Succession planning is the process that businesses use to identify and develop internal people for future key leadership positions. While most succession plans focus on senior leadership positions they should also address key positions that can impact business should they become suddenly vacant.
Much like a business continuity plan a succession plan prepares for future scenarios that may disrupt a business. If a key employee suddenly leaves the company, it can have a drastic impact on business operations. It is a good practice of Human Resource strategy and future planning to have a succession plan in place to prevent disruptions. Also if a company has strong “bench strength” in leadership, it can add to the overall value proposition in the eyes of customers, shareholders, and investors.
There are two keys to a strong succession plan:
- Organizational strategic plan, and
- Workforce planning
Organizational strategic plan:
Famous hockey player, Wayne Gretzky said, “You need to skate to where the puck will be, not where it has been.” If a company’s growth plan is to move into certain markets or adopt specific product or service lines in the future, it is critical to establish the succession plan with that in mind. Adopting a specific product or service line may require a specific skill set that is not necessarily needed today, but will be in the future. It is never too early to start planning to align the workforce to enable a company to accomplish its objectives. A succession plan is a perfect tool to carry out the strategic plan through its workforce.
Workforce Planning:
Now the real work begins. It is not effective to just to state an overall goal then expect things to magically align themselves. Determining the skill and competency required in the future, determining current skills and competency and establishing a development plan are critical steps in an effective succession plan.
What are Competitive Succession Planning Practices?
There are many varying opinions on the best way to establish and implement a succession plan. The best competitive practices boil down to these four components:
- Get support from the top (board and senior leadership),
- Understand overall direction or future of the organization,
- Determine the success factors (knowledge, skills and abilities) of each key position will need to achieve the future state of the company,
- Plans are not static and are evaluated periodically.
Succession Planning Steps
Now that we have reviewed the key components and competitive practices of succession planning, it is time to jump into the “how to” steps. Here is a step by step guide on how to establish a succession plan.
Step 1- Obtain support from top leadership.
Once you obtain support from the top the succession plan will begin to have steam for its engine. Otherwise it becomes an exercise in futility.
Step 2: Understand overall business objectives.
Understanding the overall business objectives is a key factor in ensuring the succession plan is effectively aligned with the strategic plan. It will also help to keep top leadership’s buy-in.
Step 3: Identify Key Positions.
Identifying key positions is great way to understand “who” does “what” and how they may impact, positively or negatively, the profitability and ultimately the survivability of a company. It doesn’t necessarily have to be just leaders, but can also be key employee that may be responsible for cultivating customer relationships for example.
Step 4: Identify Competency, Skills and Success Factors of Leadership.
A key question to ask is “what skills and competencies will be critically required in the future state?” Articulate exactly what skill set will be required in the future to be successful?
Step 5: Assess Current Bench Strength.
Map out what the skill set that your company has currently. Compare that to the items that you discovered in step 4. From there you will be able to identify the gap in competencies, skills or other success factors.
Step 6: Design and Implement Development Strategies.
Now you can integrate the succession plan with talent acquisition and performance management strategies. For example now that you understand what critical skill sets are required for the future you can design a recruitment strategy that attracts talent that possesses those competencies. You can also design your performance management system to guide existing employees, and especially key employees, to learn new skills.
Step 7: Monitor and Evaluate Strategies.
In order to meet shifting markets and customer demands, companies must also change direction. Just think where Apple would be without creating the iPhone. To enable companies to remain agile and compete in the future succession plans must also shift over time.
The failure to have an effective succession plan in place for key employees could derail a company should they suddenly leave. Companies that refuse to face the realities of an ever changing workforce do so at their peril.
