Succession planning and the Peter principle
Have you ever come across a manager or a key position employee and wondered how they reached that position? Yet, when speaking to them, you realize they’re just not the right fit for the job. If you’re nodding your head vigorously in agreement, then you’ve just been introduced to the Peter Principle.
The Peter principle, a concept by Laurence J Peter, states that “People in a hierarchy tend to rise to their “level of incompetence.”
The further explanation of the principle is that an organization often promotes or prepares people for higher or key positions based on their past performance. This goes on until the employee is no longer competent in their position. Are you wondering how the Peter principle is connected to examples of succession planning? Well, it is one of the most critical factors.
Let’s take an example to make it clearer.
A sales manager at Company X has suddenly resigned due to health issues. The company needs to fill this key position immediately so as not to disrupt the operations. They promote the salesperson within the team that has the best sales track record. That’s only fair, right? However, it so happens that although this newly promoted employee has an outstanding sales record, they might find it extremely difficult to execute their role as a manager. A good sales manager needs a different set of skills and competencies than a salesperson. They could lack necessary skills, like being able to motivate their colleagues, distributing tasks and responsibilities, communicating with different management levels, conflict management skills, etc.
This may lead to underperformance and feelings of demotivation, frustration, and anxiety. On the other hand, the succession planning model involves building core strategies so that you do not fall prey to the Peter Principle and can fill in a key position with the right employees at the right time. It includes:
- Identifying the requirements for key roles
- Developing a succession planning model with correct assessment and training tools
- Investing in the talent management processes
The three points above can help prevent organizations from falling prey to mediocre succession planning management and assist them in taking effective leadership decisions based on the value they will bring in the future.
Succession planning model with examples
Succession planning means an organization is prepared to replace key employees who leave their positions, suddenly or otherwise. Each step in this process is critically important to ensure that your successors will add to the company’s future success. Below are examples for each step to help you better understand the sample succession plan document.
Identifying requirements for key roles
It’s often only after someone leaves an organization that a gap in knowledge and expertise is felt. This gap can take a while to fill and could complicate business operations. Therefore, succession planning examples emphasize identifying the key roles, skills, and competencies needed for the organization to constantly be operating at peak efficiency. There are generally two levels of management that need to be a part of identifying the requirements of key roles and positions. Below are the examples of responsibilities of each department in succession planning.
The managers of each department should actively recognize the key areas and positions that could disrupt operations if left vacant. They must identify the knowledge, skills, and abilities needed for key positions. If they notice any critical gaps, they should tailor the learning and development plans accordingly. Below are some responsibilities that managers must perform to implement a successful succession planning model.
- Discuss career development with members of their teams
- Create opportunities for employee development
- Organize performance review meetings to understand if there is a need for further development.
Human resources department
The HR department plays a crucial role in succession planning. They advise managers to identify vulnerable positions that may soon fall vacant. For example, the employee in question could be retiring, moving to another city, or taking up a job in another company. This oversight allows managers to be alert and provide ample time to prepare a successor for a key position on time. Their responsibilities include:
- Engaging in ongoing discussions with new/old prospects
- Organizing performance management exercises and talent review meetings
- Consulting with different departments to understand the current and future human resources
- Evaluating succession planning initiatives
- Helping to communicate key areas and positions to employees.
Developing a succession planning model with correct assessment and training tools
Once the people who are part of the succession planning process are recognized, the next step is to equip them with the right tools. These tools can help to match the right employees that will fit the future needs of the organization and help it achieve greater and consistent success. Below are some succession planning tools that can help walk you through the process.
Outlining the succession plan
Start with ensuring that you have a clear outline of the aim of the succession plan. A successful succession plan must include the below criteria:
- A focus on progression and movement as well as on promotions for development purposes.
- Guides for individual development
- The ability to empower employees to self-nominate.
- Ensuring that people on the plan are very well-versed with how it works.
- Providing rewards and recognizing employees that support the plan.
- An element to “retain” and improve individual performers.
- External candidates to spur competition
Establish a board of key decision-makers
All the key decision-makers must be on the same page so that the plan is effective and can be enacted when the need arises. These key decision-makers constitute a board composed of managers, HR, stakeholders, C-suite, and the owner or stockholders. Together they can plan to grow and develop internal prospective candidates; note down the succession timetable, and create a contingency plan in case of emergency.
Selecting potential candidates
Selecting and analyzing suitable candidates can ensure that the employees do not feel forced into a position they may not wish to obtain or that is appropriate for them. It’s possible that, when introducing a range of evaluation methods for prospective candidates in your succession planning model, a sense of favoritism may seem to come into play. However, it’s necessary to make clear that decisions are based on quantitative and objective measurements that reduce bias, and the influence of organizational politics. A good way to achieve this is to practice transparency in the evaluation process.
Recording technical skills
Listing down the technical skills, educational background, and work experience required for the key position can help select candidates that have the right capabilities to perform the job. These include requirements like:
- Education and certifications
- Work experience
- Strengths and weaknesses
- Promotion readiness
- Reference checks
Psychological profiling has become a top-rated tool to select suitable candidates. This is done through psychometric assessments and interviewing, to identify any blind spots or characteristics that can derail the prospective candidate.
Selecting a training plan and activities
Now that the prospective candidates are identified, it’s time to develop a training program to support their growth. There are numerous succession planning models designed to develop the current employee into future leaders as the elected successors within the organization.
This method provides an opportunity for the selected candidate to demonstrate additional capabilities. Examples of stretch assignments include developing a new market entry plan, leading a new technology platform, or any tasks that are currently beyond their level of knowledge or skill and that will challenge them to learn and grow.
This includes investment in academic programs such as higher education or enrolling them in any formal programs that can help them to upskill. Take a look at the most sought-after skills of 2022 here.
Motivate your employees to take charge of their career
The success of succession planning depends on fostering and promoting the continual development of employees. When you encourage a learning culture within your organization, your employees will be prepared and motivated to tackle bigger challenges. In our guide, you can understand the concept of upskilling, reskilling, and cross-skilling that can be detrimental to future-proof your workforce.
In this method, an experienced senior employee coaches and prepares the selected candidate for the demands of a more leadership-based role. The importance of this type of coaching is evident through leadership development statistics that show that 71% of companies do not feel their current leaders can carry their organization into the future.
Measure and evaluate the progress
To ensure that the succession plan is working, you should review and evaluate the model and its effectiveness.
Here are some useful metrics to measure and evaluate the success or failure of the succession planning model.
- The percentage of positions filled internally as compared to external hires: as external hires are more expensive; a high rate of internal placement indicates that the plan has been successful.
- The percentage of employee promotions without taking tenure into account: while generally, promotions often go to candidates with the longest tenure, an effective succession plan selects the candidates most aligned with the key position.
- The percentage of promoted employees that are promoted again within 3 years: this is a clear indication that the first succession strategy was successful as the employee has been able to exceed their job requirements.
- The percentage of quick fill-in when a sudden job opening occurs wherein preselected employees can immediately fill a sudden “unplanned” opening without a loss in productivity.
Investing in the talent management processes
Effective succession planning includes making judgments and predictions to identify high performers who can succeed in meaningfully more significant or more challenging roles. Thus, the question arises, “What certainty do you have that you are investing in the right people? What if you are a victim of the Peter principle?”
Take a look at statistics that show how catastrophic things can be when businesses fail to invest appropriately in future employees.
- 24% of employees worldwide are “actively disengaged.”
- 75% of companies agreed that it was more time-consuming this year than last year to find the right talent to fill positions.
- The cost increased to replace employees have increased to 30% of an annual salary.
These numbers can affect both employee happiness and your company’s overall productivity. The solution to this nerve-wracking dilemma lies in investing in a talent management process that relies on scientifically proven processes to help organizations tackle the challenges of succession planning.
To understand how HRForecast can help you prepare for key people leaving or any questions that aren’t covered here, get in touch with one of our experts.
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