How Succession Planning Works:
Succession planning is a contingency plan that should be evaluated and updated yearly. It can be long-term or for emergencies but is used to identify critical positions and potential vacancies within an organization and develop action plans for people to assume those positions.
This ensures that businesses continue to run smoothly, without interruption, when key individuals leave, retire, or pass away.
In order to properly prepare your succession plan, you will need to identify future staffing needs, identify individuals with the potential to fill these future roles, select key skills necessary for business continuity, and develop the chosen individuals to meet these future business needs.
This typically involves cross-training employees to develop the needed skills, competencies, knowledge, and business experience to fill vacated leadership roles seamlessly.
As an example, succession planning in larger businesses typically includes the training of mid-level employees to take over higher-level positions in the future.
Meanwhile, small and family-owned businesses will generally train the next generation to take over, as in a family business where the children start in the lower ranks and work their way up, learning all aspects of the business as they go, before taking over from their parents.
What are the risks of not having a succession plan?
Neglecting to create a succession plan may lead to a loss of essential talent and knowledge from your business, particularly when handovers are not planned out and provided for.
This in turn means an increase in recruitment and training costs as you try to fill these vacated roles quickly, or it leads to power struggles in middle management and confusion among employees.
Benefits of Succession Planning:
As succession planning ensures businesses are prepared to promote and advance all employees, it promotes employee satisfaction and retention. Employees are empowered through career development, which increases job satisfaction. With guidelines for training and development in place, employers can also ensure inclusivity and diversity of the workforce.
From a business standpoint, succession planning leads to the evaluation of leaders' skills and identifying potential replacements, both within and outside the company. This means that leaders can have a clear exit strategy and leave behind a legacy so that key knowledge and expertise are not lost when a leader leaves the company.
It is more cost-effective to develop and promote employees from within the company, which reduces the risk of disruptions in business and ensures that there is someone ready and qualified to take over any vacated critical roles.
How to Create a Succession Plan:
Devising a succession plan can be a lengthy process, but it doesn't have to be a difficult one. Follow our step-by-step guide to outlining a succession plan for your business.
Assessment.
Identify any business challenges.
Evaluate your business structure and future projections for the next five years to identify any possible future challenges. You should create a roadmap that outlines your company's talent goals and the responsible parties, then use projections to determine which future positions need to be filled.
Identify critical positions.
There will be several middle and upper management positions that are essential to the continuity and success of your business. This means roles that will dramatically affect the operations, strategies, and decision-making of your business if they are suddenly empty. Create a list of these critical roles.
Critical roles may also include specialized training or experience, or a talent scarcity.
Consider the skills and competencies of the key positions.
Once you have your list of key company positions, identify the skills, competencies, and institutional knowledge that are critical to these positions. You can do this by writing detailed job descriptions.
Evaluation.
Take a look at your current employee files.
Promoting existing employees is cheaper than hiring new ones, so consider any employees with high potential, who can be trained to fill potential future vacancies. Evaluate your employees' performance, potential, and ambition.
Discreetly talk to your chosen employees.
After identifying the key competencies they will need to be successful in critical positions, ensure the employees you identified understand all expectations and are willing to take on the extra responsibility.
Development.
Ensure HR understands all critical positions.
Detail the knowledge that your critical employees possess before they leave the company. This ensures that there is a comprehensive handover process so future employees can fill the role with no glitches.
Develop your talent pool.
Develop a talent pool that can step into key vacant positions and promote employee growth with shadowing, cross-training, and mentorships. A good plan is to create a personalized development plan for each candidate to suit the role they are being groomed for.
Monitor your succession plan.
By tracking the development and performance of your chosen potential successors, you can monitor the progress of your succession plan and make any necessary adjustments. You should continue to monitor and update your succession plan over time.