The process of identifying key positions across a firm, identifying potential successors for those positions, and preparing those successors to assume leadership roles as necessary through training and experience is known as succession planning. Planning for succession is a continuous activity that enables all businesses large and small to guarantee the continuity of top leadership and knowledge retention.
What is succession planning?
Succession planning is the act of identifying particularly essential roles in the business and building a talent pipeline by training staff to fill openings as others leave or retire. In the absence of a suitable permanent replacement, a successor is an employee who has the knowledge, skills, and aptitude to fill a vacancy in a position.
Planning for a successful CEO replacement can help keep the company’s performance and continuity. Even in cases where there isn’t a clear successor within a company, succession planning can help in identifying the knowledge, skills, and education needed by a prospective outside candidate.
Related: Succession Planning: The ultimate guide
Succession planning process
Related: Succession Planning Importance
STEP 1: Identify Key Positions and Areas
The operational activities and strategic goals of the organization depend on key areas and positions.
- Identify the roles that, if unfilled, would make it exceedingly difficult to accomplish your company’s present and future goals.
- Identify the occupations that, if unfilled, would hurt the wellbeing, security, or safety of Canadians.
STEP 2: Determine Capabilities for Important Positions and Areas
You must ascertain the skills required for the key areas and jobs specified in Step 1 to establish selection criteria, concentrate employee development efforts, and set performance expectations.
- Determine the important knowledge, abilities, and competencies including language skills necessary to accomplish company goals.
- Utilize the profile of Key Leadership Competencies.
- Inform employees about key areas and positions and required capabilities
STEP 3: Determine Interested Employees and Evaluate Them Against Capabilities
Find out who is qualified to fill important roles and who has an interest in doing so.
- Talk to staff members about their hobbies and career ambitions.
- Find the people who are ready to advance or whose abilities and competencies could be developed within the appropriate period, as well as the critical areas and positions that are vulnerable.
- Make certain that feeder groups for critical sectors and positions have a sufficient proportion of bilingual candidates and members of specified groups.
STEP 4: Create and implement plans for knowledge transfer and succession
Include learning, development, and corporate knowledge transfer initiatives in your succession planning and management.
- Establish the learning, growth, and experience requirements for leadership positions, as well as other important areas and positions, in your organization.
- Connect employees’ learning strategies to the information, competencies, and language needed for their present and future jobs.
- Talk with the staff about how they can share their knowledge of the company.
STEP 5. Determine Effectiveness
To ensure the following, evaluate and track your succession planning and management initiatives.
- All essential departments and roles have succession plans prepared;
- Key posts are soon filled;
- New hires in crucial roles exhibit effective performance; & In feeder groups for essential areas and posts, members of defined groups are appropriately represented.
Importance of succession planning
Your succession planning process is key for long-term business success. It fosters growth in future leaders and protects organizational health when key contributors leave. Here are 10 top reasons why succession planning is critical to your business:
1. Guideline for training and development
The right succession plan will guide your training and development plans and prepare employees for their future roles. Your succession plan will highlight areas for growth within each employee so they can develop critical skill sets, empowering them to thrive now and in the future.
Related: Learning and Development: Guide for organisations
2. Reduce costs to recruit and hire talent
The resources used to recruit and hire top talent will soar if you don’t have a plan in place. If top roles go unfilled for too long, you might be forced to make rushed and costly hiring decisions, only to regret them later.
Hiring top talent typically requires bonus offerings and relocation costs. And when you aren’t confident in your replacement, your business may continue to lose money. By shaping a talent pipeline, you’ll safeguard the return on your hiring investment with sound successors.
In the case that your successors come from within the company, you won’t need to recruit externally, which reduces costs further. You’ll be able to invest the money you save elsewhere—like in training and development.
Related: Process of recruitment: A complete guide
3. Identify key leaders
With the right approach to succession planning, you can identify key employees with the ability to perform well in top roles. This way, you can measure all of your options and make the best decisions when it comes to successors. Plus, you can ensure your succession pool aligns with your diversity and inclusion goals.
Related: What is Transformational Leadership?
4. Promote long-term planning
Businesses that aim for long-term success need long-term plans. In the face of rapid change, you need strategic plans to guide your actions. With a thorough succession plan, you’ll create a path to retirement for top leaders and ensure their expertise is transferred to their successors. As you outline clear plans, you’ll be better equipped to grow and evolve as a successful organization.
5. Mitigate risk
Succession planning helps you protect your company. Let’s face it, your top leaders may be swayed to leave for higher pay or be affected by a serious illness, for example.
Whatever the case, when top roles within your organization go unfilled for too long, your business success may be put in jeopardy. But with succession planning, you’ll have a plan when change happens so that your business isn’t vulnerable.
6. Establishes your legacy
When leaders are aware of their successors, they’re able to provide mentorship and share knowledge. This way, when top leaders exit, their contributions, and impact won’t leave with them. All the hard work put in throughout the years will be translated into the future efforts of their successor, so your leaders can leave a lasting mark on the organization.
7. Shapes an exit strategy
Succession plans ensure leadership exits are smooth, seamless, and non-detrimental to profitability. An effective plan outlines replacements for key people so that your business can run properly when they leave. If you’re blindsided by top talent loss and have no backup plan, your business is likely to face a negative impact.
8. Promotes progression
Succession planning helps you shape the mindset that’s key for continuity. While replacement identification is important, succession planning promotes big-picture growth. When leaders continually think about how certain events can affect the business as a whole, they’ll be more agile and resilient in the face of unexpected events.
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