadership positions internally, but maintain a healthy influx of external perspectives for the remaining 30%.

So, good succession planning is like good gardening. It needs regular attention, occasional pruning, and sometimes you need to introduce new plants to keep things thriving.

To sum up then, here are some key takeaways. Start succession planning before you need it. Develop a leadership pipeline with practical experiences. Balance internal promotions with strategic external hires. And I really urge you to conduct a fair selection process.

Document critical knowledge and processes. And create deliberate development opportunities. And lastly, maintain clear criteria for both internal and external candidates. So to sign off, I just want to remind you that whether you're growing your own talent or bringing in fresh perspectives, the key is always to be intentional about it.

After all, the best time to plant a tree was 20 years ago, they say, but the second best time is now, and the same goes for succession planning. Until next time, I do encourage you to keep leading with intention, and don't forget that your organisation's future leaders are probably already sitting in your Zoom meetings wondering why no one has muted Gary from marketing. That's all for this week. If you've enjoyed this episode of How to Lead, do follow for more leadership insights.

And remember, if you want a guide by your side, get a copy of my book, which accompanies the podcast also called how to lead. If you'd like my personal support to take a look at my website, waterfallhill.co.uk for more information about my one to one coaching and group mentorship programs.

there's never a better time to take your professional development seriously than right now. I'd be delighted if you could like leave a review and share with your fellow leaders to help spread the word. Team management doesn't have to be frustrating. You too can enjoy being an authoritative yet empathetic leader.

It just takes a decision to be more intentional about your interactions with others. Some great tips for how to influence positive change, and of course, a good guide. Until next time, listen more, advise less, lead well.