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Succession planning for high-level financial roles

Why it's imperative to have a procedure

Elizabeth Hang | November 2019 Footnote

Editor's note: Updated October 31, 2019

Executives aren’t always thinking about succession planning — but they should be. In a Robert Half survey, nearly half (48%) of CFOs polled said they have yet to identify a successor for their position.

Why don’t more CFOs have a succession plan? Reasons vary depending on the company and situation. Executives may not see themselves leaving their jobs anytime soon or might delay planning because they struggle to find skilled candidates. Others may understand the value of having a succession plan but are unable to act because their attention is focused on more pressing and immediate responsibilities or business needs.

But it’s not just succession for themselves that executives should plan for. It’s critical that they prepare for the eventual — or sudden — departure of all high-level roles, from the treasurer and VP of finance to the corporate controller and director of accounting. Not having a plan in place for these positions means your company is standing on shaky ground. Here’s why you should invest time and resources into succession planning and how to go about it.

Why succession planning is urgent

Companies that plan for organizational transformations are better prepared to face the challenges that come with them. They are also less likely to see a dip in business performance when those shifts do occur.

Failing to ready your organization for turnover in high-level financial roles presents many risks, including:
  • Business disruption. When a significant leadership transition occurs and there isn’t a succession plan in place, resources must be redirected to find a replacement and cover duties associated with the vacated position. This results in interruptions to workflow, productivity and operational efficiency. Preparing a strategy ahead of time helps make these shifts as seamless as possible.
  • Loss of legacy knowledge. Any time a high-level employee leaves, your organization loses a wealth of skills and experience that aren’t easily replaced. Succession planning ensures your company retains this legacy knowledge in the wake of a critical executive’s departure.
  • Stalled business strategy. Sudden and unexpected change may mean that crucial business decisions, projects and customer accounts are put on hold indefinitely, leaving client satisfaction at risk. Planning helps avoid these unforeseen — and costly — delays.
Succession planning can also help pinpoint recruitment opportunities and ensure a pipeline of skilled, in-house candidates are ready for more senior roles. Identification of additional growth and training opportunities means improved satisfaction and retention among your high-level ranks.

Developing a strong succession strategy

Creating a succession plan may seem like a daunting task, but a solid strategy only requires a few key elements. An effective succession plan will:
  • Document business processes and define career paths throughout the organization.
  • Incorporate professional development opportunities to accelerate career growth.
  • Identify potential future leaders and provide interim external options if an internal candidate is not available.
When thinking of your succession strategy, you shouldn’t focus only on your immediate needs. Look further down the road; you don’t have to plan for one role at a time. Remember that the employees you promote will leave their current roles vacant, so strategize accordingly.

After you’ve developed your plan, make sure it stays updated. Evaluate it twice annually — once at the start of the financial year and once after performance reviews — and make any necessary changes.

Ways to identify and groom successors

A critical piece of the succession plan puzzle is identifying the individuals that will move up to vital staff roles. But how can you help to ensure your team members are up to the task?

When evaluating potential successors, be careful to avoid some common pitfalls. Don’t limit your choice to the employee directly below the role in question; a better option may be elsewhere. Likewise, don’t rely on outdated job descriptions or expectations to make your decision. Instead, stay current on the latest skills, technologies and industry trends.

  • Keep an open mind. Direct promotions might make the most sense, but you may also be able to split the responsibilities of a single position among multiple workers with different strengths. Be observant — look for employees who are excelling in their roles by motivating others, completing projects successfully and ensuring client satisfaction. 

    Furthermore, don’t narrow your focus to the point that you’re only scrutinizing internal options. While it may be ideal to hire from within the company, the best candidate could be operating outside your immediate sphere. Similarly, bringing on senior-level finance consultants during transitions could help facilitate smooth changeovers and reduce the chances of productivity loss, so consider including this option in your succession plan.

  • Concentrate on growth and professional development. Assign promising employees additional tasks and projects so they can gain experience from new responsibilities and learn from their mistakes. These opportunities — coupled with consistent feedback — give workers a chance to gain visibility and hone important skills.

    You might also delegate some of your own tasks to the people you’re thinking about tapping for upper management. This not only provides insight into whether your picks are a good fit for the role, but it also frees up some of your time, allowing you to turn more attention to your succession plan.

    In addition, establish job shadowing and mentorship programs in which you pair potential leaders with existing high-level employees. This gives promising employees an opportunity to gain the experience needed for high-level roles. Some people may also benefit from additional certifications or education, such as an MBA. Cultivating prospective financial executives is an investment in your company’s future, so offer reimbursement for fees and tuition.

  • Incorporate succession into your hiring strategy. Always be mindful of succession planning when hiring new staff members. Look for skilled, motivated candidates who could transition into senior-level roles with little effort.

    When evaluating potential successors, be careful to avoid some common pitfalls. Don’t limit your choice to the employee directly below the role in question; a better option may be elsewhere. Likewise, don’t rely on outdated job descriptions or expectations to make your decision. Instead, stay current on the latest skills, technologies and industry trends.

‘An ounce of prevention’

An organization can be shaken to the core when it experiences changes in leadership. Regardless of whether you’re eying retirement or just getting settled in your role, it’s the responsibility of company leaders to put solid succession plans in place for high-level positions. Doing so can be the difference in your company experiencing a tremor — rather than a destructive quake — during disruptions in upper management.

Elizabeth Hang is the division director for Robert Half Management Resources in the Twin Cities. Founded in 1948, Robert Half is the world’s first and largest specialized staffing firm. This year, Robert Half celebrates 50 years of serving job seekers and employers in the Twin Cities. For more information about our six Minnesota locations, call us at 651-968-4599 or visit