As a leader or member of the board, have you ever asked who will probably be the next CEO or who's well-positioned in line to lead your company? If you have an idea, congratulations; your company is one of the few (35%) with a succession plan. And if you answer no like most organization leaders (75%) would, your company is among the many without a succession plan.
A key responsibility of a board is to appoint a CEO. However, many companies have no succession plan in place.
Succession planning can be overwhelming for companies that are not used to the process. Getting it right for the position of CEO is so crucial that without the right person in place, the most innovative company will struggle to thrive.
This is why we'll discuss a succession plan and how you do it well in this blog post.
What is a succession plan?
Succession planning is the process of identifying and developing internal people with the potential to fill key business roles in the future. A well-executed succession plan ensures that a company has the right people in place to meet its long-term goals and objectives.
Succession plans contain:
- A written framework that shows the strategies to tackle expected and unanticipated transitions in a workplace.
- Forecasts on workforce needs and the various courses of action to imbibe.
The plan involves mentoring employees with the potential to be leaders in an organization.
Why is succession planning important?
The following points show the importance of succession planning in an organization.
A smooth running of a business in case of unforeseen circumstance
Some specific roles in an organization require some special skill set. And not just anyone can fit into the role. When a top executive position is vacant in an organization, it creates a void that needs to be filled as soon as possible to ensure the business runs smoothly.
Succession planning ensures that someone is always qualified and ready to take over a leadership role when needed. This can be due to retirement, resignation, or even death (interestingly, 84% of companies have a policy restricting the number of executives that may travel on the same plane). By having a succession plan, businesses avoid disruptions in operations and maintain continuity of leadership.
Gaps in competency
Competency gaps occur when workers' present competencies do not match what the organization needs. This could be due to a lack of representatives with the necessary qualifications, current requirements for key positions, or key abilities that may be required in the future.
As an organization grows, the competency level of employees also must grow. New hires might not always have the required skills or experience to take over leadership roles. Effective succession planning can help plug these gaps by identifying and developing talent within the organization.
Limit recruiting costs
It is always expensive to hire someone from outside the organization. You need to advertise the position, screen candidates, and train the new hire. By succession planning and developing talent internally, businesses can reduce their recruiting costs. Instead of the company investing in training new employees, it focuses on training its own staff (whether through upskills or reskilling).
Prevent unprepared individuals from taking up critical positions
Unprepared individuals in leadership positions can have a negative impact on the whole organization. They might make wrong decisions that could lead to the failure of important projects or even the collapse of the entire business.
Succession planning helps to avoid such disasters by ensuring that only competent individuals are promoted to leadership roles. This way, businesses can avoid the cost of having to constantly replace unqualified leaders.
Do you plan for the succession of leaders or all employees?
Usually, succession planning is focused on high-level executives or CEOs. However, human resource leaders should plan for the succession of critical team members with high potential.
They can do so by investing in internal mobility strategies that help businesses identify and develop talent within the organization.
What's the difference between succession planning and recruiting?
Although many people confuse succession planning for recruiting, these two terms are different.
- Succession planning is a strategic process organization uses to identify and develop internal talent to fill key positions in the future.
- Recruiting is the sourcing and hiring of candidates for open positions.
One key difference between succession planning and recruiting is the time frame in which they occur.
Succession planning is a long-term process that looks ahead to future needs while recruiting is a more immediate process that focuses on filling current openings.
Internal vs external talent
In addition, succession planning focuses on developing internal talent while recruiting focuses on bringing in external candidates.
This means that succession planning often includes activities such as training and mentoring, while recruiting typically does not.
Finally, succession planning is typically used to fill senior-level or executive positions, while recruiting can fill any role.
While there are some key differences between succession planning and recruiting, they both play essential roles in ensuring that organizations have the talent they need to meet their goals.
Examples of succession planning
Below are examples of succession planning and a brief explanation of them.
Mentorship and coaching
This is the process of pairing employees with mentors in the organization who can provide them with seasoned guidance and feedback. Mentorship and coaching are different but help to ensure that employees are prepared for future roles and can help them develop the skills and knowledge required for success.
This identifies employees with the potential to be successful leaders and provides them with training and development opportunities. Leadership development programs provide an organization with a pipeline of leaders ready to take on new roles as they become available.
Performance management involves setting goals and objectives for employees and then assessing their progress toward these goals. In addition, it helps to ensure that employees are held accountable for their performance.
Competency management deals with assessing the current and future competencies required for an organization to achieve its business goals and then developing plans to ensure that the competency gap is closed and maintained. This can involve identifying career development programs for high-potential employees that prepare them for future roles.
Best practices for succession planning
The best succession planning process helps businesses identify the competencies required for success and then develop plans to maintain these competencies. We've identified the best practice to guide you.
Identify critical positions
Identifying the various top positions within the company is the first step toward sustainable succession planning. By understanding which roles are the most important to the company, you ensure that there is always someone adequately trained and ready to step into these shoes should the need arise.
Understanding the relevant skills needed for the position
The second step is to identify the skills required for each position. What are specific knowledge, abilities, and personality traits necessary for success in that role? This will help you identify potential successors and create a plan for their development.
Not all skills are needed for the job. A proper analysis should be done on the necessary competencies needed for the role during planning.
Identify individual capacity
The individual's capacity can be identified based on their previous achievements and the career goals they have set for themselves. This should also include looking at their current skill set and their ability to learn and grow into the role.
Provide mentorship to potential successors
Create a pool of potential successors and begin to mentor them early enough, either formally or informally. Plus, ensure that the right knowledge is being transferred. The goal is to create a team of people who can step into the shoes of the current leaders and continue running the company effectively.
Evaluate the succession plan and the recruitment strategies regularly
The succession plan should be evaluated regularly, and necessary adjustments should be made. Besides, the recruitment process adopted by the company plays a vital role. To ensure that the company always has a pool of highly qualified individuals to choose from, it is important to have an effective recruitment strategy. There should be a process to identify, attract, and retain the best talent.
Start your succession plan today
Without a sustainable succession plan, your business is at a huge risk of losing its shareholders, intellectual capital, and talent. A succession plan is key to protecting and growing your business, but it's not something that can be done overnight.
It takes careful planning and consistent investment to ensure success. But where do you start? The answer is mentorship. Mentorship is an integral part of succession planning, and it's something that can be started now.
With Together, it's easy to get started. Our platform makes connecting with mentors and mentees simple, so you can start building your succession plan. Learn more about Together or get started for free. YIn doing so, you'll be on your way to building a defensible business.