“The only real security that a man can have in this world is a reserve of knowledge, experience, and ability.” - Henry Ford
The business world is a constantly changing environment. Trends come and go, but the key to success in business remains the same: harnessing the power of human capital.
Your company’s most valuable asset is its people, and your ability to attract, retain, and develop top talent will determine your long-term success.
This is especially true when it comes to your company’s leadership. A strong leader is the cornerstone of any successful organization, and the process of succession planning ensures that your company has a plan in place for continuity of leadership if your current leader can no longer serve in that role.
Below, we’ll outline the steps you need to take to create a succession plan for your company, as well as things you should avoid to ensure a smooth transition.
What is the succession planning process?
The succession planning process identifies and develops individuals who have the potential to take over key leadership roles within an organization.
Succession planning aims to ensure that your company has a pipeline of qualified individuals ready to step into leadership roles as needed, ensuring continuity of leadership and minimizing disruptions to your business.
Think of it as building your “farm team.” In sports, teams identify and develop young players who have the potential to one day play in the majors. Similarly, the succession planning process trains leaders within your organization to prepare them to step into leadership roles when needed.
What are the stages of succession planning?
Each organization is different, and the approach to succession planning will vary depending on your company's size, structure, goals, and culture. A small family-owned business might approach succession planning differently than a large publicly traded company.
In general, the succession planning process takes about 12 to 36 months. It comprises six key stages, from identifying key positions to developing and grooming them for leadership roles.
1. Identify key positions
The process of succession planning starts with identifying key positions within your organization. These are typically roles that are critical to the success of your business and for which it would be difficult or impossible to find a replacement if they were vacant.
A great way to do this is to start from the top down. Begin by identifying your company’s senior leaders and then work down to other critical positions. These might include positions such as CEO, CFO, CTO, and Head of Marketing.
2. Understand the necessary skills needed for that role
Most key positions will require a specific set of skills and knowledge to be performed well. For example, a CFO needs to be an expert in finance and accounting, while a Head of Marketing needs a deep knowledge of the marketing mix and brand strategy.
Having a clear understanding of the skills, knowledge, and experience required for each critical role in your organization will help you identify individuals who have the potential to step into those roles as needed.
3. Conduct career planning with potential candidates
While it’s essential to have a plan in place for succession, it’s just as important to ensure that your potential leaders are on board with the plan. After all, they’re the ones who will take on these critical roles in the future.
The best way to do this is to conduct career planning sessions with potential candidates for leadership positions. During these sessions, you can discuss their goals and aspirations, their plans for the next five or ten years, and how they see themselves progressing within the company.
4. Put candidates on development paths
Succession planning is all about developing your company’s talent pipeline. Once you’ve identified individuals with the potential to step into leadership roles, it’s crucial to put them on development paths that will help them gain the skills and experience they need to be successful in those roles.
This might include mentorship programs, job shadowing, cross-training, and educational opportunities, such as attending conferences or taking courses.
5. Prepare for turnover with replacement planning
All organizations should have a plan in place for dealing with turnover, regardless of whether or not they have a formal succession plan.
A big part of this preparation is replacement planning, which involves identifying internal talent who could step into critical roles on short notice if needed. This planning ensures that your company has a pool of individuals ready to take on leadership roles without skipping a beat.
6. Continue evaluation and mentorship for candidates
Succession planning is not a one-time event but rather an ongoing process. As your potential leaders continue to grow and develop, you’ll need to evaluate their skills and knowledge to ensure they remain on track.
Through regular mentorship sessions, you can provide guidance and support as they navigate their careers and help them identify and overcome any challenges they might face as they move up through the ranks of your organization.
Is the succession planning process the same as a contingency plan?
While the terms are often used interchangeably, succession planning and contingency planning are two different matters.
Succession planning is a proactive process that is designed to ensure the continuity of leadership within an organization. It focuses on identifying, developing, and grooming high-potential individuals to fill critical roles in the future.
On the other hand, contingency planning or replacement training is a reactive process that is put in place to deal with unplanned events, such as the sudden departure of a key employee.
Rather than develop a long-term pool of leaders, a contingency plan aims to find a replacement for a specific role by training employees to fill in the gaps on an as-needed basis.
Pitfalls to avoid in succession planning
Most business leaders and HR professionals believe that succession planning is a critical process for ensuring the long-term success of their organizations. However, a few common pitfalls can trip up even the best-laid succession plans.
Not starting early
For many organizations, succession planning is something that’s only given attention when a key leader announces their retirement. However, this reactive approach can be problematic, as it doesn’t give you enough time to groom potential leaders for their new roles.
It’s best to start the succession planning process early so you have a pool of qualified candidates to choose from when the time comes.
Not building a pool of high-potential talent
If you want your succession plan to be successful, you need to build a pool of high-potential employees to choose from. You need to identify individuals with the skills and potential to step into leadership roles and then invest in their development.
Otherwise, you risk promoting someone who’s not ready for the role, which can lead to poor performance and turnover.
Not mentoring candidates
When you identify high-potential candidates for leadership roles, the best way to invest in their development is through formal mentorship programs for HiPos.
By pairing experienced leaders with potential successors early on, you can give them guidance and support to hone their skills and acquire the knowledge needed in their future roles.
Mentorship is a key part of succession planning to help ensure your potential leaders are ready to step into their new roles when the time comes.
Only planning to replace existing roles
In every organization, some roles are essential to the company's success. However, as times change and technology advances, new roles and competencies will be needed to meet the market's demands.
As you create a succession plan, it’s essential not only to identify existing critical roles that need to be filled but also to anticipate new ones that might be needed in the future to prepare for changes down the road.
Not thinking through culture-process misalignment
Like any other business decision, the process of succession planning should be transparent and aligned with your company’s culture and values. A misalignment between the two can lead to negative consequences such as a lack of buy-in from potential leaders and loss of trust and engagement.
For example, if your company values transparency and open communication, then a succession plan developed behind closed doors is likely to cause frustration and conflict.
The Peter Principle
Many employees are often promoted to their level of incompetence, meaning they’re given roles that are beyond their abilities. This principle, called the Peter principle, often happens because there’s a lack of or poor succession planning.
When employees are particularly good at their current job, it’s often assumed that they’ll be just as successful in a more senior role. However, this isn’t always the case.
To avoid this pitfall, ensure you understand the skills and experience needed for each role and compare them to the employee’s qualifications and competencies.
It's common to express a certain degree of bias when choosing a successor, especially for a family-owned business. You might be more likely to choose someone who reminds you of yourself or who shares the same values and beliefs as you.
Instead, practice inclusive leadership by setting aside these biases. Focus on choosing the best candidate for the role, regardless of their similarities or differences to you.
Start your succession planning now
Succession planning is a critical process for ensuring the long-term success of your organization. By taking the time to build a pool of high-potential talent and implement mentorship programs, you can create a succession plan that reflects your company’s culture and values and helps your business thrive for years to come.
If you're looking to start succession planning at your organization, creating formal mentorship programs is one of the best places to start.
At Together, we offer an all-in-one platform that makes it easy to create and manage mentorship programs within your organization. If you're interested in learning more about how Together can help advance your succession planning process, contact us for a free demo today!