Every organization needs a successor for its key leadership positions … and a succession plan
Management guru Peter Drucker once said, “There is no success without a successor.” However, even if an organization has a successor for a leadership role but has no succession planning, there’s still no guarantee of success.
What is succession planning?
Succession planning is a strategy for passing on leadership roles – often the ownership of a company – to an employee or group of employees. Also known as replacement planning, it ensures that businesses continue to run smoothly after a company’s most important people move on to new opportunities, retire, or pass away.
It evaluates each leader’s skills, identifying potential replacements both within and outside the company and, in the case of internal replacements, training those employees so that they’re prepared to take over. It’s not a one-time event. Succession plans should be reevaluated and potentially updated every year or as changes in the company dictate.
In addition, organizations might want to create both an emergency succession plan (in case a key leader needs to be replaced unexpectedly) and a long-term succession plan (for anticipated leadership changes).
In large corporations, the board of directors – not just the CEO – typically oversees succession planning. In small business and family-owned companies, this planning often means training the next generation to take over the business. A larger company might groom mid-level employees to take over higher-level positions one day, according to Investopedia.
Why is it important for an organization to have a succession plan in place?
Employers might conclude that it’s better to hire externally, considering the scarcity of succession plans. However, internal hires outperform external candidates in significant areas such as time-to-contribution and length of service. Knowing this, many organizations prefer to promote from within, and some even make it part of their stated culture. These organizations and their employees benefit greatly from succession planning.
A succession plan is a great idea for any organization, regardless of its hiring philosophy. Some of its benefits to organizations include:
Less expense: Succession planning prioritizes candidates from inside the organization, enabling an employer to spend less on recruitment, as well as onboarding and new employee training.
Stronger internal hires: A good succession plan allows employers to gauge aptitude and enthusiasm, acting as a pre-filter for employees who are marked for advancement.
No lengthy vacancies: It’s impossible to predict when a great candidate will arrive to fill an opening, and a long delay can throw a huge wrench into an organization’s expansion strategy. That’s why it’s crucial to prepare employees in advance to step into new roles as soon as they open.
Solid foundation for career development: it’s a top priority for young candidates, and having a succession plan is a clear indicator that employers are willing to invest in their workforce and guide them forward.
Increased employee engagement: A succession plan shows that employers value their people, provides rewards and recognition to high performers, and gives employees a clear goal to work toward beyond the business objective.
Minimal downtime, maximum performance potential: A succession plan that includes cross-disciplinary training and skill development can expand the existing capabilities of a workforce, making an organization more versatile and productive and less vulnerable to absences and bandwidth bottlenecks.
Employees can also benefit from a well-designed succession plan. They will gain the following, according to BambooHR:
Sense of being valued: The fact that someone is willing to invest time, effort, and money into their development makes employees feel like they’re valued for their potential – not just their current performance.
Sense of purpose: A succession plan provides a clear path to advancement and fights the feeling of aimlessness, which leads to disengagement and turnover.
Sense of preparedness: Taking on a management role can be scary. A succession plan can put employees at ease by creating space and time to ask questions and commit mistakes before things get real.
Why do succession plans fail?
There are three reasons succession plans fail, according to PSI:
Lack of support from the executive level
HR and management can lay the best plans, but if the executive level doesn’t support and reinforce the necessary steps to implement those plans, it’s in vain. To gain buy-in from the C-suite, outline the benefit and value-add of investing in the training needed to have a successful succession planning model. Also, identify the level of support and involvement you’re expecting from each of the executive leaders.
Making assumptions about a candidate
Another common mistake is for management to make assumptions about the interest level, abilities, and skills of those whom they have identified as a high-potential (HiPo) performer to take to the next level. Have you evaluated their skills and abilities both at their current level and the next? It’s important to remember that just because employees may be doing great at their current job doesn’t automatically mean that they will make a great future leader.
Lack of training for developing HiPo employees
One thing that can derail a potentially successful succession plan is the failure to implement its training component. You may have strong support from your executive team and have identified the right candidates to move up in the organization, but if you fall short in providing them with the level of training and development to make it happen, it’s still not enough. Also, remember that training should be specific and targeted – not generic and all-encompassing.
How do you facilitate succession planning?
HR consulting firm Robert Half suggests taking the following steps:
Make the vision known. Include potential leaders in strategy conversations to help them acquire planning and leadership skills, as well as a broad vision of your organization and its objectives.
Offer regular feedback to protégés. When someone uses well-honed presentation skills or outperforms on a project, take note of it. Keep track of these achievements in a top-performer file so you something to reference the next time a leadership position opens.
Use your succession plan to develop a hiring strategy. Once you have identified employees as successors for key roles in your organization, take note of any talent gaps. This way, the succession planning process can help you identify where to focus your recruiting efforts.