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Succession Planning

Succession Planning: Preparing for the Future

What Is Succession Planning?

Succession planning is the process you use to ensure you have the right people in the right roles at the right time. Finding the right people for succession planning relies on strong knowledge of team members and the unique skill sets that qualify them for high-level, high-responsibility leadership roles.

Explore why succession planning matters and the steps you need to take to create and implement an effective succession plan in your organization.

Succession Planning 101

Succession planning is the process of identifying and developing people with the potential to fill key leadership roles in your organization. The process is a critical component of your talent management strategy. By identifying and developing individuals who have the potential to fill key leadership roles, succession planning helps you make sure you have a pool of talent to choose from when the organization needs to fill leadership positions.

Succession planning isn’t just about identifying people with the potential to fill leadership roles, though. The process also involves developing succession candidates so they’re ready to take on the responsibilities of high-level positions. This includes providing them with the experience and skill sets they need to lead successfully as well as ensuring that they have a clear understanding of the organization’s culture and values.

Mentorship programs, leadership-oriented training and development plans, and opportunities to shadow senior leaders within the organization all can help prepare high-potential candidates for leadership positions.

Why Does Business Succession Planning Matter?

There are lots of reasons why succession planning is an important part of your talent strategy. Explore the benefits of succession planning for your organization.

Enhance Business Continuity

Succession planning can help ensure continuity of management in the event that a key executive suddenly leaves the organization. Leaders can leave your organization at any time. Sometimes those are planned exits with months of preparation ahead of the transfer, but sometimes they catch you by surprise. If you aren’t prepared for that scenario, you may find yourself scrambling to fill a critical position at a time when you can least afford it.

Succession planning closes those gaps by helping businesses transition upcoming leaders quickly and efficiently into their new roles. Even planned leadership exits can disrupt the business if you don’t have a smooth transition plan in place. A succession plan encompasses new leader onboarding to begin the transition before the current leader vacates their role. That guarantees minimal negative effects when ‌transition time arrives.

Fill Talent Gaps

Talent gaps are the differences between the skills, knowledge, and experience required for a job and the skills, knowledge, and experience that a potential employee brings to the position. Talent gaps at the leadership level can put the whole business at risk.

Say, for example, that a leader with lots of expertise in mergers and acquisitions has to step down soon after completing a deal. If the new leader stepping into that role hasn’t been trained to implement the change management plan, your business could lose the benefits of that deal. That’s not a risk any organization can afford to take.

Succession planning can help ‌mitigate this risk by developing leadership candidates with the potential to fill these roles. If you’re aware of the skills, knowledge, and experience that are instrumental to the position you plan to fill, you can be proactive in finding and developing those qualities.

Pass Down Institutional Knowledge

Institutional knowledge includes processes, relationships, activities, and capabilities that may not be formally documented in manuals or other written documents. Institutional knowledge can be essential to the success of an organization because it provides insight into how the organization operates and how it’s addressed challenges in the past. Since it’s not formally documented, when key employees leave an organization, they often take a wealth of institutional knowledge with them.

Succession planning preserves institutional knowledge at the leadership level by passing it down to future leaders. A leader on the verge of retirement who spent many years with the company, for example, will have a wealth of stories and personal experiences to share with their successor that can help them make better decisions in keeping with the organization’s culture and values.

Institutional knowledge typically isn’t passed down through formal training. Instead, it relies on points of connection (through a mentorship program, for example), to give leaders and successors the chance to engage in meaningful conversations at a deeper level.

Improve Morale

Succession planning can improve employee morale by providing employees with opportunities for career growth and development. When employees understand that their employer is invested in their professional development, they feel more valued and appreciated. For example, by offering employees the opportunity to take on new roles, employers demonstrate that they trust their employees and have faith in their ability to take on additional responsibility.

Additionally, when employees can apply for open positions (especially those at a higher level), they feel more engaged with their workplace and take pride in their contributions. This can lead to improved employee morale and increased job satisfaction.

Succession planning can benefit the morale of employees across the organization, even if they aren’t interested in taking on leadership roles themselves. Seeing that there’s a plan in place for moving the business forward through leadership transitions increases their confidence in the business’ longevity and helps them feel more secure in their own jobs.

Reduce Turnover

Succession planning reduces employee turnover by creating a talent pool that can provide replacements for employees leaving or retiring from the organization. Succession planning also can help create a positive work environment by providing employees with a sense of security that their job positions will be filled with qualified employees if they decide to leave the organization.

By creating a pool of qualified candidates for key positions, organizations can reduce the time and money spent on recruiting and training new employees, which can help reduce employee turnover.

Increase Business Value

A robust succession planning program provides assurance that the business will be able to continue running smoothly even if leadership changes. By proactively planning for the business’ future, companies can ensure that their leadership and key personnel are replaced in a timely and cost-effective manner. This can help the company maintain its competitive edge and customer satisfaction as well as minimize the risk of disruption from unexpected changes in leadership and personnel.

Additionally, succession planning can help increase business value by providing a long-term strategy for growth, which can help the company stay ahead of its competition. By having a succession plan in place, the company can plan for future changes in the industry or customer needs and focus on developing strategies and processes that will help them maximize their business value.

3 Succession Planning Models

There are several models for finding the right people to fill out your succession plan. Explore some of the most common ways to find your future leaders.

Mass Recruitment Model

This model focuses on recruiting many candidates (internally or externally) who have the potential to become future leaders. During the recruitment process, organizations evaluate these candidates to determine who has the best skills and abilities for the role. Once the right candidates are identified, they’re given the opportunity to develop the necessary skills and experience to take on the role.

This model of succession planning lets organizations quickly fill key roles while also making sure they have a strong and diverse pool of future leaders.

Specialized Recruitment Model

Specialized recruitment typically involves handpicking successors for specific roles and developing them with those roles in mind. This process typically includes identifying essential roles within the organization and assessing the skills and capabilities of potential successors. It also includes developing and training current employees to help them acquire the skills needed for future roles.

The specialized recruitment model of succession planning helps organizations guarantee long-term success by proactively preparing for leadership changes and ensuring that the right people are in place to fill key positions.

Outside Recruitment Model

The outside recruitment model of succession planning is when an organization recruits individuals from outside the organization to fill leadership roles. This model often is used when there’s a lack of talent or leadership skills within the organization.

This model can be beneficial to the organization because it can bring in fresh ideas and new perspectives. However, this model also can be risky because the individuals recruited might not be a good fit for the organization or cannot successfully lead it.

4 Key Steps in the Succession Planning Process

Succession planning is a complex process that involves a lot of long-term strategic thinking. Here are some of the steps you can take to kick off the process in your business.

Identify Mission-Critical Roles

The succession planning process begins with identifying business-critical positions and key people with the potential to take on those roles. To do this, businesses should consider what positions are essential to the success of the company and who currently occupies those roles.

There’s no definitive answer to this question. It depends on factors such as the specific industry, company culture, and goals of the succession planning process. However, some general tips that may be helpful include:

  • Identifying which roles are most critical to the success of the organization.
  • Identifying which roles are likely to experience high turnover.
  • Identifying which roles are the most difficult to fill.
  • Identifying which roles are most important to the company’s future success.

Considering these criteria can help you determine which roles to focus on developing people to fill far in advance of their vacancy.

Determine Where You’ll Find Successors

Once business-critical positions have been identified, businesses should develop a succession plan. This plan should include which model you expect to use for filling the positions, such as promoting and upskilling people from within or recruiting leadership-ready talent externally (or a mixture of both).

Use assessments to determine if people within your workforce have the skills, abilities, and interest needed to train for leadership roles. Talk to people managers to identify the high-potential people on their teams who could become good leadership candidates.

For some leadership roles, you might hire someone externally specifically to train for that role, while you might entertain several internal candidates for others. Deciding which model to use depends on the available talent pool within your organization compared to what’s available on the market.

Support People Through Career Transitions

Once you’ve identified potential successors, develop a plan to help those people learn the skills and knowledge they need to move into their next job. This could include mentoring, training, job shadowing, and other forms of learning.

Remember that there’s more to moving into a leadership role than training and development. Employees need emotional support and encouragement from their managers and peers, too. Provide support and coaching to individuals throughout the transition period to help them adjust to their changing role.

Create a plan for the transition itself. This should include a timeline for when the transition will occur, how the individuals will be supported, and how the roles and responsibilities of the new job will be handled. Track the progress of the individuals throughout the transition period to ensure they’re adequately supported. This includes providing feedback and guidance as needed.

Don’t forget to celebrate the leadership candidate’s personal progress toward their goals through verbal acknowledgement, rewards, or other forms of recognition.

Track Progress and Adjust

Once the succession plan has been developed, businesses should implement and monitor it to ensure that it works. As the succession planning process progresses, you may need to adjust it, such as by modifying the timeline, updating roles and responsibilities, or introducing new stakeholders.

Generate regular reports to track progress and identify areas for further improvement.

Define Your Succession Planning Strategy to Lead Your Business into the Future

Succession planning is an essential tool for any business that wants to remain competitive in today’s economy. By investing in talent development and preparing for the unexpected, businesses can protect themselves from risks and guarantee leadership continuity. It all comes down to connecting the right people with each other and the resources they need to become successful leaders in the organization.