succession-planning

Succession Planning And Why It Matters In Business

Succession planning is a process that involves the identification and development of future leaders across all levels within a company. In essence, succession planning is a way for businesses to prepare for the future. The process ensures that when a key employee decides to leave, the company has someone else in the pipeline to fill their position.

Understanding succession planning

Succession planning is not just a way to navigate inevitable change, however.

It also enables companies to retain key talent who tend to be the employees who need the most clarity on where their career is headed.

The most effective succession plans, like most other strategies, are those that are reviewed on a routine basis.

Rather than looking at the organizational chart for an hour or two and never returning to it, leaders should aim to revisit their succession plans at least once a year.

Have there been any changes since the last review? Is the plan still on track?

How to create a succession plan

Below is a seven-step process for succession plan creation split across three distinct phases.

Assessment phase

Identify challenges

The process starts with the business listing any challenges it considers significant in the next 1-5 years. 

Identify critical positions

What are the critical positions the succession plan will be built around? These positions are those that have a high vacancy risk or are vital to the company carrying out its mission

Identify skills, knowledge, and competencies

What are the key success factors for each of the critical positions? Include core and technical competencies as well as institutional knowledge and relationships.

Evaluation phase

Assess employee potential

In other words, are there existing staff who are either ready to assume a role or have the potential to grow into it over time?

Include HR staff in this step to include or exclude employees who may be eligible.

Select employee competencies

Each employee is unique, and so too is the succession plan that will guide their progression.

Most will comprise a combination of assignments, mentorship, training, and coaching, with career development conversations usually occurring as part of performance reviews.

Development phase

Capture knowledge

In the sixth step, it is important to capture the knowledge that an employee possesses before the depart the organization.

This is especially important in the modern era where what employees know or think is more important to the company than what they do.

Develop a talent pool

This pool ensures that there is a ready supply of talent able to step up and fill critical positions when needed.

To enable this succession, a tailored career development pathway must be devised for each individual.

Succession planning best practices

Here are a few succession planning best practices to maximize its effectiveness.

Be proactive 

The retirement of a key employee is something a business can prepare for, but succession planning is rarely so predictable. 

To avoid being exposed to a sudden or unexpected resignation, it’s important to be proactive and develop a plan (even in times of relative stability).

Conduct a trial run 

While an employee’s suitability for a role can be vetted to some extent, the business will never know for sure until they assume it.

Instead of waiting for a crisis to put the individual to the test, it is safer to have them fill in for a superior on vacation, for example. 

This enables the company to assess their performance and identify areas for improvement.

Trial runs also provide the employee with valuable experience and an opportunity to showcase their skills.

Understand the company

Like many other processes, the key to effective succession planning lies in management’s ability to understand the company and where it wants to be in the future.

When management has a clear understanding of the company’s mission, vision, and values, it can better identify leaders that align with its objectives.

Key takeaways

  • Succession planning is a process that involves the identification and development of future leaders across all levels within a company.
  • The succession planning process will vary from one company to the next, but in general, it contains seven steps: identify challenges, identify critical positions, identify skills and competencies, assess employee potential, select employee competencies, capture knowledge, and develop a talent pool.
  • Businesses must be proactive when developing a succession plan to better protect themselves from unforeseen circumstances. They should also conduct a trial run to ensure the employee’s skills and competencies transfer to the new position.

Connected Business Concepts And Frameworks

Agile Leadership

agile-leadership
Agile leadership is the embodiment of agile manifesto principles by a manager or management team. Agile leadership impacts two important levels of a business. The structural level defines the roles, responsibilities, and key performance indicators. The behavioral level describes the actions leaders exhibit to others based on agile principles. 

Adaptive Leadership

adaptive-leadership
Adaptive leadership is a model used by leaders to help individuals adapt to complex or rapidly changing environments. Adaptive leadership is defined by three core components (precious or expendable, experimentation and smart risks, disciplined assessment). Growth occurs when an organization discards ineffective ways of operating. Then, active leaders implement new initiatives and monitor their impact.

Delegative Leadership

delegative-leadership
Developed by business consultants Kenneth Blanchard and Paul Hersey in the 1960s, delegative leadership is a leadership style where authority figures empower subordinates to exercise autonomy. For this reason, it is also called laissez-faire leadership. In some cases, this type of leadership can lead to increases in work quality and decision-making. In a few other cases, this type of leadership needs to be balanced out to prevent a lack of direction and cohesiveness of the team.

Distributed Leadership

distributed-leadership
Distributed leadership is based on the premise that leadership responsibilities and accountability are shared by those with the relevant skills or expertise so that the shared responsibility and accountability of multiple individuals within a workplace, bulds up as a fluid and emergent property (not controlled or held by one individual). Distributed leadership is based on eight hallmarks, or principles: shared responsibility, shared power, synergy, leadership capacity, organizational learning, equitable and ethical climate, democratic and investigative culture, and macro-community engagement.

Micromanagement

micromanagement
Micromanagement is about tightly controlling or observing employees’ work. Although in some cases, this management style might be understood, especially for small-scale projects, generally speaking, micromanagement has a negative connotation mainly because it shows a lack of trust and freedom in the workplace, which leads to adverse outcomes.

RASCI Matrix

rasci-matrix
A RASCI matrix is used to assign and then display the various roles and responsibilities in a project, service, or process. It is sometimes called a RASCI Responsibility Matrix. The RASCI matrix is essentially a project management tool that provides important clarification for organizations involved in complex projects.

Organizational Structure

organizational-structure
An organizational structure allows companies to shape their business model according to several criteria (like products, segments, geography and so on) that would enable information to flow through the organizational layers for better decision-making, cultural development, and goals alignment across employees, managers, and executives. 

Tactical Management

tactical-management
Tactical management involves choosing an appropriate course of action to achieve a strategic plan or objective. Therefore, tactical management comprises the set of daily operations that support long strategy delivery. It may involve risk management, regular meetings, conflict resolution, and problem-solving.

High-Performance Management

high-performance-management
High-performance management involves the implementation of HR practices that are internally consistent and aligned with organizational strategy. Importantly, high-performance management is a continual process where several different but integrated activities create a performance management cycle. It is not a process that should be performed once a year and then hidden in a filing cabinet.

Scientific Management

scientific-management
Scientific Management Theory was created by Frederick Winslow Taylor in 1911 as a means of encouraging industrial companies to switch to mass production. With a background in mechanical engineering, he applied engineering principles to workplace productivity on the factory floor. Scientific Management Theory seeks to find the most efficient way of performing a job in the workplace.

Change Management

change-management

Agile Project Management

Agile Management
Agile Project Management (AgilePM) seeks to bring order to chaotic corporate environments using several tools, techniques, and elements of the project lifecycle. Fundamentally, agile project management aims to deliver maximum value according to specific business priorities in the time and budget allocated. AgilePM is particularly useful in situations where the drive to deliver is greater than the perceived risk.

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