"Succession planning should be a core part of every organisation's human resources strategy," says James Carss, Hong Kong executive general manager of recruitment firm Hudson. "Performed correctly, succession planning will provide the basis for recruitment, retention, training, preparation for career advancement and promotion."
According to Carss, companies that build a structure of career advancement through the recognition of talent need to set short, medium and long-term goals that provide space for employees to grow within a company. This includes recognising staff who can creatively contribute to that process by being agents of change.
"Succession planning means that there are individuals set to grow and take a company to new places and face new challenges," he adds. "Things become far more transparent, and goals can be set with specific achievable outcomes."
Multinational corporation Jardine Matheson has put in place an innovative measurement system that aims to identify "potential". It uses development centres in which it places people in simulated positions of two levels above their existing role for a day. "What they do well, and what they do less well in this simulated role are measured against a special template," explains Ritchie Bent, group head of human resources at Jardines.
"What succession planning has done is allow the businesses to evolve and grow while almost [but not completely] minimising the risk of losing key people."
While Jardines' succession planning strategy is primarily aimed at its managerial level, the process can begin even before entering the workplace. For financial services company Deloitte, the process starts on the campus.
The Deloitte Club, established among universities in Hong Kong since 2003, aims to identify university graduates with the potential to join the industry.
"The objective of succession planning is to build the right talent in terms of skill sets and mindset to meet the [firm's] current and future needs," says July Kong, director for human resources at Deloitte China. "However, with a limited supply of talent in the market, we find it competitive to hire and retain highly qualified employees with potential."
Making accurate assessments of how employees can fit into the future of a company can be challenging. Much rests on the company's ability to nurture talent and position it correctly.
"A company is somewhat like a garden," Bent says. "If the skills and aspirations of people are not cultivated, the garden will fall into disrepair. But succession planning alone is not enough. Career planning [which recognises employees' aspirations] must be factored into the equation for these processes to achieve the ultimate goal - that of sustainable growth in shareholder value."
- If a company hires poor performers, it can end up with a lack of talent which restricts succession planning.
- Reviews, psychometric testing, assessment centres, appraisal processes and peer feedback reports are common ways to plan successions.
- Knowing where to position transferable talent can be problematic. Auditors may choose to work within the accounting profession; but they direct their talent towards a bank or a property development company.
- Leadership continuity and succession management are also important for business sustainability.