Robert Half’s Executive Search practice is one of the world’s leading advisories for board of directors and supervisory boards. Our bespoke advisory model is renowned for combining a hands-on boutique approach with our global strength and versatility. We take great pride in our proven track record of filling mission-critical executive positions for our clients – in particular for SMEs and mid-sized companies, whether they are listed, private-, family-, or private equity-owned.
Cameron Eustice and Patrick McKinney are Managing Directors of Executive Search at Robert Half. With almost 50 years of combined experience in the realm of talent acquisition, they’ve each earned a reputation for excellence. Partnering with Boards, C-suite, and Executive/General Management to deliver superior leadership appointments, both Cameron and Patrick have observed the importance of business succession planning firsthand.
Cameron says, “We act as our clients trusted advisor, partnering beyond the search assignment itself. We build competency-based search processes that reflect the desirable behaviours and cultural DNA of the organisations with whom we partner. We know that appointing the right candidate has a direct impact on positive workplace culture, employee engagement and increased productivity. Such executive and senior management appointments often form the beginning of building a future-oriented and sustainable company management and leadership approach.”
Patrick says, “Having partnered with clients from a broad spectrum of market sectors, it’s clear that leadership development and succession planning are essential, irrespective of whether you’re a private equity firm, a small business, or an ASX-listed business.”
“A long-term vision is fundamental. It is important to recognise that strategic planning and succession planning are not mutually exclusive when it comes to the essential objectives of a business. Delivering the best appointment is as much about the future as it is the present; to put it another way, if you want to future-proof your business, adaptability and proactivity are not optional, they’re essential.”
It might be uncomfortable to think about, but there are many ways you can suddenly lose a top leader. From death to illness, unforeseen leave to unexpected resignation, there are certain things you simply cannot predict. Although you can’t predict, you can plan – it’s leadership development and succession planning that will ultimately help you to survive when the unexpected hits.
Understanding the different types of succession can help your business prepare for various scenarios and maintain continuity. Looking ahead requires you to understand the different types of succession planning, as well as the legal and financial implications that come with each. Every business is unique; therefore, careful assessment is critical in determining which approach is most appropriate for your organisation.
Let’s review each of the succession planning options below:
This is centred around unexpected events, such as the sudden departure, illness, or death of a key leader. Emergency succession planning ensures that there is an immediate replacement or interim leader ready to step in, minimising disruption and maintaining stability during a crisis. Often, it involves identifying internal candidates who can temporarily or permanently assume leadership roles with little notice.
This is a proactive approach that identifies and develops potential leaders over time. Long-term succession planning involves a strategic process of grooming high-potential employees for future leadership positions through mentorship, training, and professional development initiatives. The goal is to ensure a seamless transition when current leaders depart.
Cameron says, “Long-term succession planning is pivotal in building a robust pipeline of qualified internal talent for leadership. It’s a valuable way to reduce the talent gap by cultivating and retaining potential leaders who can step up when the need arises. In my experience, long-term succession planning is an opportunity to show your smart and hard-working emerging leaders that a genuine career pathway exists for those who proactively engage and behave in alignment with company values. Positive by-products of well managed long term succession planning are reduced turnover, increased employee engagement and an employer/employee dual commitment to professional and personal development to be ready for future leadership.”
This approach focuses on transferring leadership and ownership from one generation to the next within a family-run enterprise. While family dynamics can make it distinctly challenging, it can be effective through careful planning, clear communication, and the involvement of external advisors who can help to navigate conflict if required.
This approach focuses on succession planning for certain critical roles rather than entire leadership teams. This is particularly useful in industries where certain positions are particularly vital to the company’s success, i.e., a Chief Technology Officer in a tech company. This form of business succession planning helps to ensure continuity in areas that are crucial to company operations.
While internal succession planning is common, some businesses look externally to fill key positions. External succession planning involves identifying potential candidates outside the organisation who can bring fresh perspectives and targeted expertise.
“External succession planning can be highly beneficial for organisations looking to modify or innovate their strategic direction. It is critically important to adopt a thorough and rigorous selection and onboarding process, in order to find the most appropriate leaders who will integrate a leadership change effectively. An external appointment can act as a positive disruptor, and ready a future-focused organisation for the next chapter of its success, ” says Patrick.
Let’s imagine two different businesses: the first is an entrepreneurial, investor-backed technology company, moving fast, with few hierarchies and quick decision-making. But it needs a leader for the next chapter. The second is a multinational public corporate, still adapting to high inflation, geopolitical tensions, and volatile supply chains. It has specialists in each department but is considering executive leadership skills in an ever-changing world.
Where will they both find talent? On paper, they have a lot going for them, but Cameron says at least one of them has a challenge.
“We know that over a quarter of Australian businesses don’t have a succession plan for their senior leadership roles. It doesn’t matter whether a business is public, private, or family-owned; what matters is a clear line of sight for young executives to the C-suite, and a plan to replace departing leaders.
A lack of business succession planning creates uncertainty when businesses need exactly the opposite. It’s a vital tool to help employees, customers, and investors feel confident about the future,” he says.
So, for both corporates and scale-ups alike, here are six succession planning tips to consider:
The supervisory board should be involved in discussions about new executive leaders. A business focused on disruptive growth will need different leadership to a business seeking stability, for example. The board can positively influence the succession process and take an objective view.
A leadership development programme will help to create a group of potential candidates. The succession story can then be communicated with employees, customers, and investors. This will give them confidence, but it will also provide a boost to commercial fortunes by positively positioning a business in its market.
Existing C-suite leaders might consider executive coaching to help them transition out of their current position into a non-executive role. Sometimes it’s hard for an entrepreneurial founder to step back and hand over the reins. Executive coaching can help them to adjust to new dynamics and the mandate of a new leader.
A time-limited transition period can help. Existing leaders can pass on their knowledge, but new leaders will be clear on exactly when they can take over. The longer the transition period, the longer new leaders might be watched.
Both internal and external candidates will need a strong backbone to cope with succession situations. External candidates will require a high level of emotional intelligence to empathise with departing leaders. Internal candidates have the advantage of being able to build trust and showcase their skills over time. That said, they may need to navigate historical power dynamics. In both cases, the supervisory board can play a supportive role.
Cultural fit is vital in succession planning. The cost of hiring the wrong person is more substantial than the investment of hiring the right one. A considered plan, and close relationships between the board and its advisors, will help to make the process as smooth as possible.
When it comes to safeguarding the future of your business, succession planning is critical. In an era where businesses are navigating multiple crises and rapid change, business succession planning is instrumental in instilling confidence in employees, customers, and investors. Whether you’re a corporate business recruiting from a growing pool of talent, or a fast-growing tech start-up looking for an external scale-up leader, know that you have multiple options when it comes to leadership development and succession planning.
Whatever your circumstances, developing a long-term succession plan is one of the most important steps you will ever take – not just for yourself, but for everyone else with a stake in your success.
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1. How is succession planning different for a small business?
While succession plans are just as important in small businesses as they are in large businesses, some unique factors make succession planning different in a small business.
These factors include:
Personal relationships and dynamics – Often they are more personal and tightly knit.
Limited internal candidates - A smaller pool of employees means there are fewer
Internal candidates available for leadership roles.
Resource constraints – Compared to larger corporations, small businesses may lack the resources for comprehensive leadership development programs.
Owner dependency – Many small businesses are tied to the owner’s vision and control.
Flexibility and Adaptability – The agility of small businesses allows for succession plans to be implemented quickly.
2. How do I know if I need a succession plan?
If you answer ‘yes’ to any of the below questions, you need a succession plan:
Does my business rely heavily on key individuals for its success?
Does my business face potential risks from unexpected departures?
Does my business aim for long-term growth and stability?
3. Who should be involved in developing a succession plan?
Senior leadership
HR professionals
Key stakeholders such as board members or advisors.
Potential successors and department heads (if possible)
4. How much does it cost to create a succession plan?
There is no set cost when it comes to succession plans. Costs will vary depending on the complexity of the business, the resources required, and the involvement of any external consultants.
While there may be some costs involved, don’t overlook the costs associated with not having a succession plan in place.
5. What is the disadvantage of succession planning?
While the advantages of succession planning far outweigh the disadvantages, it’s important to recognise potential disadvantages. These may include:
The time-consuming nature of the planning process.
The heavy resource requirements.
The internal competition and tension that may stem from multiple employees vying for the same leadership role.
