More than half (55%) of UK finance directors admit to having no succession plan in place in the event they choose to leave their current role, according to new research* from leading recruitment specialist Robert Half UK.
Succession planning strategies are vital for ensuring organisations maintain a supply of well-prepared senior executives. Companies that fail to implement a succession strategy are left with the time-consuming and expensive exercise of replacement when someone vacates a critical role in the organisation.
The research reveals that more than two thirds (39%) of UK finance directors cite ‘lack of existing internal talent’ as the primary reason preventing them from identifying a successor, though this figures rises to more than half (55%) for publicly listed companies. One in four cite ‘lack of time to develop and mentor’ as the primary factor, followed by ‘lack of time to identify their successor’ (15%), ‘lack of exposure to senior-level initiatives for employees’ (12%) and ‘lack of professional development opportunities for employees’ (8%).
When asked how they would foresee a successor being identified for their role, finance directors said external permanent hire (40%), local internal promotion (26%), international transfer/internal promotion (23%) and interim professional until permanent hire is selected (11%)
Phil Sheridan, Managing Director, Robert Half UK said: “With a raft of high profile senior resignations over the past year, it is surprising to see such a large proportion of financial directors without a chosen successor, or indeed the pool to choose from. As a result, the future continuity and performance of those businesses is at risk.”
Finance directors in the Midlands are the least prepared for succession planning, with an average 60% who have not identified a successor, followed by 58% in London and the South East, 56% in the South West and Wales and 46% in the North and Scotland.
Sheridan continues: “It’s a common misperception that succession planning is only for large companies. However, it is essential that businesses of all sizes prepare selected employees to later assume specific senior roles in the firm. In addition to implementing formal succession plans, employers should look at ways to help manage the process further, whether it’s offering managers with executive potential more training and development or bringing in interim employees until a permanent hire is selected.”
200 UK Finance Directors were asked, ’What primary factor is preventing you from identifying a successor? Their responses:
Lack of existing internal talent 39%
Lack of time to develop and mentor 25%
Lack of time to identify 15%
Lack of exposure to senior-level initiatives for employees 12%
Lack of professional development opportunities for employees 8%
Robert Half’s three tips for efficient succession planning:
- Take both a linear and holistic approach
Determine which positions must never be left vacant in the firm starting at the top of your organisation: identify managers who have executive potential and offer them training and development opportunities. In the meantime, groom potential successors for these employees’ roles. Apply this strategy throughout the organisation, as deep into the business as necessary to ensure operations won’t be seriously disrupted in the event that one or more employees leave.
- Look for talent throughout the firm
Keep in mind that the best future leaders may not always be the people next in line for promotion. This assumption is a common mistake many employers make that can result in talented workers leaving the firm because they perceive a lack of advancement opportunities.
- Make succession planning part of your culture
Because it can take time — potentially, years — to help talented staff members develop into confident and well-prepared business leaders, it can be difficult to treat the succession planning process with the ongoing sense of urgency it requires. The effectiveness of a succession planning program depends largely on active and visible support by top management. Their engagement sends a powerful message throughout the organisation that such efforts are essential to the firm’s long-term vitality.