Succession planning has become a significant concern for senior managers and human resource specialists. It is a means of anticipating the future and preparing for the continuity of business operations. Leaders can no longer ignore succession planning as it is increasingly important as today’s organizations experience unprecedented growth and change. Succession planning helps organizations strategically plan for future leadership openings by identifying, developing, and retaining future leaders. Companies with effective succession planning are five times more likely to outperform their competition in key business areas like leadership, employee development, and customer satisfaction. Publicly listed companies with poor succession plan trade at a 28% discount to similar companies without such a plan.
1. Decide what kind of business you have.
2. Create a personal development plan.
3. Create an organizational development plan.
4. Find a successor.
5. Work on building relationships throughout the organization.
To help ensure that your efforts are successful, make sure everyone agrees on the objectives before beginning each step of the process. Be sure to define what success means for each step, and then take action by following through with your proposed plans.
Succession plans are necessary for any business to ensure the smooth running of the company. They help in the transfer of knowledge and skills from one generation of leaders to the next and help build a strong foundation through employee development.
A succession plan is not just about planning for a new CEO or top management executive. It also involves identifying and developing high-potential employees who can assume greater responsibilities in other areas within the organization. It ensures that there is sufficient talent at all levels to take leadership positions when required without disrupting daily business operations.
A comprehensive succession plan helps you identify and retain high-potential employees. It also provides you a competitive advantage over your competitors, increases your chances of dealing with disruptions, and improves your chances of attracting quality and credible candidates.
Making sure that you have a strong foundation for internal talent development is essential for two reasons: firstly, it reduces time and financial resources spent on shortlisting, recruitment, and outermost leadership training when you have allowed a stream of candidates in the company; secondly, it helps you deal with uncertainties such as a change in market conditions, competition or even possible disruptions caused by natural disasters or similar situations.
Understand Strategy & Structure: Understand your organization’s vision, mission, and values. Identify where you are today, where you want to be tomorrow and how you will get there. Then, define the skills, resources, and people needed to move from point A to point B.
If done correctly and comprehensively, succession planning involves several key players in the organization. And, while they all have critical responsibilities in the process, each group of key players has different perspectives on their roles.
Depending on the type of company and structure of the organization, several key players will be involved in succession planning. These include:
Top Management: Responsible for ensuring that a comprehensive process exists within the organization. It would include both the CEO and other members of top management such as Executive Vice Presidents or Chief Operating Officers.
HR – HR typically plays a vital role in developing the succession planning process and materials. They are responsible for being in charge of the implementation of the process. Depending on the area and problem of the company, there may be one or more HR professionals assigned to this role, or it may be a shared responsibility among multiple HR professionals within HR. Sometimes this role can also be fulfilled by someone outside HR who reports directly to top management, such as a senior executive assistant or company secretary.
Board/Owner – The Board has a vital role in leadership succession
1. If succession planning is not conducted correctly, it will lead to poor decisions, disharmony, and ultimately poor company performance.
2. The business owner sometimes forces the issue or is interested in only one candidate when other equally qualified candidates are available.
3. Sometimes, the business owner hires another person to appoint someone, so a better candidate will come up later on, which may cause confusion among employees and dissatisfaction with management’s actions.
4. It also leads to low morale among employees as they think that their boss does not trust them enough and does not appreciate their work efforts.
Several challenges are faced by succession planning. The major one is identifying the right talent and then appointing the right person in their proper place. In most cases, there is a chance of sinking into the trap of biases or other psychological factors. And then, there is also a need to balance business needs and employee morale.