What is Succession Planning?Â
Succession planning is one of those things that might not always feel urgent but is incredibly important for the long-term health of any organization. Put simply, it means getting your employees ready for possible leadership roles. This is something that every type of business, no matter the size, can benefit from. Planning ahead for leadership changes means your company won’t be shocked or blindsided if someone in a critical role leaves unexpectedly.
We'll check what succession planning is, why it’s so important, the different types of succession plans, and the steps you can take to create a solid plan for your organization.
What is Succession Planning?
Succession planning is a process that involves identifying and developing internal candidates who can step into key leadership positions when needed. Instead of scrambling to fill a role at the last minute, succession planning makes sure that you have a clear path for continuity in leadership—and that your organization won’t miss a beat when someone moves on. This process recognizes the importance of leadership and takes the necessary steps to build a pipeline of talent that’s ready to step up when required.
The main goal of succession planning is to guarantee the future success of the business by making sure there’s a relatively easy transition whenever a key leader leaves. It involves developing your team in a way that aligns with your company’s eventual ambitions. You want to make sure that the next generation of leaders not only has the necessary skills and expertise but also understands the vision and direction of the business. Turnover and attrition have plenty of negative effects on a company, and sound succession planning pre-emptively does something so companies can mitigate those effects, especially if senior leaders are suddenly leaving.
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Why is Succession Planning Important?
As we’ve said, succession is a strategy that helps secure your company’s future. This is a way to make sure each detail stays the same and your company's culture stays firmly planted. Here’s why it matters so much:
Mitigating Risks of Sudden Role Vacancies
Sudden changes in leadership can be risky for any company. Unplanned departures, whether through retirement, resignation, or emergencies, can leave gaps in critical positions that interfere with operations. Succession planning helps you deal with sudden changes in a way that keeps your company on track.
Securing Business Continuity
A leadership change can cause a ripple effect across your organization, which can affect productivity or decision-making processes. This is especially true for employees who, suddenly finding themselves without a manager, might start to wonder who should make this decision or that one. With a strong succession plan, your company can continue to operate smoothly without any major disruptions.
Strengthening Employee Engagement and Retention
Succession planning helps keep the work environment positive by showing employees that there are opportunities to grow within the company. When employees know that there’s a clear path for career progression, they are more likely to stay engaged and committed to the organization. This, in turn, helps limit turnover and retain top talent.
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Types of Succession Planning
Succession planning can take different forms depending on the specific needs of your organization. Finding out about the different types of replacement planning will help you build a strategy that fits your expectations. Here’s a look at the main types:
Emergency Succession Planning
Sometimes, leadership changes happen unexpectedly. Emergency succession planning is designed so that your company is prepared for sudden transitions, whether it’s due to a resignation, illness, or other unforeseen circumstances. This type of planning is focused on making sure you have someone ready to step in on the spot.
Long-Term Leadership Development
Unlike emergency succession planning, long-term leadership development has more to do with staying ahead and preparing your future leaders over time. If your company spots potential leaders early and offer them mentorship, training, and growth opportunities, it can set up a strong leadership pipeline that supports the business in the long run.
Functional or Role-Specific Planning
Functional or role-specific succession planning involves identifying key positions that are essential for the daily operation of the company. It tries to find people who can do the job and are willing to do it. This type of planning is especially helpful for roles that are integral to the company’s operations.
Steps to Create a Succession Plan
Creating a succession plan is an organized process that must include clear steps to ensure you identify and prepare the right individuals for future leadership roles. Here’s how you can get started:
- Identifying Critical Roles
- Assessing Employee Potential and Skills Gaps
- Developing Training and Mentoring Programs
- Continuous Monitoring and Revisiting Plans
The first step in effective succession planning is identifying the roles that are essential to your company’s operations. These are more-or-less senior positions that, if left vacant, would cause disruption to business continuity. Often, these roles are found at the leadership level, but they can also include key technical or operational positions that drive day-to-day business. Once you’ve identified these critical roles, the next step is to map out the potential successors for each role.
💡 Start with the management: If you don't know where to find these essential senior positions, you can start with the managers. Managers are either extremely important because they get things done, or, if they are more involved in supervisory duties, they're helming an extremely important employee. So if you comb through your employee base because you want to proactively launch a succession planning policy, by starting at this level of the pyramid you'll have a clearer direction.
After picking out critical roles, you’ll need to assess your current employees to identify potential candidates for these positions. Look for staff members who already possess the core skills required for the role or those who demonstrate the potential to develop those skills. It’s also worth looking at any gaps in their experience or abilities that might need to be filled in. This audit will give you a clearer picture of who could step into each role in the future and where additional training or mentorship is needed.
📊 Use metrics to evaluate employee potential: Using HR software with people analytics is the quickest way to assess their present performance—and project their leadership potential. So if you're noticing a single employee is scoring high in teamwork-related metrics, and she's doing an outstanding job out there, you can already notice you have a solid recruit for succession planning.
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Once you’ve identified potential successors and assessed their skills gaps, it’s time to invest in their development. This can be done through targeted training, which might include leadership courses, job rotations, mentorship programs or on-the-job experience to help key employees gain the necessary expertise. Some companies invite employees to a one-off project and use that project to train the employee and confirm is they're indeed ready to move upward.
Succession planning can be thought of as an ongoing process that requires regular monitoring and adjustments. As your organization evolves, so do the needs of your leadership team. Consider regularly revisiting your succession plan to assess whether the individuals identified as potential successors are still on track and whether any changes are in order. This could involve reassessing employee performance, shifting responsibilities, or even revising the plan if business needs change.
Tools and Templates for Succession Planning
Implementing an effective succession plan can be made easier with the right tools and templates. These resources simplify the process and guarantee that nothing is overlooked.
Overview of Available Tools
There are a variety of tools available to assist you with your succession planning process. These range from software platforms designed for talent management to simple spreadsheets. The right HR software can help you handle everything, from figuring out the most important duties to keeping tabs on your team's progress. The best succession planning tools also integrate with other HR systems, in a way that allows for an easy overview of employee data, performance evaluations, and training records.
Benefits of Using Templates
Templates are useful because they provide a structured format for creating and tracking your succession planning framework. They can guide you through each step of the process, like identifying critical roles and assessing employee readiness. The perk of using templates is that they save time and downplay the likelihood of missing essential details.
Guidelines to Make it Work
If you’re a smaller organization, simple templates might be all you need to kick off some succession planning. You might even be able to pick out the prospective leaders without much analysis. But larger organizations with plenty of employees and complex operations may benefit from software solutions. In any case, one of the best ways to pick out candidates is by checking a detailed org chart and seeing how each member is performing, and HR software is the easiest way to do that.
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Succession Planning FAQs
How do you handle succession planning for a family-run business?
Succession planning in family-run businesses is a bit more delicate. Start by identifying family members who have the skills, drive, and interests to lead the company while also considering the possibility of hiring external talent if necessary.
It’s very helpful to, from the earliest stages in which a family member gets involved, have open and honest conversations with family members about their aspirations and the future direction of the business. And family companies don't necessarily stay the same forever: Some grow or change their shapes, and probably some family members will want to step up in these circumstances. So, drafting a plan with clear future roles, expectations, and a timeline for transition can help avoid conflicts. It'd then be a matter of putting names to those roles that were drafted together.
Can succession planning work in startups or small businesses?
Yes, succession planning is just as important for startups and small businesses as it is for larger organizations, though the approach might look a bit different. In these companies, leadership roles can often be fluid, and the team may be smaller.
Even so, preparing for leadership changes is key for securing business continuity, but it's safe to say it's easier to spot the candidates than in a huge company. For startups, a succession management process can begin with identifying the key roles that are critical for the company's growth and making sure that employees are cross-trained to step into these positions as needed. The easiest way to train them is to let them do the job themselves by sharing responsibilities with the current stakeholders. It’s also helpful to build up internal talent in a way that provides opportunities for growth and skill development so there’s a pool of succession candidates ready to step up if needed.
Can succession planning be tied to employee performance reviews?
Yes, employee performance reviews can be a useful tool in succession planning. Regular performance reviews help employees understand their strengths, areas for growth and readiness for higher-level responsibilities.
If you incorporate succession planning into the performance review process, you can identify high-potential employees who are ready for more significant challenges and leadership opportunities. And this approach lets you adjust training, mentoring, and growth opportunities based on how an employee is doing. One of the best ways to conduct performance reviews is either with a template or with specialized HR software.