Planning for the exit of a valued team member or senior leader is often a stressful event. Usually, employees or managers must leave due to unforeseen circumstances, leaving a hole within your company. To avoid the stress and uncertainty of these transitions, it’s helpful to create a formal succession plan for your most critical roles to prevent operational disruptions when the time comes for a key employee to leave your organization.
What is succession planning?
Succession planning involves selecting and preparing internal talent to take over key roles eventually. It is a strategic practice that ensures critical positions are not left empty for an extended period should someone quit, retire, or need an extended leave. Succession planning is an essential part of workforce planning and internal talent development.
It’s worth noting that succession planning is optional for some roles. Many positions, including some managerial roles, will be OK with succession planning. Outside hires can fill some roles or allow a bit more ramp-up time for an internal hire to be promoted and learn the role. Often, executive leadership roles have a succession plan, as these roles have a high level of responsibility and visibility within the organization.
How to create a succession plan
Identify critical roles
The first step is identifying the role(s) requiring a succession plan. Pull out your company’s org chart and think about which roles would significantly disrupt your company’s operations and morale if left unfilled. For smaller businesses that don’t have an entire C-suite and VPs, there may only be a couple of roles that are critical enough to require succession planning. You’ll typically always need a succession plan for CEOs or CFOs, as those two roles cannot be left vacant without creating internal uncertainty and disrupting external partnerships.
These critical roles are often filled by senior leaders who have several people reporting to them and providing direction and approval for critical operational activities. Consider what tasks or workflows you cannot allow to be disrupted within the company or which leaders play a crucial role in your internal leadership practices and external partnerships.
Select high-potential employees to develop for each critical role
Identify internal candidates with excellent leadership potential who would fit well with the requirements of each critical role. Consider their current skill sets and demonstrated enthusiasm and potential. Often, there will be a reasonably obvious successor in the organizational hierarchy, such as the person immediately below them. However, take notice of new and emerging talent within your organization, too.
Talk to the selected employees about their career goals
Talk with employees regularly about career goals. Use performance management meetings and employee reviews. Ideally, you should already be doing this. You should also have an idea of who is looking to advance. Speak with each potential successor. Ensure they are interested in working towards the role.
Sometimes, specific roles won’t align with employees’ goals or lifestyles. For example, employees with young children or who care for sick family members may perform well in their current roles but hesitate to take the next step into a role that could require longer hours or more frequent travel. Have an open discussion and allow the employees to ask questions so that you can discuss any concerns and find ways to accommodate their needs.
Create a development plan
Identify what training the top candidate would need to prepare for the role and build a plan to help provide them with the necessary training and development opportunities. Detail what skills they’ll need to make, training programs or certifications they need to work on, and what opportunities you’ll provide to aid their development. This employee development plan should also include mentoring from the person currently holding the role they will take over someday.
Introduce the planned successor to key contacts
You often fully share the succession plan with others closer to the planned transition, but the designated successor should be socially integrated a bit earlier. Building solid relationships with key contacts before a power transition will make the process go more smoothly. Consider bringing them to conferences, client, or board meetings to network and foster relationships with high-priority contacts.
Regularly review and update the succession plan
There’s never a true end to creating a succession plan, as it must be reviewed and updated fairly regularly. You should review your organization’s succession plans at least once per year, but you may need to update them sooner if someone in the line of succession leaves to take an opportunity elsewhere.
Benefits of succession planning in the workplace
Succession planning provides several benefits to the business itself as well as its employees. Here are the most significant advantages of succession planning.
Supporting business continuity
The biggest reason for having a succession planning strategy is to ensure that business operations can continue while a staffing transition occurs in crucial leadership positions. You want approval workflows to continue and for everyone who can contact you during a leadership change. If a high-level position sits vacant, operations will be maintained because vendors, customers, partners, and staff members may need a designated person to contact for everyday needs and processes.
Allowing for better candidate preparation
Specific roles require highly specialized skills or an in-depth knowledge of the company’s inner workings. Getting an outside candidate or unexpectedly promoted employee up to speed would take a long time, which can cause a massive disruption to the company’s operations if it is a vital role.
This is particularly true for high-level leadership roles where relationship-building is essential. You must build trust quickly, whether with the internal employee population or external stakeholders like investors, business partners, or board members. A succession plan allows the successor to start obtaining more visibility and building those relationships early on so that they aren’t viewed as strangers when it’s time for them to step up and take the lead in managing those relationships.
Retaining company knowledge
The next generation of talent can learn a lot from your current leaders, including your company’s history, how to work best with external stakeholders, and strategic approaches that have worked well in the past. Some knowledge will be well-documented, but some can be improved through ongoing mentorship and shadowing.
It’s also worth noting that sometimes, this knowledge transfer won’t happen during transition. If someone is retiring, you’ll often have a few months to ramp up the talent development of the future leader and facilitate a more robust knowledge transfer. However, leadership team members can sometimes leave unexpectedly or on bad terms. If someone leaves due to conflict or a scandal, they won’t be willing to support the next in line for their job. Health and sensitive family matters can also strike quickly and may limit the successors’ access to the employee previously holding the role.
Providing stability for employees
A leader stepping down or leaving the company without a clear replacement can throw a department or the whole company into disarray. If there is a clear, immediate successor, you can remove much of the stress and uncertainty from the process.
Employees are often sensitive to change and uncertainty, which can create stress. For instance, they may worry about job security, internal communications, and who to go to for approval. In addition, if the head or VP of a department leaves, there may be no one to approve new projects or spending, thus disrupting the whole department. Furthermore, not knowing who will take over roles like CEO or COO is also stressful, as these roles guide the organization’s culture.
Minimizing conflict during transitions
Some healthy competition in the workplace is okay and to be expected when multiple people are gunning for a promotion, but it can get in the way of a smooth transition of power. Ironing out these issues in advance allows everyone to unify behind the chosen successor. It also keeps employees from feeling in the crosshairs of a leadership or power dispute.
Keeping high-potential employees engaged
High-performing employees want opportunities. These opportunities are for professional development and advancement. Some team members may still need an open role. Succession planning can keep them engaged in career development. This applies to future roles. It can also help retention. People are often more willing to stay with your company. This is true if they know they’re in line for a promotion.
Common succession planning challenges
While creating an effective succession plan, you may encounter a few challenges. Here are three potential problems to be aware of and some strategies for overcoming them.
Planning for transitions that are many years away
One challenge with succession planning is that it must happen for all critical roles, even if you don’t anticipate the incumbent stepping away soon. This means you must look far into the future to plan and develop the successor. Sometimes, someone doesn’t want to wait years for a promotion.
Keep planned or potential successors engaged. Use leadership development programs and initiatives. This way, you won’t lose sight of what’s ahead. Keep succession plans updated. Some people might take other opportunities if they know a key leader isn’t retiring soon.
Not having a clear successor
In larger companies, you’ll likely have a vast talent pool and several strong candidates for promotion to a high-level role. In family businesses, the succession plan will often follow the family tree, though you could have conflict among siblings a la HBO’s Succession. However, sometimes there isn’t a strong candidate for succession, or nobody wants to step into the role.
Hire for leadership potential. Find someone with the necessary competencies. They can eventually take over a key position. For example, the business owner or general manager may want to retire soon. Create an assistant manager role. Find someone to develop for a more prominent leadership role. This may be worthwhile.
Bias in the succession planning process
As with any hiring or promotional decision-making process, bias can impact succession planning. There is often some affinity or similarity bias in succession planning; You may favor the person who feels most like the current leader in the role and overlook other qualified candidates. Don’t look for the closest replacement for current leaders. Evaluate candidates on core competencies, interpersonal skills, and leadership potential. It’s essential.
More Resources:
Skills-based hiring: Punching through the paper ceiling
Unconscious bias training: What it is & how to improve your workplace
Microlearning vs. traditional E-learning: Which is better for your workforce?
