Ensuring your board’s succession outcome is future-proof and orderly rather than chaotic, requires ensuring you have a good plan to start with. Australian governance leaders are calling on boards to shift succession from static plans to active systems. Succession planning should be “always on” and to build an effective pipeline you need foresight and groundwork.

With solid preparation in place, particularly should there be an unexpected departure, your organisation can have confidence in the board and stakeholders can be reassured the process will proceed as smoothly as possible.

Michael Rosmarin GAICD, managing partner at Johnson Partners (Board, Succession & Leadership Advisory skills), says experience and cultural fit are two essentials boards need to be considering – and the readier you are, the better the process will be when the time comes for succession.

Preparation should start some time before a director leaves the board, particularly when it involves the chair. “For anyone identified as a potential chair, you would ideally want them to be on the board for a number of months before transitioning into the chair role,” he says. “You also don’t want too many maximum terms coming to an end at the same time, nor too many directors being up for re-election simultaneously.”

Identify and build talent pool

Mapping those timings and planning for succession is an essential part of the pipeline development. “You can build a pool of potential talent through providing the board with exposure to potential candidates long before you might need them,” says Rosmarin. He adds that mentoring or inviting people to speak to the board about their area of expertise or advising a committee can be a way of introducing them to the board. “This exposure gives you an opportunity to see if they might, in the future, be a good fit should the board feel their skills are what’s required when a vacancy arises,” he says. “This does not negate the formal selection process the board would undertake when there is a vacancy. However, it can help to reduce the risk, as well as the time the director would need to get up to speed on the company.”

Align with strategy

Updating the board skills matrix annually is an important step in ensuring the combined strengths and gaps of directors are identified and the composition of the board remains current. This should include technical, functional, sector and geographic expertise and experience.

“Does the candidate have the skills and experience the board needs to govern and guide the organisation to achieve the company’s mission and strategy?” asks Rosmarin.

Often, the nominations committee will lead and facilitate this process with regular updates to, and appropriately engaging with, the board.

“Once you’ve identified any gaps, even though there may not be a vacancy, proactive boards may engage a search firm to conduct a market-mapping exercise to identify potential candidates, even in the absence of an immediate vacancy,” says Rosmarin. “This builds a forward-looking view of the available talent pool and creates a curated pipeline of candidates aligned to future needs. Some boards then take this to the next stage and meet these candidates, so when a vacancy does come up, the search process may take less time as the groundwork has already been laid.”