Should you expand your succession planning efforts to include external candidates?

Most U.S. companies do not have an adequate pool of internal candidates to replace employees slated to be promoted to the next management level, including the most senior executives, according to Salveson Stetson Group. The majority of companies have failed to establish a succession program that addresses the shortfall they have of candidates for key positions in the company.

To address the succession problem, many organizations are considering external candidates. The Salveson Stetson Group suggests that to properly undergo succession planning, the following steps should be taken:

• Conduct a succession audit. It is essential for companies to maintain an accurate account of current succession readiness by conducting a succession audit. This audit should include an in-depth review of the current succession planning model, identify talent gaps for critical company roles and define the core talents, compentencies and experiences needed to qualify for each position.

• Aggressively develop talent within the organization. After confirming a solid succession planning program, companies need to do a much better job of preparing their current employees for higher-level positions. Businesses need to identify and develop the employees who have the qualities they desire in senior-level managers. This strategy may include putting high potentials in developmental assignments, mentoring by more senior executives and outside coaching on management and leadership skills.

• Accept that your next generation of leaders may not be working for you today. Companies must develop their knowledge of the talent that exists within their industries or within the functional areas where they have significant internal gaps. Getting to know the high-potential external talent in these areas before you need them will be a competitive advantage with more and more businesses going outside to fulfill their succession planning needs. As a result, organizations that proactively build succession pools which include both inside and outside talent will be successful in the long run.

• Align the succession plan with overall company goals. The final step should be to make sure the succession plan reflects not only current, but future skills required to run the company. What makes for a good CFO for your company today may be quite diffeent three years from now. Periodic review and revision of the plan is an absolute requirement of a successful process.