Succession Planning

What Is Succession Planning?

The process of identifying the crucial jobs within your organization and creating action plans for people to fill those positions is known as succession planning. 

This kind of planning guarantees that you have the right people in the right jobs today and in the future by taking a comprehensive approach to present and future objectives.

Long-term succession planning increases the organization's capacity overall by:

• Identifying any prospective openings in crucial roles;

• Choosing the essential knowledge and abilities for business continuity;

• Concentrating on personnel or individual growth to suit future business needs.

This identifies the people with the abilities and potential to fill these upcoming responsibilities, as well as the staffing requirements for the future. 

The Succession Planning Toolkit from Professional & Organizational Development will assist you, but we strongly recommend that you involve your allocated HR consultant and/or HR administration in this process as well.

This word refers to a business approach used by organizations to transfer leadership responsibilities to another individual or group of employees. 

By creating it, firms can remain productive and unaffected when key personnel leave for other positions, retire or pass away. 

Additionally, it might create a liquidity event that makes it possible for rising employees to acquire ownership of a going firm. 

It is a fantastic approach for firms to make sure that they are ready to advance all personnel, not just those in management or executive positions.

Understanding Succession Planning

It is a procedure used by organizations to guarantee that workers are chosen and trained to fulfill all important positions inside the business. 

By following this procedure, you can guarantee that no key position will ever be accessible for which another employee is unqualified. 

In other words, it ensures that someone can fill the function when it becomes available as a result of a promotion or unforeseen circumstances.

All employees should be aware of this critical tactic, especially those in leadership and senior management roles.

At times, the process can seem overwhelming, especially if it's a fresh initiative for your business. Even though it takes more time initially, the process might ultimately save you time and money.

These are only a few illustrations of making it effective. These businesses carefully considered their goals were strategic and did it with purpose. 

They identified people with the appropriate level of expertise, developed their credentials, and made investments in the workers.

These strategies also needed supportive leaders who stood aside to mentor and prepared to leave. 

Any company's leaders can use these principles to improve their operations. It can promote internal promotion and retention while preserving growth and stability.

Succession Planning Toolkit

This toolkit (PDF) has a set of worksheets that guide you through the entire process. We've divided the process into three phases with clear milestones. 

• Assuring that it closely aligns with business objectives and strategy;

• Recognizing the significance of involving senior and executive leaders in the process;

• Identifying essential skill development in detail; and

• Ensuring that employees are aware of their responsibilities and their involvement in the process.

1. Assessment phase

Step 1: Determine the most pressing business issues for the next one to five years.

Step 2: Determine the important positions required to support company continuity.

Step 3: Identify the institutional knowledge, competencies, and skills that are essential success factors.

2. Evaluation phase

Step 4: Take high potential personnel into account.

Step 5: Determine the skills people need to succeed in their roles and address identified business concerns.

3. Development phase

Step 6: Document the knowledge that people have before they leave the organization.

Step 7: Create a talent pool through focused career development initiatives that can fill important positions.

Benefits of Succession Planning

Having it defined and in place has many benefits for both businesses and employees:

• Employee empowerment and job happiness can increase when they are aware of the possibility of promotion and even ownership.

• Employee career development is supported by knowing there is a strategy for upcoming opportunities.

• As a result of management's dedication to this process, managers will mentor staff members to share their knowledge and skills.

• The value of employees is better tracked by management so that openings may be filled internally as they occur.

• Employees and management are better equipped to communicate the company's beliefs and vision.

• When a significant portion of the workforce retires, a new generation of leaders is required.

• Shareholders of publicly traded companies benefit from it, particularly when the incoming CEO is already actively engaged in business operations and is well-regarded years before the outgoing CEO departs. 

This approach can also foster the emergence of a new generation of leaders, giving firm owners looking to exit a way to do so.

Succession Planning and Diversity

The degree to which a company is inclusive, whether it be a little firm or a major corporation, is one of the key factors in determining its success. Companies increasingly understand that to be competitive and successful, they need to vary their work environments.

In addition to raising staff morale, it also tries to diversify the talent pool and combat bias. But how do businesses accomplish this?

This calls for the implementation of a well-thought-out the process that includes the hiring of people with various backgrounds, styles of leadership, and life experiences.

The strategy should also include removing any internal obstacles that might exist for staff members at all levels and making sure that everyone works in a pleasant environment.

Your staff will understand that decisions are made based on merit, not demographics, by dispersing development opportunities and promotions among people from different backgrounds. 

They will also see that anyone with skill or a strong work ethic can take advantage of these development chances. Having a leadership team representative of the customers your business serves might help your company's public image. 

Additionally, it increases the likelihood that the qualifications and history of your leadership team are comparable to those of your clientele. Thus, this can facilitate a stronger bond between your team and the clients you serve.

This only works if it is implemented sincerely rather than to improve corporate reputations.

Succession Planning Examples

Some of the examples are:

1. Apple

Steve Jobs created Apple University as his succession plan before he left his position as CEO of Apple. Apple University, established in 2008, includes a leadership program with resources and content based on Job's experiences.

To "educate Apple employees how to think like Steve Jobs and make decisions that he would make," according to its stated goal. This online course is a fantastic illustration of how technology may be utilized to plan a company's leadership transition.

Before working closely with Jobs to gather expertise in the CEO post, Cook took on a range of various operational roles, including manufacturing, distribution, sales, and supply chain management.

As for my successor, I highly advise that we carry out and select Tim Cook as Apple CEO, as Steve Jobs stated in his letter of resignation.

In a recent interview, Tim Cook expressed his opinion about it, saying, "I see my role as CEO to prepare as many people as I can to be CEO, and that's what I'm doing. The board then decides at that time.

Apple has realized the value of having a suitable succession plan in place to make sure that there are no issues with the company's leadership.

2. IBM

IBM, a pioneer in technology, provided a great illustration of how internal succession planning should have been done a few years ago.

When Samuel J. Palmisano decided to retire, IBM declared that the incumbent SVP, Virginia Rometty, would become the business's first female CEO.

This replacement was seamless and occurred while Palmisano and the corporation were at the height of their game, not as a result of a humiliating oversight or unstable financial results.

Rometty joined IBM in 1981 and has remained a part of the company ever since. Before being offered the position of CEO, she progressed and rose through the ranks to become SVP and Group Executive for Sales, Marketing, and Strategy.

Rometty showed herself to the board by strategically working her way up from an entry-level position at the company. Rometty was instrumental in getting this promotion, but IBM did a great job of ensuring the growth structure road was established.

They accomplished this by 

• creating excellent career growth pathways.

• fostering a vibrant and positive workplace culture

• allowing contestants to compete on an equal footing

The changeover began before the news was made public, and the announcement was made in October. This is the proper technique to transfer a position and set up a gradual exit.

The team created a plan that fit the role rather than forcing the move in two weeks. A transfer could take longer for a CEO post due to the added responsibility.

By allowing time for a smooth transition, the board and business can determine whether this is the appropriate fit, and the successor has time to become comfortable in their new role, ask questions, pick up new skills, and manage the workload.

A common practice in this manner would have been for the firm to select a leader based on the traits of their current leader. However, IBM made their new leader selection based on merit and also considered internal applicants.

This exhibits a comprehension of transparency that strengthens and contributes to the vibrant corporate culture they already have in place.

Researched and authored by Prachee Rajvanshi I Linkedin 

Free Resources

To continue learning and advancing your career, check out these additional helpful WSO resources:

• Associate Company
• Buyback
• Diversification
• Industry Life Cycle
• Risk Transfer