Why companies are preparing emergency succession plans

Other than the CXO roles, there are multiple functions within the organisation, which are critical to business and need a standby ready in case of unforeseen circumstances

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Succession planning is a lengthy ongoing process in any organisation. A successor is often groomed over the years to be able to step up.

Yet, due to the uncertainty that the pandemic has brought in, companies are now working on emergency succession planning. It is not just restricted to the leadership roles, but is done for all critical roles across levels.

A few months ago, when the UK Prime Minister Boris Johnson contracted the coronavirus, the country sprung into action to decide on a quick successor, in case the Prime Minister was unable to recover.

The pandemic may have alerted organisations across the world, but emergency succession planning is a must even in normal times. A company may lose its leaders all of a sudden, to not just health-related issues, but owing to other reasons too.

MVS Murthy

“Succession planning is not usually seen as a need-to-have talent-management function. While organisations would usually know where to look for a successor, most would not have a policy in place.”

When Steve Easterbrook, CEO, McDonald’s, was shown the door, Chris Kempczinski, US head of operations, had to quickly step into his shoes. While every company needs an emergency succession plan at all times, the pandemic seems to have amplified that need.

Biswarup Goswami, CHRO, Gujarat Heavy Chemicals (GHCL), says, “There is always a need to identify emergency successors as readymade talent who can take over a position in the blink of an eye.”

Goswami goes on to add that at GHCL they have identified 108 critical roles, and have identified emergency, short- and long-term successors for each. A succession planning exercise is part of every talent-review discussion.

“The talent pipeline of a company needs to be robust enough to have a person ready, even at the CXO level, to take over in times of need,” opines Goswami.

A good succession plan will identify emergency successors, two short-term and two long- term. Short-term successors can be identified as emergency successors if they qualify. Succession also needs to take into account all the critical roles within the company and not just the senior-most role.

A maintenance manager in a manufacturing plant, for instance, may not be a key role but it is certainly a critical one. Whether it is mechanical maintenance or electrical, there needs to be one person identified who can take over if the incumbent is indisposed. Hiring suddenly from the marketplace may be a viable and easier option, but can prove costly. A new person will need to get familiar with the operations and machinery leading to an increase in the breakdown time or cost of repair. Every machine in every plant is unique and a person accustomed to the plant needs to be kept in the pipeline.

Even an area sales manager’s role is a critical one, as she/he is close to the distributors and helps the company earn its revenue.

MVS Murthy, consultant, Infor, says that while the awareness is there for the need to have an emergency succession plan in place, it is not usually followed by all companies as a necessity. While progressive organisations may employ a continuous succession plan, most organisations may not really consider creating a strong policy for the same.

“Succession planning is not usually seen as a need-to-have talent-management function. While organisations would usually know where to look for a successor, most would not have a policy in place,” points out Murthy.

“While it is well known that a good succession plan, even for ad-hoc purposes, is necessary, somewhere between the management board rooms and the graduation classrooms, it loses its relevance,” he explains.

Goswami points out that there may be reluctance to train and groom talent for future succession, because it is assumed that they will shift to another job in a few years or less. Therefore, it may make more sense to just hire off the market. However, the situation does not improve for the company in this case. At best, there will still be a person working at a competency level below what is required for the job. It boils down to whether one is a ‘pro-talent’ company or a ‘poach talent’ company.

Biswarup Goswami

“There is always a need to identify emergency successors as readymade talent who can take over a position in the blink of an eye.”

Additionally, it also has an impact on future recruitment. Without a robust talent-development programme in place, it will be difficult to attract the new generation of workers, such as Gen Z or young millennials, for whom career-development takes precedence over most factors. It can end up hurting the employer’s brand.

Planning for future succession is not just HR’s prerogative, but also the organisation’s. The possibility of one or more senior executives coming down with the virus is a reason on its own to have an emergency succession plan in place. At the same time, there are other critical roles within, which have to be accounted for as well. Boards and directors right now have the opportunity to create the best practices as an emergency succession plan is relevant for all times.

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