Succession planning is a core component of talent management. Companies that proactively manage human capital assets, including maintaining steady flows in their talent development pipelines, are decidedly better positioned to succeed over the long-term. The benefits of proactive talent management include:

• Ready availability of individuals who possess the specific knowledge, skills, and personal qualities needed to assume key positions
• Minimal down time caused by positions remaining vacant or being covered by someone not skilled in that position and having competing priorities elsewhere
• Little or no time to acclimate to corporate culture change
• Less disruption and more consistent organizational performance
• Significantly reduced risk of costly hiring errors
• Higher talent retention rate

Despite the genuine benefits of developing and maintaining a strong leadership pipeline, many companies are falling short in this regard. Davenport classifies companies in three categories. First are those having the cultural predisposition and systems needed to do succession planning effectively. "These organizations have a sense of career mobility and internal development."

"They also vigorously recruit and develop talent in every key area," he explains. He estimates these organizations to comprise about only 15 percent of companies. Those in the second group, he says, have some sense of the need for succession planning, have a thoughtful approach for filling vacancies when they arise, and typically engage in some management development efforts. He estimates about half of all companies to be in this group. The third category, perhaps 35 percent of organizations, comprises companies where succession occurs largely by default. They may be growing too fast, financially troubled, or otherwise lacking the resources that effective succession planning and management development demand. If these estimates indeed reflect reality, then approximately 85 percent of companies are falling short in deploying full, proactive, succession planning programs.something likely to grow increasingly evident as the nation's management and labor pool contracts.

Challenges of Effective Succession Planning

Successful succession planning, as we've seen, is an ongoing and complex endeavor that is necessarily broad in scope. It therefore presents significant barriers to both implementation and long-term maintenance. Here are some of the more challenging obstacles:

• MULTIPLE OWNERS: Traditionally, HR has been considered owner of the succession planning process, but meaningful success really requires a genuine sense of ownership and commitment at many levels of the organization. While HR may be best positioned to oversee the process, it can never fully know or evaluate every process participant the way managers and supervisors can.
• NUMBER OF POSITIONS: All but the smallest of organizations have a substantial number of positions critical to long-term performance, whether these involve leadership skills or technical expertise that would be difficult to quickly replace. Comprehensive succession planning must incorporate all such positions; yet, as the number of positions grows, so too does the administrative burden.
• STRATEGIC ALIGNMENT: Succession plans need to reflect long-term organizational goals and strategies. Companies must give thoughtful consideration not only to the plan's design and implementation, but also to sustaining the process over time. As strategies and goals shift, so too must the plan if the organization is to recruit and develop the workforce its future success will require.
• ORGANIZATIONAL COMPLEXITY: Conglomerate, geographically-dispersed, multi-industry, and other complex organizational forms significantly increase the challenge of succession planning. Often, higher-level positions require well-designed cross training to inculcate the unique knowledge and skills success in the organization requires.
• ORGANIZATIONAL CHANGE: As companies evolve in response to marketplace threats and opportunities, the skills, talents, and expertise they will need to thrive evolve, as well.
• EFFECTIVENESS & EFFICIENCY: The larger and more complex an organization, the more challenging it is to maintain an effective and efficient succession planning process. Yet, by definition, the best process is the one that enables the firm to identify the best candidate in least amount of time and at the lowest cost.

These, then, are some of the higher hurdles companies must jump if they are to have a meaningful succession planning process. Perhaps they help explain why so few are able to do it consistently and well. Nonetheless, succession planning provides significant competitive advantage to companies that take it seriously, and serious risk to those that do not.