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What Is Succession Planning?

 

Definition of Succession Planning

Succession planning is described as having the right people in the right place at the right time.

More specifically, succession planning is the ongoing process of identifying successors to the critical roles of an organization and developing them so they’re ready to move into those leadership roles.

This process includes reviewing the organization’s strategic plan, assessing the current workforce, forecasting future trends, and developing employees in a structured plan to replace leaders as they retire or depart from the organization.

Here’s an overview of the basic steps of the succession planning process:

• Assess the organization.

• Determine key positions.

• Identify capabilities for key positions.

• Identify and assess candidates.

• Create development plans.

• Measure, monitor, report, and revise.

Replacement Hiring Versus Succession Planning

At one time, succession planning was a term reserved for the last wills and testaments of family-owned companies. Later the term was expanded to include companies whose purpose was to plan to replace CEOs.

Today, succession planning is accepted as a best practice to replace leaders and critical key positions at various levels in organizations. However, if yours is like many organizations today, you’re practicing what is known as replacement hiring. Replacement hiring is a reactive process to fill an immediate need, whereas succession planning is proactive and works to address the need before it exists.

Why would you want to practice succession planning over simple replacement hiring? Great question. Here are some reasons to consider implementing succession planning in your organization:

• Replacement hiring is a narrow approach and is usually focused on trying to quickly avoid a crisis by filling a position in a short time. Succession planning takes the additional time needed to ensure that the decision aligns with the organization’s strategic plan and goals.

• Replacement hiring is more restrictive, sometimes forcing you to select the best person available at that moment. Succession planning is more flexible and allows you to focus on selecting the best candidate for the position.

• Replacement hiring is a quick fix. Succession planning exhibits a long-term commitment to the organization and to developing individuals in the organization.

• Replacement hiring is usually based on the current job description and has limited time for additional input. Succession planning allows you the time to further develop the job description to include new directions, expanded responsibilities, or other adjustments to the position.

• Replacement hiring usually centers on identifying one or two potential successors to senior-level positions, whereas succession planning focuses on developing pools of talent for key positions at various levels of the organization.

• Replacement hiring often uses input only from the incumbent and their immediate supervisor, whereas succession planning uses feedback from multiple perspectives and resources.

• Replacement hiring also may offer advancement as a reward or because of seniority with the company, whereas succession planning doesn’t just consider whether a person has been in their position for a period of time long enough to merit an advancement, but rather looks at the person’s abilities to ensure that they have the competencies needed to be successful in the new role.

• Because replacement hiring usually needs to be done quickly, it often doesn’t allow time to consider the relationship of the hiring activity with other human resource activities, such as recruitment, training, development, and diversity initiatives. Succession planning works to integrate with other human resources activities.

And that’s just a sampling of the reasons why succession planning is a good idea; it’s a necessity for any organization that hopes to compete for the best talent in the workforce, to develop that talent fully, and to retain those individuals as the future leadership of the company.

Models of Succession Planning

Succession planning is a part of workforce planning. Workforce planning involves planning for hiring and developing employees in all levels of an organization and encompasses more positions than a traditional succession plan, which focuses on leadership and key positions.

Because the emphasis on succession planning is still relatively new compared to many human resource functions, there are multiple formats and, consequently, a lack of standardization. Also, because organizations differ in their specific requirements, there will always be a need to tailor succession plans to fit the company’s needs and culture.

And of course, there will always be buzzwords, new tools, and updating of succession planning practices. For the purposes of this book, we’ll stick to the basics, and you can decide which enhancements you’d like to include in your specific plan.

Succession Planning Core Concepts

There are different structures for succession planning as well as variances in the order of the steps. Differences exist in how leadership candidates are identified or nominated. However, the most successful plans share common elements that are excellent benchmarks to study before deciding on your process. Consider the following core concepts:

• To receive employee buy-in, the plan must have ongoing support from the organization’s top management. That means the CEO and senior management are not only visible during the kickoff of the program, but should also take ownership of the process by continually supporting it and by presenting frequent communication about the plan’s progress.

• The plan must be coordinated with the organization’s strategic plan. The project team needs to understand the organization’s direction so they can tailor the plan to address any new focus areas or upcoming changes in company structure.

• The best plans are developed by a team of representatives from different levels and areas of the organization. By using various representatives, you can establish a broader understanding of the organization to ensure that the plan meets the true needs of the organization, not those perceived by one specific group.

• The most successful plans use systematic methods to identify future leaders of the organization and to develop those individuals to assume leadership roles. In addition to identifying candidates, good plans use ongoing communication to ensure that the employees know what competencies they need to develop to move into leadership roles.

• The best plans are simple and are designed to answer the organization’s unique needs and goals. As with most projects, if the plan is simple enough to be easily enacted, it will be used. If it’s cumbersome, it may be abandoned and the organization will find itself right back at the stage of replacement hiring.

Good plans incorporate open communication methods and solicit employee input. Employees need to be able to voice concerns, opinions, and ideas and know that these are heard and considered by the planning team.

The best plans include accountability, evaluation, and follow-up measures. Many excellent plans have ended up in filing cabinets because there were no specific maintenance procedures built into the system. These plans include evaluation and revision systems to keep the process current and focused.

Variations in Succession Plans

The main differences in the types of succession planning include who determines the candidates and how many candidates are being considered for each position. Some companies allow the incumbent to choose their successor, whereas other companies use input from groups like a task force or a senior leadership team. Some organizations create separate pools of candidates for each position, whereas others create pools for all positions of the next leadership level. Each system has its own advantages and disadvantages.

These variations are also what make it difficult to present an exact timeline for your succession planning efforts. The larger the organization, the more key positions, and the more basics that must be addressed (such as updated job descriptions and identification of competencies), the longer the process will take. The least amount of time an organization can expect to use to design and implement a plan would be a year, and even then the process is not complete. In fact, with ongoing evaluation and revision, your succession plan will become an ongoing process. The good news is that this process becomes a selling point for your organization as a desirable employer.

This book will give you information on each type of plan so you can determine which one is right for your organization.

Purpose of Succession Planning

Today we recognize that succession planning is not just a process to replace a CEO. It’s a necessity for leadership at every level of the organization.

The purpose of succession planning is to prepare your organization for the challenges and opportunities associated with changes in critical key positions. You’ll accomplish this by developing employees to ensure that you have qualified candidates ready to fill those key positions when a vacancy occurs.

The scope of succession planning can include only the senior leadership positions or it can extend to key positions across the company. Likewise, succession planning can target specific divisions of the company based on current strategic planning and the mission of the organization.

Succession Planning Opportunities

If we’re thinking about the big picture, it’s easy to see that succession planning shouldn’t be viewed as a burden but rather as an opportunity to drive the organization, instead of letting it be driven by workforce fluctuations.

Succession planning allows us to create a standard for the qualifications and competencies that future leaders need to have if they are going to take the organization into the future. It also offers senior management a structured way to review and guide the potential leadership talent in the organization.

Succession planning benefits employees by improving their understanding of the potential career paths available and the development they need to move along those paths. This leads to improved retention, morale, and commitment of the workforce.

Succession planning helps us to avoid premature promotions because employees are guided in their development and prepared for their leadership roles. This prevents the problem of losing valuable talent because an employee can’t handle a new role and can’t face the embarrassment of having to take a step back down in position.

Because succession planning is built with the strategic plan in mind, it gives us the opportunity to identify upcoming workforce needs so we can create specific training and development opportunities based on those specific needs before they become urgent.

Succession planning is an opportunity to build on the diverse intellectual abilities and specialized skills available in a company because it identifies the knowledge, skills, and abilities of each employee as well as individual developmental interests.

And finally, succession planning allows us to move away from the reactive practice of hiring whomever is available to fill the job and into the proactive system of locating and developing the right person to realize the full potential of that position.

Need for Succession Planning

At your next meeting, take a moment to look around the table and ask yourself a few questions:

• Is there anyone at the table who will retire in the next few years? Is there a successor prepared to step into the position?

• How many people at that table are the only ones who understand specific processes in their departments? Does production suffer when they are out of the office? What would happen if they were suddenly out of the picture?

• If anyone in that room exited the organization without giving notice, would there be a disruption of office procedures? Would valuable knowledge be lost forever?

Corporate America has seen its share of these unexpected departures in recent years, including Intel, Texas Instruments, Papa John’s, Fiat Chrysler, and others whose leaders have exited quickly due to catastrophic events. How well prepared would your organization be to withstand such a loss?

These questions are the basis for succession planning. Succession planning allows time to ensure that the successors to such positions have absorbed some of that expertise. This means that the organization doesn’t lose ground every time someone in a key position leaves.

The time for succession planning is not when someone exits your organization. It’s when a new person comes in. From the first day an employee arrives, that individual should be observed and coached to determine if they are a potential leadership candidate and to discover the areas they need to develop to fulfill that potential.

Succession planning ensures that an employee has been developed and is ready to step into a leadership role when the opportunity arises. To make that happen, critical positions are identified and then carefully analyzed to determine what competencies they require.

The cost of an employee leaving is high—not only in the loss of their skills but also in the knowledge that they acquired during their time with the organization. Effective succession planning ensures that strategies are in place for the transfer of that knowledge.

Even the changes in the workforce today underscore the need for changes in the way we do succession planning. Pew Research Center’s analysis of U.S. Census Bureau data noted in 2018 that 56 million Millennials were working or looking for work. Gen Xers, at 53 million, accounted for a third of the labor force, with Baby Boomers, at 41 million, representing only a quarter of the total. And now Gen Z is moving into its place in that workforce.

With statistics like these, coupled with the fact that businesses are realizing that Generations Y and Z value the ability to develop and drive their own careers, recruiting and retaining leaders is gaining even more importance.

One of the best ways to keep talented people is to provide them with growth opportunities that they might otherwise look for elsewhere. Succession planning answers that need.

Summary

Creating a career map and implementing a succession plan is no easy task. And it’s going to meet resistance and fall by the wayside if you haven’t created the right foundation by including positive communication and two-way discussions with employees.

Succession planning is an opportunity for employees to develop their own plans for the future. They can create their own destiny. It is not a way to determine which employees should stay and which ones should go; that’s performance management. And that’s one of the messages that bears repeating to those who will be affected by this process.

In summary, succession planning involves the steps of analyzing an organization, determining what exists in its current workforce and what it needs, and then implementing the systems to develop potential leaders to fulfill those needs. The methods to get there will vary to suit different companies, but the end result is the same. It creates an organization that is stronger as a whole and individuals who are motivated and prepared to face their roles as future leaders.

Getting It Done

This week your goal is to begin educating your organization about succession planning and the benefits it can have for the company and everyone in it.

To do this effectively, you’ll want to take time to highlight key information in this chapter and create a short presentation about succession planning. Be sure to include a definition, the difference between succession planning and replacement hiring, and the core concepts.

Present this information to the leadership team. Invite them to think about people in their departments who may be retiring, moving up, or leaving. Ask if they have ideas about who would replace them. Continue to share information with others by giving sheets with bullet points to managers for presentation at department meetings, in email reports, or newsletters.

Create your own elevator speech with a 30-second definition of succession planning and why it’s important to your organization. Then share it with others at every opportunity. This stage of information sharing not only encourages others to get on board but also will pave the way for the next step of creating a succession planning team.

Sample Introduction for Leadership Team

Imagine that three of you in this room won the lottery and decided not to come to work tomorrow. Do you think our organization would suffer? Would we lose institutional knowledge and wisdom that has helped this company get to the level of success it has achieved?

That’s what we’re risking when we ignore the opportunity to create a succession plan for key roles such as yours. We hear time and time again that true leaders are the ones who set up the organization for success, even after they are gone. This is our chance to prove that.

I’m asking for your support of a succession planning effort that will identify key roles and the skills needed for them, assess if we have enough of those skills in our organization, and begin a plan to develop our future leaders. With this plan, we ensure that the organization continues to build on the foundation you’ve created and that those in our ranks who understand our workplace have the opportunity to continue your work.

Sample Elevator Speech

Here are the basics of succession planning. We create a team to look at the key positions in our organization and determine the skills needed for those roles. Then we examine whether we have potential candidates in our ranks to fill those roles when they become open. We create plans for these internal candidates to develop those skills. And we monitor and adjust this plan to ensure that we are always developing our workforce to be the leaders of tomorrow. I’m asking for your support in this effort so we can continue to build on the foundation our leadership has created.