Companies that don’t take steps to plan for future talent needs at all levels will face certain disruptions when key employees leave.

Succession management used to refer to the process of replacing a CEO when the position became vacant. These days organizations understand the importance of implementing a succession plan for more and more roles across the company. Succession planning is also an important way to identify, develop, retain and allocate key members of your workforce long before any talent gap occurs. Where do you start?

Identify Leadership Qualities
Most managers believe certain skills and attributes that can be recognized in a non-managerial role are predictors of managerial success. To develop targeted leadership programs and identify employees with leadership qualities, organizations must determine the competencies required for success at key positions.

Designate Top Candidates
Another important aspect of succession planning is identifying whether or not you have a pool of qualified candidates ready to assume critical leadership positions.

Difficulty may arise in identifying top candidates for succession to a specific job because the role often changes when a new person is selected to fill it. Once a job becomes available, many view this as a good time to revise the job as it has been filled previously and revise the job description.

Develop Candidates for Leadership Roles
Retention research indicates that individuals tend to stay longer where they are experiencing personal and professional growth. However, it may take time to develop even one viable candidate for top level positions. There are a few ways to develop your employees with an eye for succession planning.

• Training: Encourage employees to attend on- and off-site classes with targeted training that enables them to acquire the knowledge necessary to move to positions with increased responsibility.
• Increase responsibilities: Assign work goals that are related to the increase in responsibility necessary for advancement within the company in a somewhat controlled environment.
• Retain Key Employees and Attract High-Potentials

Identifying your employees as “high potentials” in the succession planning process can be a motivating factor in their retention. The two-way information flow allows employer and employee awareness of what is wanted and needed from one another. Expectations are clear. Companies know where they need leaders, and employees are realistically aware of how they fit into the corporations’ bench strength requirements and succession plans.

In Summary
All organizations should incorporate a robust development program to be a part of the succession planning process. This will ensure that the right people with the right skills are available at the right time to meet current and future business needs.

What do we do? For whom do we do it ? How do we excel?”

Strategic planning is an organization’s process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy.

In many organizations, this is viewed as a process for determining where an organization is going over the next year or—more typically—3 to 5 years (long term), although some extend their vision to 20 years.

The key components of strategic planning include an understanding of the firm’s vision, mission, values and strategies … often captured in a Vision or Mission Statement.

Vision: outlines what the organization wants to be, or how it wants the world in which it operates to be. It is a long-term view and concentrates on the future.

Mission: Defines the fundamental purpose of an organization or an enterprise, describing why it exists and what it does to achieve its vision.

Values: Beliefs that are shared among the stakeholders of an organization. Values drive an organization’s culture and priorities and provide a framework in which decisions are made.

Strategy: A combination of the ends or goals for which the firm is striving and the means or policies by which it is seeking to get there. The most important part of implementing the strategy is ensuring the company is going in the right direction which is towards the end vision.

For a company’s vision and mission to be effective, they must become assimilated into the organization’s culture. They need to be assessed internally and externally. The internal assessment should focus on how members inside the organization interpret their mission statement.

The external assessment offers a different perspective. These discrepancies between these two assessments can provide insight into their effectiveness.

A study by the Harvard Business Review released today stated that two in three business executives report their company’s focus on risk management has increased since the 2008 financial crisis. But only one in 10 said that their executive management is successful in creating a strong risk management culture.

1,419 executives worldwide were surveyed. Almost half of the companies with 10,000 or more employees have a chief risk officer vs. 11% three years ago.

Respondents were asked to identify the risk management capabilities they consider most critical to the performance of their organization and their company’s success in achieving them. Thirty-four percent of respondents said their company performed well at linking risk information to strategic decision-making, while the same percentage said they consider their companies successful at embedding a risk-aware culture at all levels.

Thirty percent said their companies performed well at embedding risk management practices and responsibilities within strategy and operations. Twenty-eight percent of respondents said their organizations performed well at ensuring that all decisions remain within the organization’s risk tolerance, while the same percentage said their companies were successful at driving risk-mitigation activities and proactively indentifying current and emerging risks.

Risks rising in importance
Participants in the survey were asked to identify the top ten risks of the most important in the past three years. The majority cited natural disasters, next in popularity was the continued slow recovery, and lastly, human resources issues, such as talent retention and acquisition. Half of the respondents said brand reputation had grown in significance over the past three years, while 49% cited business continuity planning, 48% legal risks and 46% new regulations/more enforcement. Almost 50% of respondents also cited capital scarcity as a risk that had grown in importance. Electronic/data communications/information security risks were cited by 42%.

Conclusions

• The past three years have seen more companies recognizing the importance of enterprise-wide risk management and, often for the first time, adopting practices to implement it.
• 41% of companies say they are deepening and extending the ties between risk management and strategic planning.
• A good risk management group should operate like a boutique firm, with everyone an expert in a particular area who can be asked to do deep-level work.
• A truly successful risk management culture is focused on driving sustainable and profitable growth rather than simply protecting against downside losses and operational risks.

With the collapse of Lehman Brothers in 2008, the world got a taste of the domino effect that can be created when a systemically important financial institution (SIFI) fails.

In the backlash that has occurred since, risk management has become the primary focus of the Financial Stability Board (FSB), and with good reason.

In an effort to prevent future economic crises resulting from SIFI failures, the FSB has developed a proposal for living wills, or effective resolution regimes, for financial institutions. The FSB criteria for an effective resolution regime are outlined in Key Attributes of Effective Resolution Regimes for Financial Institutions .

The objectives of living wills are: Ensuring continuity of financial services. Protecting client assets. Allocating losses to shareholders while respecting the hierarchy of claims. Not relying on public solvency support. Avoiding unnecessary destruction of value. Providing speed, transparency and predictability for orderly resolution. Legally mandating cooperation, coordination and information exchange with relevant resolution authorities. Ensuring orderly market exits by non-viable firms and enhancing market discipline and offering incentives for market-based solutions.

In the event that risk management measures fail and a financial institution becomes no longer viable, the FSB proposal recommends that the living will should have provisions for two important activities: stabilization and liquidation. Stabilization is necessary for ensuring the continuity of vital financial services and may be achieved through sale of the firm to a third party or creditor-financed re-capitalization.

After or concurrent with stabilization measures, the liquidation phase must protect insured depositors, insurance policy holders and other retail customers, while winding down business operations in an orderly manner. SIFIs are by definition critical to the success or failure of an economy. It is for this reason that measures beyond standard risk management practices should be required.

A living will allows authorities to resolve a failed financial institution or large company while minimizing risk to the taxpayer and ensuring continuity of critical financial services. However, implementing living wills as part of a larger risk management strategy should not be limited to just the 29 SIFIs that have been identified by the FSB.

All large companies and financial institutions should have a living will in place in the event that existing risk management systems fail.