One of the major sources of operational risk faced an organisation is change of personnel and specifically, the departure from the organisation of key personnel who have specialist knowledge vital to business continuity and/or to the management of risk.
There is a risk that important knowledge about business operations and task requirements (including risks and risk management plans in a particular area) may be lost to an organisation:
• When skilled and knowledgeable personnel move on from the organisation through retirement, resignation, dismissal or redundancy or
• When activities carried out the organisation are outsourced to external service providers, so that internal units are downsized discontinued, and internal knowledge banks are no longer maintained.
Succession planning is the process wherethe organisation proactively identifies potential leaders, or replacements for key positions, and prepares them (through systematic career, skill and personal development) to replace the current leader or key person if they leave or retire.
Risks caused a lack of systematic succession planning.
• Lack of leader development and leader transition management, creating ‘vacuums’ of leadership when a leader leaves the organisation, loss of strategic direction and momentum, potential for conflict and adversarial leadership transitions, poor performance due to hurried or unevaluated appointments, and loss of stakeholder confidence in the leadership. One example would be the traumatic, unplanned leadership transitions at Marks & Spencer between 1998 and 2004:
• Loss of continuity of leadership, and consistency of brand and organisational values, owing to lack of forethought in the succession and grooming of potential leaders.
• Lack of strategic innovation and capability for cultural change, because of an unquestioned tradition of internal, promotion, and failure to plan for new blood’ in key positions.
• Leaders or other personnel in key roles taking over positions for-which they are insufficiently prepared or developed, or with insufficient internal support.
• Loss of ‘critical knowledge possessed departing specialist staff, which has not been handed over to pre-identified successors (or stored in some form of knowledge bank, so that it is available to successors when required).
• Lack of critical skills possessed departing specialist staff, which have not been passed on to pre-prepared successors.
A systematic approach to succession planning might include the following activities.
• Identify key positions, transitions in which are an area of vulnerability for the organisation because of knowledge and skills that are strategic, essential for operational continuity, or rare.
• Review the job description and person specification for a key position, or conduct job analysis to establish the key tasks, responsibilities and knowledge requirements of the position.
• Use the performance appraisal system of the organisation to identify individuals with potential to be promoted or transferred to the post in future (including skills, aptitudes, motivation, aspirations and soon).
• Develop and implement talent management plans for identified potential successors: appraise their current skills, experience and knowledge and identify training needs; appoint a mentor to guide the potential successor through the transition process; plan education, training and other developmental activities (project or committee work, job ‘shadowing’, coaching and so on) to prepare the potential successor for the position.
• Implement internal management development programmes: career development planning, management education and training, mentoring and so on.
• Review recruitment policies to ensure that there is a preference for internal recruitment and promotion (and related succession planning) for key positions.
• Implement transition plans (as for supplier transition): where possible, utilising. the resource represented outgoing personnel to brief and coach their successors; to ensure that their knowledge is documented; and to ensure that any work in progress is well-organised, documented and prepared for handover.
• Conduct exit interviews with outgoing key personnel, aimed at determining reasons for leaving (to reduce staff turnover in future) and securing information necessary for smooth transition.