Howard is Managing Partner at Cedar, a specialist financial recruitment consultancy focused on sourcing senior financial talent across commercial organisations.
The Financial Times reported that the Financial Reporting Council (FRC) plans to tighten its guidelines on corporate succession planning in Spring 2015. The announcement comes after serious concerns over the way some of the largest corporations are dealing with new appointments after unexpected losses of senior executives. Without a crystal ball it is difficult to expect the unexpected however, organisations must be prepared if the worst does happen.
Succession planning enables companies to identify and develop potential future leaders or senior management. Current corporate governance guidelines state a company should have plans in place for orderly succession for appointments to maintain an appropriate balance of skills and experience within the company.
Following concerns over Tesco and Total, the FRC identified an urgent need for all companies to have a clear and consistent succession strategy in place. The new guidelines will strongly advise making succession planning a permanent and continuous exercise. Cedar has noticed an increase in the number senior finance professionals and HR Directors becoming increasingly concerned about their succession plans and talent pools. As a result, many are planning to bolster their finance teams at all levels with external candidates.
With the war for talent once again in full force, current demand for senior finance executives is out-stripping supply. With more opportunities on the market than we have seen for quite some time, high quality senior finance executives are at a premium and direct headhunting has consequently become a significant threat. Coveted executives are taking advantage of the situation to progress their career and broaden their experience by leaving their current roles in favour of more exciting opportunities as well as improving their personal bottom-lines. Base salary demands are growing and Cedar has experienced 'bidding wars' for top talent.
Organisations run the risk of being thrown into crisis without a succession plan in place if an unexpected departure of an executive should occur. Organisations need to identify team members who can be developed and motivated to take on additional responsibilities and / or step up into a role. If there is a sudden departure, this will allow for the baton to be passed on with confidence while a suitable replacement is hired.
A clear benefit of having a succession plan in place is employee retention. A structured progression plan gives your employees focus, motivation and satisfaction and they will be less like to consider other opportunities. When a new role is being recruited, it should be clearly communicated to the candidate that they have a clear future in the business beyond their current role and what is to be expected of them should they need to step up to a new positon.
As well as utilising existing talent within a business, it is imperative that the organisation looks to the external candidate market to ensure that a robust succession plan is in place. External candidates add a different dynamic to a team and can bring with it a fresh pair of eyes, experience in different sectors and new and exciting ideas. At the very least, an external candidate allows employers to bench mark their existing internal talent.
In line with the FRC's proposed guidelines to make succession planning a permanent exercise, there needs to be constant and consistent discussions to identify skills gaps. Discussions about recruitment should not begin when the incumbent is beginning to show signs of discontent or when handing in their notice. Instead, the process should be an ongoing discussion allowing for the succession plan to be constantly assessed and adapted according to business need. As soon as a new hire is made, the business should immediately start thinking about who might succeed that person. There needs to be a steady flow of suitable candidates being introduced to the business, regardless of a vacancy being immediately available or not. Quality and quantity are key to the success of both succession planning and talent management initiatives.
Successful succession planning is a collaborative process that needs to be supported and influenced by all senior management in the existing finance team, not just between a recruitment consultancy and HR / hiring manager.
As an experienced recruitment partner, Cedar will help your business to identify the critical roles within your business and create a clear plan of succession which can be easily communicated to your finance team and business as a whole. Cedar will work with you and align with your business to ensure that any succession planning initiative is in sync with your short, medium and long-term corporate goals. By hiring the best candidates in market and having talent developing within your business will provide you with the bandwidth to react and manage business continuity effectively.
If you would like impartial and confidential advice on how to manage your talent pipeline, contact Cedar on +44 (0)203 002 8050.