An organization’s success depends, in large part, on having the right people in the right roles. Without advance planning, an organization can find itself in a difficult situation when an important role suddenly becomes vacant. This article offers some suggestions on how to prepare for succession.
Whenever I’m asked to describe what makes for a successful CEO, I usually want to say that it takes a person with the temperament of a good emotional support pet. A more serious answer would be that it takes someone who enjoys managing people and thrives in that role or, more broadly, someone who understands that an organization’s success depends on having the right people in the right roles. Sure, building and sustaining a successful organization requires a lot more than just the human resource part. But if you get that part right, the rest often comes relatively easily.
A critical aspect of getting the people part right is succession planning. By this, I don’t mean CEO succession planning. While that’s obviously important, I mean succession planning at all levels of the organization. Every type of organization must grapple at times with succession issues. This is certainly true for organizations in the insurance sector, whether they be insurers, reinsurers, brokers, program managers, TPAs, pools or pool administrators. Indeed, the demographics of the aging employee population in the insurance world make the need for succession planning particularly acute.
Unfortunately, too many organizations don’t think about succession until a key person has left. Then the mad scramble to fill the role begins. By that point, it’s often too late to make the best decision. Instead, organizations in this position often settle for the next in line regardless of that person’s suitability for a new role.
How can an organization better plan for succession? Here are five suggestions:
First, don’t just plan for filling leadership roles. Many of the most important jobs in an organization are not held by managers. Too many succession plans ignore such roles and therefore come up short. A robust succession plan starts by identifying all key roles at all levels and then develops a succession plan for each one.
Second, a good succession plan is like a computer operating system - it needs to be updated regularly. There are lots of reasons for this, but perhaps the most important is that your staff’s individual development and goals are not static. Changes need to be assessed against the plan. At a minimum, therefore, an organization should review its succession plan annually.
Third, it’s important to think outside the silo and the presumed lines of succession. The natural tendency is to start and finish succession planning according to the current organizational chart, but that has at least two problems. It fails to consider good candidates from elsewhere in the organization. In addition, it can lead you down the path of the Peter Principle. For those who might never have heard this term, it refers to the tendency of organizations with a hierarchal structure to continue promoting good people to the level at which they fail. A good succession plan doesn’t assume that a strong number two will be a strong number one. Often that isn’t the case. Don’t fall into the trap of concluding that you owe someone the next job just because they’re in the presumed line of succession. If you do, you may be setting up that person, and your organization, for failure.
Fourth, it’s perfectly acceptable to conclude that there are no internal candidates for certain roles. An example is a small organization that has a single actuary on staff. Most likely it would be impracticable to hire an additional actuary solely to have a successor on hand. In this instance, the succession plan would involve having a clear understanding of where to find an actuary when the need arises.
Finally, a critical part of a succession plan is training and exposure for succession candidates. The plan is just a piece of paper. The more you can do to prepare succession candidates for the next role, the easier it will be for them to assume it.
There’s lots more to be written about effective succession planning. If you follow these tips, however, you’ll be well on your way toward positioning your organization for a bright future.
The material contained in this publication has been prepared solely for informational purposes by General Star.General Star National Insurance Company is licensed in all states, the District of Columbia and Puerto Rico. General Star National Insurance Company has its principal place of business in Stamford, CT and operates under NAIC Number 0031-11967.
General Star Indemnity Company is an eligible surplus lines insurer in all states, the District of Columbia, Puerto Rico, and the Virgin Islands. It has the status as an unlicensed insurer in California and operates under NAIC Number 0031- 37362. Insurance is placed with the General Star companies by licensed producers and, for risks that qualify, by licensed surplus lines brokers.
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