While a succession plan can provide a safety net in the face of unforeseen events, no succession plan is completely foolproof, warns consulting firm Cutting Edge Information.
According to new research, companies must continually assess and develop their succession plans by putting methods in place that measure the success and improvement systems that are currently in place.
"When an organization goes to choose performance measurements, first steps are to identify desired outcomes and then select metrics that correctly assess progress toward those outcomes," said Jason Richardson, president of Cutting Edge Information. "Using these types of major performance measures can help executives and human resources teams develop executive talent and improve succession planning."
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Cutting Edge Information identified nine key succession plan measurements. These include:
- Number of roles within the organization that have a successor in place.
- Percentage of candidates "ready now" compared to those still needing additional years of training. This metric reflects bench strength.
- Ratio of internal to external talent – This can also indicate the strength of an organization's bench. If a high number of leaders are coming from external sources, it may be time to build a stronger bench.
- Employee attrition rates – Attrition rates can reflect how satisfied workers are with their jobs and can serve as a barometer of the talent management system's effectiveness.
- Candidates' length of time in leadership roles.
- Leadership representative of workforce diversity.
- Alignment of company actions with strategic values and vision.
- Stakeholder buy-in – A balanced succession plan will be approved by a variety of sources.
- Coordination with risk-management teams to assess whether leadership decisions have decreased risk.
Cutting Edge Information's new study, "Succession Planning: Preparing Tomorrow's Leaders" is designed for human resources and executive teams at companies of any size, industry or region and showcases succession planning best practices with real-world case studies and sample plans from 25 of the world's top companies.
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