Succession management research highlights its vital role in business survival

A ten year follow-up research programme, examining the impact of succession management on organisational success, has identified proactive succession management as a key factor in shaping corporate survival and success. But it has also indicated that many organisations may be approaching succession management in the wrong way, implementing practices and processes that are failing to hit the mark.

The research programme was conducted by management consultancy, AM Azure Consulting. “In 1998 we conducted an in-depth analysis of a broad spectrum of organisations from the corporate and public sectors, reviewing their business capability and the succession management practices they had in place,” explained Andrew Munro, director of AM Azure Consulting. “We let the clock tick for ten years and have now looked at who survived and who succeeded. The results indicate the impact of proactive succession management, but they also ask some difficult questions of conventional practice.”

Research results

It’s been a tough decade for a number of the organisations. Of the dataset, only 60 percent had survived in their original ownership profile, and only a quarter could be described as 'succeeding' - emerging out of the last decade in better shape than they entered it.

Was succession management activity ten years ago a dynamic in shaping this pattern of business success and decline? The results are compelling. Succession management did make a difference: positive succession outcomes shaped success and a lack of proactive succession contributed to decline. Organisations lacking effective succession management were five times more likely to disappear than those that had established robust practices. And high-impact succession organisations were three times more likely to succeed than those organisations reporting limited practice in 1998.

However, some aspects of succession management activity did not seem to make much of a difference. Organisations that had invested in an infrastructure of high potential assessment, general management training and development, succession reviews and information technology didn’t see significant gains in organisational performance. The existence of a ‘good’ process wasn’t an indicator of positive organisational outcomes.

What did improve the odds of survival and success? Organisations that had made more senior executive appointments from within, which managed retention proactively, and had built flexibility within the executive population, were more likely to survive and succeed. Other key drivers of survival and success included: the development of specialist expertise to build high levels of technical know-how; a targeted management development strategy to focus effort selectively on key individuals rather than any attempt to build capability throughout the management ranks; the use of job moves and coaching to accelerate development (rather than training or business education); and personal time and commitment from the top team in succession activity.

The analysis also looked at the impact of leadership. Overall evaluations of general leadership effectiveness in 1998 did not predict organisational outcomes by 2008. But low levels of visionary and entrepreneurial leadership did reduce the chances of survival over the last decade. And organisations with higher levels of leadership capability in trouble shooting and the management of people processes doubled the chances of succeeding.

These results seem to highlight two sets of enterprises: organisations that prioritised activity and focused on the substance of succession management and those that implemented ‘across the board processes’.

‘Substance firms’ had a top team that took a personal involvement in succession management, identified organisational priorities and targeted investment on key roles and individuals, managed retention proactively, recognised that leadership requirements change as the business moves on, ensured that specialist expertise and technical know-how was understood and valued, and utilised job moves to provide leadership experience.

‘Process’ firms seemed to see succession management as a set of programmes, introducing high potential initiatives, implementing general management competency frameworks, training and business education, and conducting talent reviews that covered the full management structure. The problem is that these initiatives didn’t direct sufficient attention or investment on the key roles and people that would have most organisational impact.

Summarising the pattern of results, Andrew Munro comments: “Talent management is high on the corporate agenda and these results provide huge encouragement for those keen to take a long-term view of leadership planning to ‘future proof’ their organisations. However this analysis also challenges organisations about the design of succession systems and the tactics they’re deploying in implementation. The key message seems to be one of focus around well thought through business priorities that identify specifics - of leadership requirements, of roles and of individuals. The attempt to implement blanket organisational-wide processes based on a sense that we need better leaders won’t drive organisational success.”

The full analysis of this research can be downloaded here.

•Date: 4th June 2008• Region: UK/World •Type: Article •Topic: BC statistics
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