Succession Planning3rd March 2021
Succession planning is a process for identifying and developing new leaders who can replace old leaders when they leave, retire or die. Here the planning is usually a close process, so that those who have been selected are not likely to know that they are on a succession list or chat. Succession planning increases the availability of experienced and capable employees that are prepared to assume these roles as they become available. Succession planning is a strategy for passing on leadership roles often the ownership of a company to an employee or group of employees.
Succession planning is a process that ensures an organization has a plan in place to identify and develop internal talent to fill key leadership roles when the current leaders leave their positions. A succession planning program is a formal program that helps organizations identify and develop their future leaders.
A well-designed succession planning program involves several key steps. The first step is to identify the key leadership positions that need to be filled in the future. This involves analyzing the organization’s strategic objectives and identifying the critical roles that are necessary to achieve these objectives.
The next step is to assess the current talent within the organization to identify potential successors for these key positions. This involves evaluating the skills, experience, and potential of current employees to determine who is ready to take on leadership roles in the future.
Once potential successors have been identified, the organization can begin developing them through training, mentoring, and other development opportunities. This involves creating a development plan that outlines the specific skills and experiences that potential successors need to acquire to prepare them for future leadership roles.
In addition to developing potential successors, the organization should also establish a process for regularly reviewing and updating the succession plan. This involves monitoring the progress of potential successors, updating development plans as needed, and identifying new potential successors as the organization’s needs change.
A well-designed succession planning program has several benefits for organizations. It helps ensure continuity of leadership and reduces the risks associated with unexpected departures of key leaders. It also promotes employee engagement and retention by providing clear career paths and development opportunities.
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. Succession planning can also provide a liquidity event enabling the transfer of ownership in a going concern to rising employees. Taken narrowly, “replacement planning” for key roles is the heart of succession planning.
- In dictatorships, succession planning aims for continuity of leadership, preventing a chaotic power struggle by preventing a power vacuum.
- In monarchies, succession is usually settled by the order of succession.
- In business, succession planning entails developing internal people with the potential to fill key business leadership positions in the company.
Effective succession or talent-pool management concerns itself with building a series of feeder groups up and down the entire leadership pipeline or progression. In contrast, replacement planning is focused narrowly on identifying specific back-up candidates for given senior management positions. Thought should be given to the retention of key employees, and the consequences that the departure of key employees may have on the business.
Some of the most common types of Succession planning programs include:
- High-potential program: This program identifies employees who have the potential to fill key leadership positions in the future and provides them with targeted development opportunities to prepare them for these roles.
- Talent review program: This program involves assessing the current talent within the organization to identify potential successors for key leadership positions. The program focuses on evaluating the skills, experience, and potential of current employees to determine who is ready to take on leadership roles in the future.
- Career development program: This program helps employees identify and develop the skills and experiences they need to advance their careers within the organization. It provides employees with a clear career path and development opportunities that prepare them for future leadership roles.
- Executive coaching program: This program provides one-on-one coaching and mentoring to potential successors to help them develop the skills and experience they need to take on leadership roles in the future.
- Succession planning task force: This program involves creating a task force that is responsible for overseeing the organization’s succession planning efforts. The task force is typically composed of senior leaders and HR professionals who work together to identify potential successors and develop them through training and development opportunities.
Process and practices
Companies devise elaborate models to characterize their succession and development practices. Most reflect a cyclical series of activities that include these fundamentals:
- Identify key roles for succession or replacement planning
- Define the competencies and motivational profile required to undertake those roles
- Assess people against these criteria – with a future orientation
- Identify pools of talent that could potentially fill and perform highly in key roles
- Develop employees to be ready for advancement into key roles; primarily through the right set of experiences.
Research indicates that clear objectives are critical to establishing effective succession planning. These objectives tend to be core to many or most companies that have well-established practices:
- Identify those with the potential to assume greater responsibility in the organization
- Provide critical development experiences to those that can move into key roles
- Engage the leadership in supporting the development of high-potential leaders
- Build a database that can be used to make better staffing decisions for key jobs
In other companies these additional objectives may be embedded in the succession process:
- Improve employee commitment and retention
- Meet the career development expectations of existing employees
- Counter the increasing difficulty and costs of recruiting employees externally
Process of Succession Planning
- Identifying Key Business Areas and Positions: First and foremost, the key business areas are identified, i.e. the areas which are significant with respect to the operational activities and strategic objectives. After that, those positions are identified which if vacant can cause difficulty in achieving business objectives.
- Ascertaining Competencies for Key areas and positions: Next, you need to determine the required competencies for key business areas and position, in order to create the selection criteria, establish performance standards and fill the difference between what the viable successors know and what they need to know, through the training and development process.It determines the knowledge, skills, ability and experience required to achieve business goals.
- Find out the interested and potential candidates and assess them as per the competencies: After competency is analysed, the next step is to identify among various employees working in the organization, who are interested as well as they have the capability to fill key business areas and positions.The Human Resource Manager discusses future career plans and interests with the candidates and identifies the potential successors who are ready to replace the old ones and can be trained and developed for future contingencies.
- Develop and Implement Succession Strategies: Strategies for learning, training, development, knowledge transfer, experience sharing is developed and implemented for potential successors.
- Evaluate Effectiveness: The last step to the succession planning process is to evaluate the succession planning and management, to ensure that all the key business areas and positions are covered under the succession planning. Further, it also ensures that in case of any sudden vacancies in future, key positions can be filled as soon as possible and the successors perform effectively when they hold the position.
A larger business might groom mid-level employees to one day take over higher-level positions.
Succession planning starts with proper hiring practices with the goal of choosing candidates that are capable of rising through the ranks as time goes on. For example, an experienced person from another company might be courted and groomed for an executive-level position.
Training includes the development of skills, company knowledge, and certifications. The training might include having employees cross-train and shadow various positions or jobs in all the major departments. This process can help the person become well rounded and understand the business on a granular level. Also, the cross-training process can help identify the employees that are not up to the task of developing multiple skill sets needed to run the company.
Benefits of Succession Planning
There are several advantages for both employers and employees to having a formalized succession plan in place:
- Shareholders of publicly traded companies benefit from proper succession planning, such as the case when the next candidate for CEO is involved in business operations and is well respected years before the current CEO retires. Also, if investors observe a well-communicated succession plan, they won’t sell the company’s stock when the CEO retires.
- With Baby Boomer business owners and leadership retiring in huge numbers, a new generation of leaders will be needed.
- Employees know that there is a chance for advancement and possibly ownership, which can lead to more empowerment and higher job satisfaction.
- Management keeps better track of the value of employees so that positions can be filled internally when opportunities arise.
- Knowing that the company is planning for future opportunities reinforces career development among employees.
- Management’s commitment to succession planning means that supervisors will mentor employees to transfer knowledge and expertise.
- With succession planning, leadership and employees are better able to share company values and vision.
Need for Succession Planning
Succession Planning is a part and parcel of the Human Resource Planning, which acknowledges that the employees may or may not work with the organization in the future. And so to be at the safer side, a succession plan is developed to analyse the vacancies which might take place when an employee leaves the organization, the business areas which might be affected, job requirements and the skills of the existing incumbent.
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