succession planning is also good talent management

Creating a succession plan provides an opportunity for the business to drive the development of the next generation of senior leaders, aligning leadership at the top of the organisation with the strategic needs of the business – this can be easier said than done, depending on culture the departing MD is leaving behind.

The foundation for MD succession planning is the strategic direction of the business, from which the profile and selection criteria for the next MD can be developed.

Getting this profile right is key, because it provides a roadmap for internal candidate development plans and a framework for selecting potential candidates for the job.

The succession plan should think long term. Look beyond just replacing the current boss – who should be training up for the job after them?

MD succession is an ongoing process so it is important to have a pipeline of talented candidates undergoing development as they rise up through the business – it is a good idea to have promotional pathways open from all areas of your business as you never quite know where your next MD may come from.

Succession plans should evolve with your requirements

You should create a written succession plan. This document should detail how the Directors are elected and replaced, how successors are to be chosen and the respective roles of the MD, the chair and where appropriate the board and any management committees within the business.

Potential candidates should be assessed against industry benchmarks and these criteria should be detailed in the succession plan. An emergency succession procedure should be included in the written succession plan – in the case of a sudden vacancy for a new MD or Chair for that matter.

Once you create your written succession plan, the Directors/board should review it at least once a year as part of your ongoing risk assessment and to ensure that it is fit for purpose.

Future internal candidates in the business should also be reviewed as part of this process, in order to manage the pipeline of potential future leaders of the business. If the capability to manage this process doesn’t exist within your business now, it would be worth introducing this in 2022.

We can talk to you about how to go about getting started and we can make introductions to others who can help you to introduce talent management strategies, as well as MD search, if you have a pressing need.