Four mistakes SMEs make in planning for future leadership

Focusing on the wrong or misguided priorities is an invitation to failure

FOR many SMEs, planning for future leadership is still a new idea - too often, planning for the next generation leader is considered premature, falling among other non-immediate concerns.

A recent study by American Express revealed that 87 per cent of local SMEs consider their day-to-day operations to be more important than mapping out a long-term business strategy.

While the business needs of SMEs may differ vastly from those of larger businesses, one thing remains - no organisation can grow without great leadership.

Whether you are the CEO of a large corporation or the leader of a small startup, the bottom line is: you need to be intentional about who will be leading your organisation in 10 years. With the average CEO's tenure lasting about nine years, the clock is ticking, fast.

There may not be a single right way to execute succession planning, but here are some common reasons why SMEs fail to efficiently prepare for the future:

1. Making your top performers your 'succession plan'

A person's outstanding performance in his current position does not necessarily predict outstanding performance at the next level. You have to be looking beyond performance to potential.

We've all seen the Peter Principle in operation a few too many times, haven't we? Ask questions like these to look at potential for leadership excellence:

  • Who asks great questions that push us beyond the status quo?
  • Who is always learning more and connecting new ideas to our overarching goals?
  • Who has the influence (even without formal authority) to advance ideas for making things work better?
  • Who has a knack for seeing what other people do well and positioning those people to succeed in the process of achieving bigger-picture team goals?
  • Who do people naturally turn to for answers, advice or a listening ear?
  • Who do you implicitly trust?
  • Who elevates the game and the intensity of every other player when he or she walks onto the field?
  • Who manages change and conflict in ways that keep people focused on achievement?

Whatever a person's specific expertise, these habits of thinking and action make success more likely at the next level of leadership.

2. Relying on subjective assessments to measure leadership potential

You are making a mistake if succession candidates are selected based primarily on individual manager recommendations.

Decision by committee or consensus isn't much better. Here are some specific things you can do to objectify the process:

  • Identify objectively measurable qualities shared by next-level leaders who have historically been successful in your organisation. Then use multiple raters to evaluate each candidate on those qualities.
  • Use a validated assessment tool that measures leadership potential to predict next-level leadership performance.

3. Planning only for the C-suite

If you're creating succession plans only for the C-suite, you have the potential to leave gaping leadership holes when the time comes to promote your internal candidates into those C-suite roles.

If you want to truly prepare your business for the future, you should be intentionally planning for succession at every step in the organisation's hierarchy.

At SMEs, where hierarchy often tends to be flatter, it is critical to ensure that every employee, from individual performer to the C-suite, is accounted for in your plan.

4. Potential successors have been identified, now the work is done

The succession plan is now complete, this must mean you are done, right?


In fact, the succession plan is just the beginning. The next step is creating and implementing individualised development plans for your future leaders to keep them growing and highly committed to your company.

The nature of SMEs is such that team churn is often unavoidable. Some people will be promoted and some people will leave the organisation, despite the investments you make in their growth. This is why you must continually add new people to that high-potential pool.

Considering the pace at which your business is growing, you will need more leaders in 10 years than you need today.

For a variety of reasons, the need to replace a CEO often creates additional holes in senior leadership you need to fill.

In order to satisfy these and fulfill the future leadership needs of the organisation, you must continually identify potential and develop it.

Businesses, no matter the size, can no longer afford to plan only for the short-term. In the face of unstable political and economic changes knocking at Singapore's door, planning for future leadership is now more critical than ever.

Ultimately, any good succession plan takes time and lots of forward thinking. And it must allow sufficient time for the induction process, so my parting advice to you would be to start planning, and do it now.

The writer is Director of Asia Pacific, Talent Plus