Michael Timms, Founder & Principal, Avail Leadership
When it comes to finding talented managers and executives, there really are only two options: recruit them or develop them from within. Common thinking is that although it may be a little more expensive to recruit them, it’s worth it because it’s quicker and easier. But that assumption is dead wrong.
Recruiting is often far more expensive than companies realize. The hard costs of advertising, recruiting agency fees, relocation expenses and signing bonuses pale in comparison to the soft costs of recruiting. Recruiting consumes an enormous amount of time, from the recruiter leading the search to the managers that must interview multiple candidates. But the biggest cost that usually goes unaccounted for is the lost productivity resulting from the vacant position.
People create value. When a position is left vacant, value is not being created. When vacancies take three to six months to fill, the lost opportunity cost of that vacancy combined with the hard costs become astronomical.
The Forgotten Alternative
Compare that scenario with a succession plan that works. A corporate controller gives two weeks’ notice of their departure. The chosen successor, a senior accountant, has been prepared over the last year to take on that role. She spends the next two weeks working closely with the outgoing controller to ensure she is up to speed with all the open files and projects that the outgoing controller was working on. An accounting clerk is promoted to fill the vacancy left by the senior accountant, and the company recruits an entry-level accounting clerk to fill that vacancy in turn. The result is an easy search for recruiting, virtually no downtime, and seamless knowledge transfer from outgoing incumbent to incoming successor.
Promoting internal candidates who have been prepared for the next step in their career minimizes or even eliminates the downtime associated with turnover of critical positions. These candidates get up to speed faster and hit the ground running because they already have relationships with key contacts and know the processes. This institutional knowledge is another cost savings that provides tremendous value for the company.
Make Succession a Priority
Succession planning is one of those things that’s forever on the “to-do” list, but often gets done off the side of people’s desks. When this happens, there’s little chance that succession plans contain anything useful that will actually fast track the development of high potential employees.
After interviewing over fifty executives about the effectiveness of their succession plans, one thing became absolutely crystal clear: if the CEO isn’t the driving force behind succession planning, it simply won’t work, because it will continue to be done off the side of people’s desks.
Here’s the litmus test to know if your succession plan will work: are you, as CEO, driving succession planning and turning to HR for support, or is it the other way around? If it’s the other way around, it’s time to re-evaluate the priority your organization places on the development of its people, and get serious about succession planning.
[Image courtesy of hin255 at FreeDigitalPhotos.net]
About the Author
Michael Timms is a management consultant, author and speaker specializing in organization and leadership performance and the founder and principal of Avail Leadership. Timms is also the author of the new book, Succession Planning that Works. You can learn more about Timms and his book at www.availleadership.com and connect via Facebook, LinkedIn and Twitter.