A lack of planning can lead to big problems down the road.
It’s no secret that the population is getting older. Here in the United States, the baby boomer generation is starting to retire. As they do so, many businesses are finding themselves caught short with respect to succession management (i.e., failing to properly prepare for the leaving or retirement of a senior executive like their general counsel). In fact, a recent report from Thomson Reuters shared that only a quarter of legal departments are planning for the generational shift. This lack of planning can lead to big problems down the road.
Succession planning can be broken down into three parts: 1) evaluation of succession needs; 2) development of succession talent; and 3) putting a succession plan into place. This discussion will focus on part one — how to evaluate succession planning needs. This evaluation comes down to four factors:
- Evaluation of the short- and long-term legal needs of the company;
- Evaluation of the short- and long-term needs of the legal department;
- An honest evaluation of the likely turnover in the legal department over the next one, three, and five years, along with a continual working knowledge of who is getting to retirement age; and
- Working with human resources department professionals (to raise the profile of the issue).
Evaluation of the short- and long-term legal needs of the company
The very first step of succession planning begins with evaluating what the company will need in terms of legal services over the short term (the next one to two years) and over the long term (within five years). This is true because you cannot properly plan staffing needs until you understand what types of legal services are needed. You must go into this process without any preconceived notions of what the company will need (i.e., you cannot focus only on what has happened and how the legal department is structured today). Instead, you need to start digging and figure out where the company is going and whether there are legal issues on the horizon that you need to plan for (even if they do not come directly from the plans of the company). The place to start is with the strategic plans of the company and your business partners.