Invest in Your High-Potential Employees as Part of Succession Planning
Ownership transfer and management succession (OTMS) in a closely held construction firm is challenging in the best of times. Transition brings a tightly interwoven set of challenges that includes—but is not limited to—people, money, legacy and emotion.
The last 10 years provided an ideal backdrop for succession thanks to multiple factors. Strong work backlogs, profitable work that accelerated management buyouts, an active mergers and acquisitions (M&A) market and up-and-coming leadership teams focused on building out corporate infrastructures for continued success all played a part.
While the COVID-19 pandemic slowed succession plans for many and required owners to shift their energy and focus elsewhere, they are now returning to succession planning. It is crucial to invest in your high-potential emerging leaders since they will be the ones shaping the company’s future going forward.
By identifying high-potential team members and developing them to take on their next roles, companies can build a consistent culture of leadership and sustain that through the succession process. These development efforts, paired with open dialogue early in the succession process, ensure E&C firms realize the benefits of quality succession planning.
Here are five tips that companies can start using today to set themselves up for a successful succession process:
- Reconnect with long-term goals. While many leaders may have a general sense of their own vision and business strategy, these central areas aren’t always clearly established, communicated and embraced by all leaders and employees. Leaders in E&C can avoid this problem by identifying the organization’s strengths and weaknesses in the context of business continuity; creating alignment around the direction of the company in the near and distant future; and identifying the core values that govern behavior and make up the organization’s unique culture.
- Focus on the people. A vital aspect of succession planning is understanding how people and talent impact the organization’s value. A firm’s internal pipeline of talent can be a gold mine; unfortunately, not everyone sees it that way. “In any succession planning process, I think people want to go to the numbers first,” said one E&C CEO. “They want to talk about the money. That’s not what’s important. I mean, rather it is important; but what makes the money work is the people. It is all about people, people, people.” In other words, a strong pipeline of talent is a critical component of succession planning because it guarantees that companies have internal candidates prepared to move into more senior roles.
- Don’t just zero in on one good candidate. Organizations get into trouble by identifying and developing one potential replacement for a specific role. This creates unnecessary risk. If, for example, that replacement decides to leave, the company will be back at the beginning of the succession planning process.
The other common pipeline challenge is not identifying replacements for every position. Without suitable replacements, potential succession candidates can become stuck in their current roles if no one else is able to fulfill their obligations. To avoid these issues, organizations should identify multiple suitable candidates and invest in their collective development.
- Integrate succession into your corporate culture. Self-sustaining talent pipelines are rooted in organizational cultures that prioritize learning and development. These organizations intentionally seek out opportunities to grow their people. They offer extensive formal and informal development opportunities and provide constructive feedback to employees. These elements promote retention and longevity by allowing team members to understand the career advancement opportunities that lie ahead.
- Use tailored training to address skill gaps. It is not realistic to believe that each current manager or leader will have all the necessary skills and experience to fill executive level roles in an ever-changing market. This reality can present significant competitive advantages for E&C firms that acknowledge this and put the time and energy into tailored training and development programs designed to address skills gaps commonly seen across the industry.
Internal development programs (e.g., in-person training, mentoring programs, on-the-job training), external development training programs (e.g., leadership institutes, cohort-based development programs, project manager academies), and formal education (e.g., MBA courses, other degree programs, industry certifications) can all help high-potential successors prepare to take over leadership roles. Further, using tailored intentional developmental efforts to address skill gaps makes E&C firms more attractive to candidates, which will be key to retaining skilled workers.
Building Your Best People
Companies that want to improve their internal approach to high-potential development can start by making programs as transparent and visible as possible. A transparent high-potential program will attract and motivate high performers to their maximum potential.
When designing a high-potential program, it is important to be specific about who you are going to develop. Ask questions like, “Do we know who the high potentials are? Do we really understand why they perform at a high level?” If this can be made clear and communicated throughout the organization, then more people will strive to elevate their performance to the level necessary to become high potentials.
To maximize the potential impact of development programs and efforts, don’t overlook the power in connecting your best people across the organization. Spending time developing them together as a group creates a strong network that allows them to learn from each other and challenge each other to be better. Building these connections will drive loyalty and collaboration. Finally, the organization must build the necessary systems and processes needed for success and then drive accountability.
