Succession Planning - Preparing for the Exit of the Baby Boomers

On our ‘Engaging People, Powering Companies’ podcast last week,

Amrit shared statistics, that, if you are intending to get to your succession planning someday soon, but it’s never as much as a priority as the latest priority, then these may have been rather sobering! He shared that here in the UK, 13.76 million people (24%) are of the Baby Boomer generation, and following the pattern in the U.S., will retire in 2024, seeing a wave of knowledge and skill dropping out of our workforce. In fact, in the U.S. this year, more people than ever before in history, will celebrate their 65^th birthday.

In the next four to five years, we will see a big exit of those in the C-Suite retiring and taking their knowledge and experience with them. Less than ten percent of organisations are building succession planning into their strategic objectives, according to research shared on our podcast, yet the phrase that seems popular when talking about the next level being able to step up into these roles is, ‘they just aren’t ready yet’. This leaves organisations at risk because we are not facing into this issue. Instead of taking affirmative action to get them ready, other things keep trumping this very key topic.

We hear all to often, the issues organisations are having in attracting the right talent, and at the other end of the spectrum, here we are, about to lose key people, critical to delivering strategic objectives and goals as they are on their way out. This is a problem! Amrit draws on a study published in the Havard Business Review by Khurana and Nohria, across two hundred organisations over fifteen years, that found when promoting an internal recruit into a senior role, into a well performing organisation, it didn’t have any significant impact on performance, suggesting stability. However, if organisational performance was good and it was an external hire bought into a senior position, then the research showed they had the biggest negative impact on performance. 

This was based on CEO succession planning in particular, and the study shows that if an organisation was performing badly and someone external came into this position, it improved performance. In further research by Matthew Bidwell (Wharton School of Business), we learn that external hires receive ‘significantly lower performance evaluations for their first two years on the job than do internal workers who are promoted into similar jobs’. It would appear then, that promoting from within to maintain stability of performance makes sense and is a far less risky option. This though takes forethought and planning, and it isn’t always as perhaps we’d expect, that a new hire will bring fresh blood and vigour to a business. Instead, it seems to be based more on what performance is like currently, whether an internal or external candidate is the right decision.

So how do we assess performance and highlight those with potential? Of course it is subjective, and people can get stuck in boxes that they have perhaps always been in, and we struggle to see them in a new light, which could allow us to believe in their ability to step up and be the leaders of the future. Is it that we need to start giving people a chance? What if we could check in with our own inner narratives and beliefs about the people around us and give them a chance to prove us wrong?

We could take inspiration from graduate programmes and make it our business to allow people exposure to areas they wouldn’t normally get to experience, beneath the safety of the C-Suites wings! Imagine, one day a week dedicated to succession planning, where those with potential, get to have a go. To learn from the best, on the job, with the support and wisdom of those coming to the end of their careers. It may just uncover hidden talent of those already there, perfectly capable, and a potential great fit, from the pigeonholes they have been living in for maybe long enough. And to see people out of their comfort zones, in new situations and scenarios may bring fresh perspectives not only about what we believed about their capabilities, but also about how things have always been done.

Who will step in when you are done? Someone new that looks good on paper and talks the talk, or someone you know has dedicated their career to your organisation, who knows the landscape and potentially has the same values, that has had the opportunity to be mentored. Someone that can step up in a way that will feel more seamless, keeping the cogs moving for the performance and the people, without the distraction and noise of waiting to discover how this new recruit is going to get on?! Or is it time for fresh blood?! Whatever it is, the time is coming, if not here, to face into this before it is too late, and we risk losing the wisdom that has been built over decades of crafting and grafting. Let’s plan for the success of the future and not just leave it to chance.

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