Creating a talent pipeline

A key part of planning for the future is to have a strong group of people ready to take on leadership roles when needed. This means looking at people who already work for you and people outside your business. 

Internal vs. external candidates  

Think about your current employees, their stengths, and potential to grow. Use your current staff as a starting point to see who has the work habits and responsibility needed. On the other hand, new people from outside the business can bring fresh ideas and ways of doing things. Consider both approaches, as each offers distinct advantages and considerations:  

Internal candidates  

Internal candidates are current employees who know the business culture, operations, and values. They offer several advantages for succession planning:  

• Familiarity with the organization: internal candidates already know the business processes, stakeholders, and goals, which reduces time needed for onboarding. 
• Provides an incentive to stay: recognizing internal talent and providing growth opportunities can serve as an incentive for employees to stay with the business. 
• Higher probability of success: internal candidates have demonstrated their capabilities within the business, giving them an advantage in assuming leadership roles.  

External candidates  

External candidates bring new perspectives, experiences, and skillsets that can energize the business. They can offer new ideas and approaches, which may be beneficial in times of change or transformation.  

• Fresh ideas: external candidates may offer innovative solutions and approaches. 
• May lack internal depth: while external candidates bring diverse experiences, they may take time to familiarize themselves with the business dynamics and culture. 
• Lower probability of success: the success of external candidates may be less certain compared to internal candidates due to the learning curve associated with joining a new business.

Businesses should have internal and external succession plans in place. By considering candidates from both groups, businesses can maintain flexibility to meet unexpected challenges or opportunities.

Business owners should develop a plan for their own succession. Thinking about how and who they might sell their business to ensures a well-structured exit strategy and secures the future of the business.

A scorecard is a research-proven tool that supports effective and impartial assessment of potential candidates for leadership positions. By assigning numeric values to capacities, experiences, and skills needed for the position, the scorecard measures the requirements and expectations for potential successors.  

• Listing key experiences or resources: the scorecard should include five to seven key experiences or resources that a successful candidate for the leadership position must possess. These experiences should directly align with the role's responsibilities and requirements. Use your Knowledge Capture © matrix to help identify these requirements. 
• Specificity and points allocation: the scorecard should be specific and avoid generic descriptions. For example, instead of stating "should know budgets," the scorecard could specify "has created budgets for centers with a budget of $500,000 or more." Each experience is assigned a specific point value based on its importance to the position. Items of higher importance have larger point values while more minor requirements have lower point values. 
• Quantifying the position: the scorecard provides a tangible measure of the leadership position's requirements, making it easier to compare and assess candidates objectively. Using the scorecard help prevent emotional decision making. 
• Identifying areas for development: by using the scorecard, potential candidates can identify areas in which they may need to develop their skills or experiences to be more competitive for the role. Use your scorecard as a means of reporting these areas to potential candidates. The more aware they are of their own strengths, the better they can serve a business.

The scorecard serves as a valuable template for assessing both external and internal candidates. Businesses can use it to identify areas where an internal candidate may require additional training to meet the requirements. Use this assessment to guide professional development efforts. For example, if an assistant director lacks experience in financial management, the business can provide opportunities for them to attend training courses or involve them in financial decision-making processes to enhance their skills.

Disclaimer

The information contained here is for educational purposes only and is not intended to constitute legal, tax, or financial advice.