A new report from Robert Half has indicated that succession planning is not a high priority among Australian business leaders. 

In today’s turbulent talent landscape, succession planning is more crucial and complex than ever before. 

In times of economic and workforce stability, ad-hoc planning to replace key senior roles might have been sufficient for many organisations to mitigate the risk of losing talent. However, with job mobility in Australia at a 10-year high, according to the Australian Bureau of Statistics, organisations lacking a strategic approach to succession planning now face significant disruption to operations if employees leave abruptly. 

Meanwhile, career progression is being sped up in some sectors to fill gaps left by skills shortages, meaning that training employees to take over a senior role needs to be undertaken early and effectively.

However, nationwide research has uncovered an absence of succession planning for top roles in a significant number of Australian businesses. According to Robert Half’s report, published in November 2022, more than a quarter (27 per cent) of the 300 business leaders surveyed said they hadn’t made plans to identify a successor for their current role.

Not planning to leave in the near future (49 per cent) and being busy with other priorities (42 per cent) were the top reasons why leaders did not have a succession plan in place. 

“Creating a succession plan involves identifying and training high-potential employees for key management roles in the business,” says Andrew Brushfield, Director at Robert Half. 

“Having a solid succession plan in place means that any sudden departures can be managed effectively and efficiently.”

Why is succession planning so important?

With many businesses grappling with challenges posed by skills shortages and increased staff turnover, it makes sense that succession planning has slipped down on some leaders’ to-do lists.

However, Brushfield says it’s these very issues that make succession planning so crucial to an organisation’s resilience.

“Succession planning isn’t just about continuity and preparing the business for inevitable change,” he says. “It also helps to build a workplace culture centred around professional development, enhances knowledge-sharing between existing talent in the organisation and helps leaders put processes in place to identify and retain future leaders.”

He points to a number of pitfalls that organisations can encounter if they lack a talent succession plan, including business disruption, loss of legacy knowledge and a ‘strategy standstill’ where long-term initiatives must be put on hold.

In order to avoid these issues, he says it’s essential that leaders stay on the front foot and identify potential successors before a key player even considers leaving their role.

How to design a future-proof succession plan

There are a number of potential risks and obstacles that come with selecting and preparing a successor to take over a role, and organisations should have a clear strategy in place to safeguard themselves from disruption. 

Even though HR plays a part in the logistics and creating a hiring framework, it’s up to the team itself to provide HR with the responsibilities of the role, and what skills and experience they are looking for.” – Andrew Brushfield, Director at Robert Half.

To that end, Brushfield outlines some essential steps that leaders should consider when carrying out their succession planning.

1. Identify the roles in the business that could benefit from a succession plan.

Senior and executive roles are likely to top this list, says Brushfield, given that high-level executive absences and departures are most likely to impact the success of strategy planning and high-priority projects. But don’t overlook those middle managers – they are often the people with the most institutional knowledge.

Even if successors have not been identified within the business, it’s sensible to anticipate the need for an interim leader until a replacement is found, he says.

2. Map out the skills and experience required to undertake those roles.

Having a clear outline of the responsibilities and requirements of the role will not only help to ensure that an employee is willing and able to take on the job, but will also provide expectations to benchmark their progress against, says Brushfield.

Mapping out necessary skills and the progress needed to get there allows leaders to start training employees in small ways so they can build this foundational knowledge over a long period of time.

3. Recognise people who may be able to step into the new role.

According to Robert Half’s report, only 30 per cent of leaders would require their successor to have internal company knowledge, indicating many organisations are willing to hire external talent for their leadership positions. 

However, there are significant benefits to promoting internally, including lower onboarding costs and greater confidence in the company’s commitment to developing its employees. 

In fact, a study conducted by Wharton management professor Matthew Bidwell, based on employee data from 2003-2009, found that external hires received 18-20 per cent higher salaries than internal hires on average, but had lower performance scores in their first few years in the role. The same research found that external hires were 61 per cent more likely to get fired from their roles than internal hires.

4. Collaborate on your recruitment strategy. 

Brushfield notes that the research stage of the planning should be a collaborative process between HR and the team in question. Although workforce planning issues are often considered to be HR’s responsibility, it’s impractical to expect HR to create a succession plan without consultation with the person currently in the role.

“More than one third (34 per cent) of respondents [in Robert Half’s research] point to HR as responsible for succession planning. Even though HR plays a part in the logistics and creating a hiring framework, it’s up to the team itself to provide HR with the responsibilities of the role, and what skills and experience they are looking for,” he says.

5. Provide development opportunities to help employees grow their skill sets. 

In order to avoid the loss of legacy knowledge, potential successors should have as much exposure as possible to the role they are preparing for, says Brushfield.

“Mentoring with existing managers and leaders can mean that skills and experiences that have been learnt over the years can be passed on and retained in the business, rather than being lost when employees leave.”

Companies such as Amazon have introduced ‘skip level meetings’, where employees meet on a semi-regular basis with the person who works two levels above them (their boss’s boss) and shadows them in meetings or engages in some coaching to learn more about the realities of working at a higher level in the organisation. 

This is a great way to give them some exposure to other aspects of the business and to start the succession planning process very early in that individual’s career.   

6. Adjust the plan according to the role or person filling the role.

A one-size-fits-all process for succession planning might fail to recognise the different requirements and complexities of certain roles, so it’s crucial that the plans for identifying and training a successor are adjusted to the nature and level of the role, says Brushfield.

He also says that having open conversations with successors about their career aspirations can help to identify where adjustments can be made to accommodate their professional goals as well as safeguarding the company’s future.

Businesses who adhere to these principles and keep both people and strategy front of mind in their succession planning will be far better prepared to weather times of economic uncertainty, says Brushfield. 

Learn how to incorporate business strategy into your workforce planning and mitigate future risk with this short course from AHRI.