Succession planning

By THIS IS MONEY
Updated:

 

The Daily Mail city team explains what succession planning is and how it works.

What is it?

Put simply, it is identifying and developing a talented individual who will one take over as boss of a company.

It applies equally to small business owners as it does to bosses of large, publicly quoted corporations.

In fact, it is probably more important for smaller firms that perhaps are dominated by one, larger-than-life personality because there may be a smaller pool of internal candidates vying for the top job.

What happens?

Generally there are three ways of identifying and appointing the right person to take over a role. The first method is to groom one or more internal candidates.

The second route would be to appoint an expensive executive recruitment consultancy to conduct a nationwide, or sometimes global search, for the right candidate. Finally, some of the biggest companies do both in order to 'benchmark' the best of the internal talent against outsiders.

Any recent examples?

Shell is currently weighing up who might succeed Dutchman Jeroen van der Veer as boss, with internal candidates Linda Cook and Malcolm Brinded leading the chase. Defence group BAE Systems recently appointed its chief operating officer Ian King to take over from departing supremo Mike Turner in September. It arrived at this decision after sifting through, and ruling out, a range of outsiders.

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