A Case Study on Succession Planning: Outsource vs. Do-It-Yourself
Meet Sandy.
Sandy is the Vice President of Human Resources (VP of HR) at a mid-sized tech company in California. Her company has a strong executive team, however, most of them are legacy employees quickly approaching retirement. The board of directors has asked Sandy to implement a formal succession planning process in order to mitigate the risk of losing their leaders and having no qualified candidates to take their place.
Although a little nervous, Sandy is excited about this opportunity. She knows that succession planning is one of the most important strategic processes her organization will undertake. It’s about more than just choosing a successor for each role; Sandy will have to build an entire leadership development program that identifies and trains high-potential employees. If she’s going to do it right, Sandy will have to prepare multiple candidates for each critical role so that her organization always has a strong leadership bench to fall back on.
The prospect of creating a succession plan — let alone an entire talent development process! — is a little daunting. Sandy knows she could do it on her own, but there are also resources available that she could use to make the process more efficient and effective. Sandy is considering the following three options:
- Creating, from scratch, an entire succession planning process — and all supporting materials — by herself
- Using an existing process and as many free tools and templates as she can find
- Hiring a consulting firm to guide her company through the succession planning process
Each of these options has its own set of benefits and drawbacks. Before Sandy makes a decision, she takes some time to sit down and think through the pros and cons of all three options.
Starting from Scratch
Starting from scratch is ambitious, Sandy knows that already. As the VP of HR, Sandy has other duties she will need to continue performing while implementing her succession plan. Sandy doesn’t think she can reasonably do both effectively, however, she does want to at least consider this option before eliminating it entirely.
Pros of creating a succession plan from scratch
- All models and assessments are customized to the needs of the organization
- There may be opportunities to publish or gain proprietary rights to any methods or models developed along the way· This route would take Sandy exponentially more time
Cons of creating a succession plan from scratch
- Sandy has no background in industrial-organizational psychology or statistical methods (beyond a few courses the had to take to get her HR designation)
- She may not be qualified or able to develop psychological measures that are both valid and reliable
Using Existing Tools and Templates
After careful consideration, Sandy is confident that she won’t be starting from scratch when it comes to her succession plan. A quick Google search shows her that there are plenty of tools and templates available for her to download and use. Sandy likes the idea of spending more time researching upfront, and then hopefully being able to do everything herself. However, she knows there are some risks that come along with a do-it-yourself (DIY) approach to succession planning.
Pros of using free resources for a DIY plan
- No communication or collaboration with third-parties
- Sandy has more ownership and control of the process and results
- Effectiveness depends on the quality of the resources available online
Cons of using free resources for a DIY plan
- Cost-effective
- Sandy will have to spend a significant amount of time researching the succession planning process, comparing tools and templates, and learning how to use them
- Sandy will have to take care of the entire administration and implementation of the succession plan on her own
Working with a Consultant
Going through the pros and cons of DIY Succession Planning, Sandy is beginning to grasp how much work it actually takes to establish a proper succession planning process. She’s starting to wonder whether it might actually be worth working with a consultant in order to get the job done.
Pros of working with a consultant
- Use of a proven succession planning process, as well as tools and templates that have been optimized over years of client use
- No preparation required; only a short amount of time spent implementing and communicating steps along the way
- No analysis or decision-making required; experienced succession planning consultants will provide Sandy with a detailed 12-month succession plan for each member of her leadership team, as well as an executive summary to present to her board of directors
- Access to the ongoing support of consultants who are experts in the field
- Access to a much greater range and quality of tools, templates, and other resources
Cons of working with a consultant
- More costly up-front
Saving Time vs. Saving Money
Sandy finishes her list of pros and cons and sits back to evaluate. Sandy is almost positive she doesn’t want to implement a succession plan starting from scratch — why would she when there are plenty of resources available for free online? What Sandy isn’t sure about is the quality of the free resources available to her. She’s also not sure whether she has the time, expertise, or qualifications to do succession planning well herself.
After about an hour, Sandy comes to the conclusion that her decision is about saving time vs. saving money. Working with a consultant might be more expensive up front, but it would certainly save Sandy and her company a significant amount of time. Sandy is also aware that an ineffective succession planning process may be much more costly in the long run — both in time and money — compared to the relatively small investment her company would have to make in having a consultant get them started.
Not-So-Fun Facts
- Due to ineffective (or non-existent) succession planning, 40% of today’s CEOs are failing to meet performance expectations within 18 months of taking on the job
- Costs associated with unplanned or ineffective succession have been estimated at over 10 times the price of an executive’s salary succession (i.e., lost knowledge, missed opportunities, client delays)
Because quantifying things is always helpful for making decisions, Sandy decides to do some quick mental math to estimate how much time it would take for her to do succession planning on her own vs. working with a consultant. SIGMA Assessment Systems was recommended to her by a co-worker who had worked with them in the past, so Sandy did her calculations based on SIGMA’s Succession Planning Launch.
DIY Succession Planning ~ 150–230 hours
Succession with SIGMA ~ 15 hours
*Access the complete table with a breakdown of tasks and timelines on our blog
Decision Time
Sandy is quite surprised when she adds up the hours. Trying to build a succession planning process on her own — even with third-party tools — could take her anywhere from 4-to-6 weeks if she’s completely focused on only the succession plan. Sandy estimates that even if she’s able to balance succession planning with her other ongoing duties, it could take her upwards of six months to get the job done. If the board agrees to give her that time, Sandy isn’t sure whether she wants to risk putting together a plan on her own that may not be implemented properly. Since this is such an important strategic process, Sandy wants to make sure it’s done right.
Not-So-Fun Facts
- 67% of well-formulated strategic plans fail due to poor execution
- 1 in 3 leaders rate their company as “poor” or “very poor” at implementing strategic plans
At the end of the day, Sandy is faced with the following considerations:
- DIY succession would take Sandy anywhere from six weeks to six months — or longer if she encounters unforeseen challenges along the way, which Sandy thinks is very likely!
- Succession planning with SIGMA would take only 15 hours of Sandy’s time. This would allow her to deliver a robust succession plan to her board within the next few weeks while continuing to perform her other ongoing duties
- SIGMA’s Succession Planning Launch Series costs $15,000 up front, but could save Sandy’s company significant costs in the long term if the alternative option, a DIY succession plan, is not done well
Knowing what you know, and if you were Sandy, what would you do?
Ready to Get Started?
If you’re ready to start your succession planning process, check out SIGMA’s Succession Planning Launch Series. We offer flexible in-person and online services that will bring your leadership team together to create a plan that works for you. Our consultants can help you get six months’ work done in only six hours! By the end of the session, you’ll know how to launch a robust succession planning process and have a customized 12-month succession plan for each member of your leadership team. Contact us for more information or reach out to our consulting team below. We’re always happy to chat!
Erica Sutherland, Ph.D.
SENIOR CONSULTANT & EXECUTIVE COACH
Erica completed her Ph.D. in Industrial-Organizational psychology at Western University. She is a Senior Consultant at SIGMA, where she delivers consulting services and Succession Planning solutions to clients. As a member of SIGMA’s executive coaching team, Erica works one-on-one with leaders to develop talent. She also brings her expertise in measurement and psychometrics to the R&D team, assisting with the development and validation of SIGMA’s many assessments.
Brittney Anderson, Ph.D.
SENIOR CONSULTANT & EXECUTIVE COACH
Brittney is a member of our coaching and consulting team. She brings her expertise in evidence-based practice to provide companies with leadership solutions that meet their needs. Primarily, Brittney helps her clients prepare for their future with succession planning and comprehensive leadership development programs. As an executive coach, she helps leaders hone their skills using a process-based approach to development.
Glen Harrison
VICE PRESIDENT
Glen oversees SIGMA’s sales and marketing activities. As a skilled presenter and trainer, he has designed and delivered engaging and entertaining workshops and webinars to help leaders and HR professionals enhance their understanding of how our products and services can be used to realize potential within their organizations.
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[i] Watts, A. (August 9, 2021). 4 Statistics Highlighting the Importance of Diversity and Inclusion in the Workplace. Edume. Retrieved from https://edume.com/blog/workplace-diversity-statistics.
[ii] Ibid.
[iii] Harrell, E. (December 2016). Succession Planning: What the Research Says. Harvard Business Review. https://hbr.org/2016/12/succession-planning-what-the-research-says.
[iv] Carucci, R., (November 13, 2017). Executives Fail to Execute Strategy Because They’re Too Internally Focused. Harvard Business Review. Retrieved from https://hbr.org/2017/11/executives-fail-to-execute-strategy-because-theyre-too-internally-focused
[iv] Cascade Team. (March 13, 2020). 51 Strategy Insights and 3 Key Lessons To Help You Succeed. Cascade. Retrieved from https://www.cascade.app/blog/51-strategy-statistics
