Great Business Ideas: Internal promotion and succession planning

Great Small Business Ideas to Start: Internal promotion and succession planning

Getting succession right is vital. There are two approaches that can be used at different times to ensure success. The internal selection approach advocates choosing successors from within, to ensure a smooth transition, preserve company values, and encourage employees by showing a potential career path. The Darwinian approach favors being open to both internal and external candidates when selecting a successor.

The idea

Organizations struggle with how to turn succession into success. It is necessary to use either internal selection or the Darwinian approach at different levels or at different times. For example, a high percentage (eg 80 percent) of senior roles may be internally appointed, while junior roles are selected in a Darwinian way, with employees chosen from a large pool of talent both inside and outside the company. This two-tiered approach is successfully used by many corporations, including HSBC.

The strength of the Darwinian approach is that it promotes a meritocratic system, where the most talented workers are selected, bringing fresh perspectives, and increasing the competitiveness of your organization. By choosing influential employees from a diverse array of candidates, a company will gain a valuable range of different skill sets and perspectives to guide it through a variety of challenges. Also, rather than earmarking certain people for possible future

promotion, this open approach allows an unrestrained, competitive selection process during succession. If promotion is not guaranteed in advance, all those hoping to be considered for promotion will be motivated to improve business acumen and performance.

Internal promotion involves choosing successors from within an organization, to ensure that people who are already familiar with the company are appointed to leading positions, to ensure consistency and avoid drastic changes. When a seamless transition between key workers is important, internal promotion is useful. It also complements “talent management” and fast-tracking—where certain employees are marked for possible future promotion. These are powerful motivators. Running against “best practice” guidelines prevailing in Britain at the time, internal promotion was favored by HSBC when Sir John Bond left his position as chair in 2006 to be replaced by CEO Stephen Green. This ensured the new chair would be familiar with the organization, and that other employees would know what to expect.

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In practice

Internal promotion:

  • Find ways of motivating workers who are not interested in promotion. Although “fast-tracking” can help retain certain workers interested in corporate advancement, there are often a number of valuable employees who do not desire such promotions.
  • Recognize that internal promotion may not be the best option when an organization is underperforming or when significant changes need to be made.
  • Prepare employees who are earmarked for promotion for the jobs they will take over. A benefit of internal succession plans is that individuals can be groomed beforehand for the new responsibilities they will take on.
  • Ensure workers at the top do not feel threatened by succession plans. This can have demotivating and negative results for everyone involved in the process.

Darwinian succession:

  • Bring in external talent as part of the succession process to revitalize a failing company.
  • If there is little variety in your organization, recruiting from outside your organization can widen your “corporate gene pool.”
  • When selecting a successor, utilize a range of advice and opinions from experts inside and outside the organization.