What Is Succession Planning? (With Examples)

No employee stays in a single role forever, and in order to be successful, companies need to be ready to handle transitions in leadership.

Succession planning is one of the best ways to do this, and in this article, we’ll talk about what succession planning is, how to do it, and the benefits of having a succession plan.

Key Takeaways

• Succession planning ensures that every leadership role in a company has someone ready to step in when the current leader leaves.

• Succession planning requires understanding the company’s values and key leadership positions, identifying its high-performing employees, and developing its next generation of leaders.

• Succession planning makes personnel transitions easier and cheaper and improves employee morale.

What Is Succession Planning?

Succession planning is a process of long-haul internal recruitment for leadership roles that gradually open up down the line. For every position within the company, there is another individual in mind who could step into their role and be successful.

Companies use succession planning to avoid a situation where important functions are left undone because there’s nobody to do the job.

Being prepared ahead of time for the possibility that an employee leaves their role for any reason eases the burden of handling it at a moment’s notice. As with any other part of professional life, preparation can only help.

6 Steps for How to Create a Succession Plan

1. Understand the values of the company. The company values must first be outlined to identify employees that would make good leaders in the future. The qualities that a business holds close are the types of characteristics they should look for in a successor.

   Filling leadership roles with an individual whose management style doesn’t align with the company culture usually doesn’t end positively.

2. Define the key leadership positions within the company. Once a company’s core values and systems have been established, the next step in creating a succession plan is deciding which positions are the most crucial to functioning.

   While every employee in an organization serves a purpose, certain management positions need to be filled for a company to maintain its daily operations.

3. Develop a barometer of employee performance. Creating a measurement for impressive employee performance helps to calculate who is showing the most potential for future leadership roles. The barometer for success may differ between industries.

   For example, in a sales position, a successful employee could be deemed from the amount of money they’ve brought in. Alternatively, a customer service representative might be evaluated based on the amount of positive client feedback they receive.

   Figure out a way to measure employee performance effectively in the company’s field.

4. Identify top talent. With a way to determine which employees are excelling, it becomes simple to identify the top talent within the company.

   Keep track of which staff members are consistently improving their work and performance results. These are the employees to focus on during succession planning.

5. Assist in leadership development for the next generation. The final step to set the beginnings of succession planning in motion is working with the high-potential employees to assist in career development.

   Even if an employee shows promising signs of becoming a new CEO one day, they still need guidance to reach this potential. After identifying key roles and high-performing employees, The central focus of succession planning is developing their skills to take on more responsibility down the line.

6. Reevaluate over time. An individual could seem like they’d be the perfect successor for a leadership role in an organization initially, but that might not continue to be the case over time.

   Monitor employees who are being considered during succession planning to see how their career development is coming along. If an employee is showing little signs of overall leadership progress, reevaluation of the succession plan is required.

Tips for Creating an Effective Succession Plan

1. Get to know employees well. The basis of effective succession planning is identifying which employees would fit the best in a particular high-ranking role. The only way to choose the right person for a crucial leadership job is to get to know each and every employee well.

   Even if there are certain individuals that you’ve already ruled out in your mind, give them an objective chance. You never know which employee might surprise you with their leadership potential.

2. Invest in training for promising employees. After a few candidates with a high potential for leadership roles in the future have been identified, put some effort into getting them ready for the task.

   While investing in the extended training of people who already work for a company might sound redundant, it’s a great way to strengthen a succession plan. Although a candidate shows a lot of traits of a strong leader, they’ll still require the development to get there.

3. Communicate with potential employees when considering them for leadership. Once potential successors have been identified for a position that’s soon opening up, it’s important to communicate this interest with the employee that’s being strongly considered.

   Discuss the possibility of them taking on a position with more responsibility and power. This helps all parties be prepared for a smooth transition when the time comes. This honest communication should be practiced with all employees to make sure everyone is on the same page.

4. Embrace mentoring. There’s nobody who knows the ins and outs of a high-stakes position like the person who has been working in it for years.

   Using a system of mentoring between senior employees and the younger generation is a great way to funnel important information about the role to the people who could take it over one day.

5. Pay attention to diversity. Succession planning is a great opportunity to diversify your company’s work environment. By identifying talented, qualified people who come from a variety of backgrounds to take part in your succession plan, you’ll set up your company for success in the long run.

   You shouldn’t make someone who is a terrible employee a leader just because they bring some diversity to the table, but if you notice that your leaders are all alike, look for other pools of candidates you could draw from to add some different perspectives and skills to the mix.

6. Don’t rush it. The process of building up an effective succession plan doesn’t happen overnight. It could take years before ideal successors are identified and prepared to take on a new role.

   It’s always better to remain patient for the perfect fit while succession planning, rather than rushing into a decision with the wrong candidate for the position.

7. Be flexible. There is no singular way to create an effective succession plan. It works a little differently for every unique business and industry. With this in mind, it’s important to be flexible during every stage of the succession process. There is always the potential for even long-term plans to change.

   Having an open mind about succession planning helps ease a process that would otherwise be stressful.

The Importance of Succession Planning

When a company is unequipped to handle a vacancy on their staff, it costs them loads of money, time, and collective stress. Failing to take into consideration the loss of staff in positions of power and evaluate the potential of lower-ranking employees leaves a company scrambling when they’re put in the situation.

Succession planning is sometimes easy to predict, such as with employees who are nearing the retirement age. In the final years of an older employee’s service, their employer thinks ahead to start arranging for their termination.

Another reason that succession planning is an important part of a business’s long-term vision is that it identifies high-performing employees who could make excellent future leaders.

Focusing on detecting successors demonstrates to staff that there is room for growth within the company and motivates them to work towards this outcome.

Recognizing talented employees early on makes for easier transitions when an unexpected departure takes place.

The Benefits of Succession Planning

Engaging in effective succession planning provides advantages for both the employer and employees. Below are some of the benefits of succession planning:

1. Avoids difficulties during unexpected departures. The stress can be felt by every member of an organization when an unexpected loss of an important team member occurs. It’s palpable.

   Luckily, implementing a succession planning system avoids piling on any additional panic because there’s already a promising individual in mind to fill the role.

2. Decreases the time of having a missing spot on the team. A company that doesn’t take time to consider its current talent pool ahead of time is likely to face a persistent hole in its workforce.

   Losing even a single staff member in a leadership role has detrimental effects on a team’s overall productivity. The longer an empty seat lingers, the more of an expense it takes on the company.

3. Reduces hiring expenses. As opposed to searching for candidates externally, looking into a company’s current staff dramatically reduces hiring expenses.

   While hiring a person might not seem like a monumental task, it can take a lot of time to find the right fit. Succession planning eliminates the costs of embarking on a hiring process from scratch.

4. Provides career development for high-potential employees. The most skilled employees look for a professional environment where they can grow. They want to devote their time and energy to a position that’s going to further their career.

   When a company actively participates in succession planning, it shows its staff that they want to provide this advancement for them.

5. Improves employee satisfaction and retention. Every time an employee decides to pick up and leave because they’re not satisfied with their job, it costs their employer a boatload of money in finding their replacement. One way to effectively improve employee retention is by increasing their satisfaction.

   Succession planning helps elevate these two aspects because it exhibits an environment that supports its employee’s career growth.

6. Reassures company shareholders. When a company goes through a transition in leadership, shareholders often sell their stock in the company. However, this is less likely to happen when the new leader has been well-trained and is already respected when they move into their new role.

   Having a well-communicated succession plan also helps assuage shareholders’ fears and increase their confidence in the company’s future under a new leader.

Author

Sky Ariella

Sky Ariella is a professional freelance writer, originally from New York. She has been featured on websites and online magazines covering topics in career, travel, and lifestyle. She received her BA in psychology from Hunter College.