May 2025 Volume 7

OPERATIONS & MANAGEMENT THE SCIENCE OF SUCCESSION PLANNING By Jared Detter, PsyD, MBA

S uccession planning is one of those pesky organizational activities that everyone knows is important but often gets incomplete attention or ignored altogether. In fact, it can be very tempting to avoid this important organizational competency, because it doesn’t feel nearly as urgent as the rest of the things competing for your time. This is something to ignore at your peril, however. Research shows that only about 25% of positions have a succession plan in place1. In addition, many organizations don’t believe there is an internally viable candidate for the CEO role if the current CEO left. This means that organizations often turn to external candidates for senior leaders. Several years ago, a study showed that externally hired CEOs are 15% more expensive and are 84% more likely to have failed at the three-year mark than internal candidates2. In other words, poor succession planning can be very expensive and lead to significant turmoil in the organization. Even in the lower ranks, succession planning is a vital discipline. If a senior manager leaves and you hire externally, no opportunity for advancement was created for anyone. However, if you promote a manager into that senior manager role, you have created an opportunity for a supervisor to move into a manager role, and you’ve opened a spot for an individual contributor to move into the vacated supervisor role. By promoting internally, you have opened two new opportunities for employees to promote. But this only works if you have a system that actively develops your people, and that’s what we’ll be discussing here. Let’s look at 10 steps that every organization should be taking to create a healthy succession plan. Step 1: Good Job Descriptions I once consulted with an organization that estimated at least half of its job descriptions were out of date. The problem is that they were still hiring – against those out-of-date job descriptions. Right from day one, they were behind the curve developing their employees, because they hadn’t hired someone who matched the real (and unwritten) job description. They had to spend more time playing catch-up with the new hire, making them less productive to the organization initially. I can’t overstate how important good job descriptions are. Let’s take a quick look at what hinges on good job descriptions: • Job postings – These are almost entirely based on the job descriptions. An inaccurate job description means that you’re likely not recruiting the right people. • Hiring – When hiring people, we should be assessing them against what the job would require of them. If we don’t have good job descriptions, we’re not going to be assessing candidate-job fit very effectively. • Onboarding – Any good onboarding program looks to set people up for success. It should involve taking another look

at the fit between the new hire and the job description to see where focused development needs to happen early on. • Performance evaluation – We measure peoples’ performance (or should be) on at least an annual basis. What do we compare their performance against? The job description. • Promotion – When we promote people, we do so because we believe their skill set matches up well enough with the job description of the position they’re promoting into. Without good job descriptions, we’re not assessing this fit well. • Firing – How do we know when to part ways with an employee? In most cases, their performance is falling consistently short of what their job description requires of them. Without a good job description, how do we know when they’re failing or to what degree? Step 2: Position-Based Competencies Once you’re confident that you have the job description updated correctly, the next step is to distill what factors you believe someone needs to have to be most successful in this role – and we’re not looking at job skills here. When I walk a potential employer through our pre-hire assessments, I often ask the hiring manager for 3-5 things someone needs to be successful in this role. They’ll often say things like, “I need them to be a systems thinker. They’re going to be working across departments, and I can’t have them sitting in their silo.” Another one might say something like, “I need them to have strong attention to detail and have a strong executive presence, because they’re going to be making frequent presentations to the Board.” These are what we call ‘Competencies’. These go beyond the skills listed in the job description and are the ‘soft skills’ that can make the difference between an average employee and one who is going to be very successful in a role. No matter what position you review in an organization, there are going to be certain competencies that should be identified. Knowing these competencies can make a huge difference in successfully hiring new employees and developing the ones that you have.

FIA MAGAZINE | MAY 2025 48