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This article is going to explain what succession planning is and how it can be applied to your business.

After reading this guide, you will have a strong idea of creating or improving your succession planning process and the best practices involved.

What is succession planning?

Business succession planning, benefits of succession planning, succession planning process, succession planning best practices, faq about succession planning.

  • Succession planning template

Succession planning is the process whereby you identify new leaders and develop them to take over the role of the incumbent.

For businesses to thrive, it needs to avoid moments of crisis and lack of leadership.

At some point, succession planning will help with such a situation by preparing a candidate for a planned or emergency replacement. This could be because of retirement, a new opportunity, or in the event of death.

Succession planning is your safety net to ensure that business operations can remain smooth. A robust process will help you identify key individuals who could fill leadership positions.

In the best-case scenario, you will be given advance notice when someone is going to leave. A succession plan prepares you for the worst-case scenario and no notice.

At the same time, an effective succession planning strategy will avoid any questions of succession where leadership positions are concerned.

In the monarchy, this is often resolved through the order of succession. A well-understood model that passes the office to the nearest descendant. This model is also common with family-run businesses that intend to leave the business to their children or next of kin.

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In business, succession planning plays a vital role in identifying candidates to take on more challenging roles. When an important postholder departs they leave behind a void that can disrupt the company.

No matter the size of your business, a succession plan is a key to having a smooth transition.

Large companies such as Pepsi , Microsoft , and General Electric have well-known succession plans for executive talent.

For large corporations, it will typically fall to the CEO and the board of directors to oversee the succession plans. They will evaluate employees to identify leadership qualities and provide training for those in consideration.

Often the succession plan will look internally for candidates to take over positions. However, some companies may look to external candidates and may even employ the use of headhunters.

Smaller-scale companies may not need a comprehensive succession plan compared to large businesses. However, there will still be a need to identify someone to take over in the event of an emergency.

Therefore it is wise to train potential successors so they are prepared to step up if the need arises.

Types of succession plans

There are two types of succession plans that should be considered. This will give your business something to fall back on in the case of an emergency.

1. Long-term succession plan

The first type of succession plan you should consider is your long-term succession plan. This is the plan that you will more or less stick to as a standard for key positions.

A succession plan of this nature can be reevaluated and changed as the company grows. For large companies, this would be the plan that outlines the details of succession for all key positions.

2. Emergency succession plan

A secondary emergency succession plan can also be created, where appropriate, to be deployed in the event of an emergency.

This type of plan may involve more temporary measures but is intended to keep operations running smoothly.

This could see other senior members of staff take on extra responsibilities while a replacement is sought.

Many small and medium businesses do not have a succession plan. Of those that do, some of them have only informal plans.

This can be a risk for your business as there could be unforeseen incidents that could occur such as death. It is worth creating a formal, written succession plan that is developed and easily accessible.

Here are some of the benefits for businesses of any size to create a succession plan:

1. Candidates ready to start

When an upcoming promotion, retirement, or departure is approaching you will have the next generation of leaders ready to go.

Thanks to your succession plan the replacement will already have the skills required to take over the role.

2. Encourages managers to develop junior employees

Your succession plan can help your managers to start developing lower-level employees.

The plan helps to define clear progression routes through the company so managers can share appropriate training and information with junior staff.

Managers will also be able to start training their replacement when promotions are approaching.

3. It leads to higher job satisfaction

Employees report higher job satisfaction when there is a succession plan at their company. This is because it helps to define routes to progressions and lowers job insecurity.

A succession plan can help employees understand what they need to do to achieve a promotion. It can help with goal-setting and giving employees a sense of direction at work.

4. Helps to track progress

Succession planning can help your managers to track employee progress through performance reviews.

Internal opportunities can also be quickly filled with knowledgeable employees who have been upskilled and crossed trained.

5. Keeps shareholders confident

Whenever a high-ranking postholder leaves the organization it can leave shareholders feeling uneasy.

In some cases, they may look to sell their shares. A good succession plan can help keep investors on board.

For positions like CEO or CFO, the board may have had some input into the choice of successor. This will give the shareholders confidence in the company and the new postholder.

6. Cultivate and maintain company loyalty

Having a strong culture of promoting from within can lead to increased company loyalty.

You can attract talented employees who will stay with you for a long time. This helps them to have a strong understanding of the businesses, morals, and expectations.

Employees are more likely to stick around for the long term if there are defined advancement opportunities.

Instead of an informal plan, it’s a good idea to make a comprehensive document that outlines how succession should work.

Small and family businesses may only need a limited plan that outlines succession for a single person.

Larger corporations may need a comprehensive document that starts with the hiring process and works its way through the ranks and details different leadership positions.

The fundamentals of your succession plan will remain the same which is what we’re going to look at now.

It’s also worth pointing out that this document can be revised and amended whenever it is necessary.

1. Determine the scope

You will need to figure out how comprehensive you want your succession planning to be.

A small business might only need to find a replacement for ownership. Medium and large businesses may only want to consider the succession plan for their C-suite of employees.

It may also be the case you want a succession plan that covers every eventuality from store manager to distribution to CEO.

Ask yourself the following questions to decide what is best for your business:

  • Do you only need a plan that covers senior management?
  • Do you want a succession plan that covers the entire organization?
  • Are there any vulnerabilities in your business? Such as having a division with a higher amount of employees nearing retirement. Are you prepared for that?
  • Should performance reviews be used to help identify potential candidates?
  • Should the talent acquisition process be a part of your succession plan?

It’s important to understand what your specific needs are as well as the needs of the business.

The size and type of your business can help to inform some of your decisions but ultimately every business will be different.

2. Identify key positions and skills

First, you have to identify the key roles in your organization that will be good to secure.

It could be the CEO, CFO, CCO, CHRO, and different heads of departments.

Second, you might have some specific specialists that are unique to the industry or your business, e.g. it might be some highly skilled engineer, programmer, scientist, etc.

Consider the following questions to identify key positions and the skills needed for that post:

  • How does this position impact the company?
  • If this position became vacant, how would that affect the company?
  • Are there some big risks if this position became vacant?
  • What skills (both hard and soft) are needed for this specific role?

The objective is to figure out how crucial the position is. If the company would be severely affected by a vacated position then this is one that should be considered within your succession plan.

You will also need to understand what specific attributes are needed for the role. That way you can build your training and development around nurturing those key skills.

3. Identify potential candidates

Perhaps the most crucial stage is finding the employees that might be suited to a tougher challenge .

You could ask the current postholder for help determining who could step up in their absence.

It’s also worth considering that the right person for the job isn’t necessarily the next in line. Candidates could be sidestepped in the role or there could be other promising candidates in the business.

You may wish to make hiring a part of the plan and therefore can use interviews to vet potential recruits for career prospects.

Try to answer the next questions:

  • Who are the strongest candidates to step into this role?
  • What skills do they possess that could benefit their new office?
  • What skills are the candidates lacking?
  • Does this person have the appetite for more responsibility?
  • What training will they need to succeed?

It’s important to identify people who want more responsibility. Your top choice maybe someone who is happy in their current role and not looking to change.

This is something that can be gauged during annual reviews or in meetings about their professional goals.

4. Speak to the candidates

It would be wise to speak with the people you are considering.

This will give you a clear answer if they would be interested in the role.

Don’t make any promises but explain that they are being considered for leadership.

Explain that nothing is guaranteed as there are plenty of moving factors to consider. This includes the current postholder, the company, and the candidates.

However, you can gauge their interest and it may help to encourage high-performing individuals to remain loyal to the company.

5. Work on professional development

Leadership development is worth investing in particularly for employees you have identified for succession into key roles.

There are a variety of ways to develop potential successors and help them to develop leadership skills.

You can create a leadership development plan to ensure candidates have the right skills and are a good fit for leading positions. Employees being groomed for leadership roles can be developed in several ways .

You need to test your employees to make sure they can meet the demands of the increased responsibilities.

Some of the ways this can be achieved are through:

Connect the candidates with business leaders in your company. They can help to develop the skills of succession candidates and even share knowledge that might not be immediately obvious.

You can send prospects on courses to help develop their skills. These could be in-house courses or ones run through independent third parties.

Task forces

Task forces and project management is a great way to test your candidates. This will give them the opportunity to lead a team and test how well they cope under pressure.

When you think about development consider the following questions:

  • What is the best way to upskill?
  • What resources are required and available?
  • Are there some additional skills needed?

The focus should be on improving a candidate’s interpersonal abilities and communication skills that are important in a leading position.

You will also want to give them the opportunity to learn and develop the necessary skills required to do the specific job.

6. Trial and error

There should be ample opportunity to give your succession plan a trial run with the candidates you are considering. For example, if the postholder is away on holiday or off sick for an extended period you can use this as an opportunity to try someone in the role.

The benefit here is twofold, the candidate will get a feel for the position and appreciate the opportunity. While you can assess whether they are the right candidate for the position.

Note: Such tests can affect the team so pay close attention to this . This is especially true for external candidates and people from different teams. Not everybody will like it, unless the candidate is a strong leader from the inside of the team.

This is what you need to consider:

  • How does the employee interact with others?
  • Have they kept the department running smoothly?
  • How do they handle issues that arise?
  • How do they react to stressful situations and conflicts?
  • How much help do they need in the role?

You want to see them step up and take control of the position. This will help identify if there is any specific training they need to take the role full-time.

You can gauge whether someone is wrong for the position. This may come down to their interpersonal skills or ability to deal with new challenges.

7. Refine and redefine

Your succession plan is something that can be developed over time.

It may be that what was working years ago isn’t quite the same now.

You may need to adjust the succession plan to adapt to a changing business landscape. As the business grows you may need to redefine what is included in your succession plan.

It would be prudent to start with the most important roles in the business. After all, you can’t totally predict when a key position will become vacant.

Once you have those key positions locked down you can start to expand the scope of your succession plan.

1. Start from key roles

You should start with the most important roles first.

Which of the positions will have the greatest effect on your business if the postholder doesn’t turn up tomorrow?

Roles at an executive level are going to be the most disruptive ones. From there work out the specific skills and knowledge required for the role. This will help you to create your plan and identify potential successors.

Once the most pressing roles are covered you can look at what other roles are important to include.

2. Talk to your employees

Your succession plan will affect people and may make some people feel nervous.

It’s important to explain the scope of the succession plan and why certain roles are included in it.

You may only look to include executive positions or your plan may include managers and supervisory staff as well.

By giving a clearly defined scope you can avoid members of staff second-guessing their position.

3. Collaboration between management and HR

This is a process that should be driven by the business leaders with support from HR where necessary.

It is not strictly an HR process and therefore senior leadership should be communicated with regarding the succession plan.

Gain insights, input, and information from across the senior positions to help the succession plan run smoothly. Interviewing the post holders about the wants and needs of their job can provide crucial information.

4. Forecast your business needs

You should have an emergency succession plan in place that can deal with the untimely vacancy of a position.

Alongside this, you can create a detailed forecast and a longer-term plan. This is necessary to address things like upcoming retirement and promotions.

You will also need to consider how quickly the business can mobilize to fill this position.

A strong succession plan will understand how it will impact the business in 6 months, 1 year, and 5 years.

5. Create a pipeline of talent

Create a pipeline of talent so you have individuals ready to take up new challenges as they arrive.

A pipeline of this kind is essential for finding a talented successor but it’s also a good idea to help fill newly created positions. New recruits can be included in your pipeline of talent.

You can learn about this in our talent acquisition guide.

Even if you don’t have any open positions currently, you can still start cultivating a pool of talented individuals.

6. Annual talent reviews

Your succession plan is something that should be continually developed.

This includes reviewing the candidates on an annual basis or more. People may have moved on or into new positions within your company. Promising candidates may no longer be performing at the standard you would like.

Take a look at your succession plan every year and adapt and change things where it is necessary.

7. Build the learning culture inside your organization

It will help you nurture and grow potential candidates as well as new talents.

When you have identified the individuals that are being considered for senior positions you will need to develop their skills.

You can work with the candidates and they can lead their own individual development plan.

This ensures that their progress is actively monitored and they can take ownership of the process.

Managers should be on hand to provide guidance, resources, and provide timely reviews.

Why is succession planning important?

Succession plans make your business disaster-proof. They provide a concrete plan for filling key roles and help to avoid times of uncertainty. It can be reassuring for investors to know that there is a carefully considered plan in place.

How to do succession planning?

Succession planning should be conducted by business leaders with support from the HR teams. All affected individuals need to be involved in the process. Start with the end goal to identify what you need to achieve. Each business will have different needs so consider which positions will have the biggest effect on operations.

What is business succession planning?

Business succession planning is the process whereby you identify candidates to be groomed for senior positions. Specifically, when the incumbent leaves the role, this could be for a promotion, retirement, or an untimely death. Your business succession plan is in place to facilitate a transfer of power and keep your business sailing smoothly.

What is the correct order of the succession planning process?

  • Identify which positions need to be included
  • What specific skills are required for those roles?
  • Identify people who could be a good fit
  • Start grooming them for succession
  • Review your succession plan and candidates annually

Succession Planning template

Avoid moments of crisis and lack of leadership by preparing candidates for a planned or emergency replacement.

company succession planning methods

Ivan Andreev

Demand Generation & Capture Strategist

Ivan is a dedicated and versatile professional with over 12 years of experience in online marketing and a proven track record of turning challenges into opportunities. Ivan works diligently to improve internal processes and explore new possibilities for the company.

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Business Succession Planning: A Step-by-Step Guide

company succession planning methods

Business succession planning is a valuable tool for both small businesses and growing enterprises. In small businesses, succession planning means effectively managing changes in ownership or leadership. In larger organizations, it that can help to avoid potential talent gaps that have a detrimental effect on the company. The right strategy can help you plan ahead so that you can transfer knowledge and retain employees in key roles. And this is a top priority in these uncertain, post-pandemic times.

With that in mind, we have created a step-by-step guide to help you design and implement a plan that sets your business up for long-term success . We will take a look at the benefits of succession planning in HR and break down the succession planning process to help you understand everything that’s involved.

Table of Contents

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What Is a Succession Plan?

So, what is the definition of succession planning? How can you apply it to your business?

Business succession planning is a process that helps you prepare your company for the future. Essentially, it’s about creating a strategy and process for identifying potential future leaders and developing their skills so that they are ready to take on a new role when one of your key employees leaves the company.

Through careful planning, communication, training, and feedback, you can create a successful change management strategy that prepares you for potential transitions in your business. This helps you avoid key player talent gaps. It also helps you proactively develop your inclusive leaders of the future.

Despite its valuable role in business planning, according to a survey conducted by SHRM last year, only 44% of HR professionals claim that their organization has a succession plan in place. What’s more, only 21% of those that do have a plan in place have created a formal succession management plan.

Do you have a detailed succession plan in place? If not, then you’ve come to the right place.

Why is Business Succession Planning Important?

According to the 2021 Global Leadership Forecast , companies around the world are facing a leadership crisis. In fact, only 11% of surveyed organizations reported that they have a “strong” or “very strong” leadership bench, the lowest rating in the past 10 years (it has been in decline since 2011’s reported 18%). This drop has been attributed to a decline in leadership development and transition training in organizations.

Understandable given the distractions the world has had over the past couple of years.

Nonetheless, this figure shows just how important it is for organizations to work on their succession management strategies. This is the most effective way to ensure that the leaders of the future have the right skills and experience to guide them to success . And this is what business succession planning is all about.

By preparing strong leaders for the future, you can help your organization reach its long-term goals, reduce employee turnover , and build a stronger and more resilient business that’s ready to thrive.

Benefits of Business Succession Planning

In case you’re still not convinced, let’s take a look at some of the specific benefits of business succession planning in a bit more detail.

  • Identifying and developing your existing employees for future leadership roles helps you to promote from within . Aside from reducing turnover and hiring expenses , this also helps you ensure your future leaders have the right organizational knowledge and internal relationships , something which external recruits will lack.
  • Promoting the development of your existing employees shows them that you are willing to invest in their future . This can be a great morale boost that motivates employees to stay at your company. This helps you stay competitive and attract top talent to your business.
  • A well-designed succession plan helps you formalize training for both present and future leaders. It keeps your business moving forward and helps you retain your top performers .
  • Business succession planning is also an effective tool for mitigating the risks of organizational change . This helps you avoid any potential talent gaps when someone leaves your company. It also helps you pass on valuable institutional knowledge to future leaders before it’s too late.

What is Succession Planning in HR?

Succession planning in HR consists is a vital part of talent management. It’s all about your role as an HR professional in identifying key roles and positions that may need filling in the future and finding and developing internal candidates who may have the right skills and experience to fill them. The right strategy can help you retain staff, cut recruitment costs and better manage your internal recruitment processes .

HR succession planning is the process of identifying, selecting and developing employees who could potentially become key players with the right development. This helps you prepare for potential organizational changes so that you have skilled and engaged employees waiting to fill key leadership roles when the time comes.

As an HR professional, you play a significant role in preparing and facilitating your organization’s succession management strategy. However, for your succession planning in HR strategy to succeed, it’s equally important to get the support of senior management so that your plan is as effective as possible and aligned with your organizational goals .

Talent Management and Succession Planning: Employee Buy-in

Business succession planning is also about managing your existing talent so that you are able to retain as much institutional knowledge and experience as possible. This means that, aside from working with senior management, you also need to rely on the feedback of your employees.

What do we mean by this?

Essentially, it’s all good and well managing and developing your existing talent, but they need to be on board with your succession plan and have a genuine interest in remaining at your company and developing their skills. Otherwise, the time and money you invest in preparing them for future leadership positions will be wasted.

Make sure the potential succession candidates you select are:

  • Interested in learning new skills
  • Comfortable with change
  • Motivated and engaged
  • Able to adapt to uncertainty and new working environments
  • Willing to take on more responsibilities
  • Up for a challenge

The Business Succession Planning Process in 5 Steps

Now that we’ve discussed what business succession planning is, let’s take a look at what you need to include in your succession planning process.

Make sure your succession planning framework includes the following 5 key stages.

Define & Align Your Goals

The first step is creating a succession leadership plan. This means you need to define your goals and align them with your business. You may need to meet with senior leaders for this phase to ensure your goals are aligned with your overall strategy.

You also need to have a clear idea of who you are as a business before creating your succession leadership plan. Once you understand “who” you are, you will be better equipped to identify your potential new leaders.

Finally, to complete your plan, you need to:

  • Define the roles, skills, and experience that each successor will require (your succession profiles). Make sure you gather as much feedback on this as possible from your team to help you get a full picture of what you need to include in your succession plan.
  • Create a forecast of your company’s needs . Where do you need to be as a company within the next 5 years? How will your organizational structure change over this time? Think about your turnover trends, compensation strategies, who may be due to retire, and training and development plans for the future.
  • Update your job descriptions to reflect the information you’ve gathered. Make sure you are clear about your expectations . This will help you define the right candidate profiles for your succession plan.

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Create Your Succession Strategy

Defining your goals is one part of your plan, but you also need to create a comprehensive succession planning strategy to make sure you are on the right track – you need a business strategy game plan !

So, what does this mean, exactly?

Put simply, you need to define a series of actions and strategic moves that help you align your succession goals and objectives with your overall HR strategy .

Consider the following:

  • Where do you want to be as a business? What roles, positions, skills and experience will you need to succeed?
  • Which senior/leadership roles do you need to create a succession plan for?
  • Will you take business succession planning into account during performance appraisals in order to identify potential candidates throughout the year?
  • Does your business have any specific vulnerabilities that may affect your succession plan? (For example, a high percentage of employees that are due to retire soon)
  • Have you considered adjusting your hiring strategy to account for successor roles?

The key here is to be as proactive as possible with your strategy. Anticipate potential gaps in your workforce before they occur.

Identify Potential Candidates

The next step is to evaluate your current workforce in order to identify key positions that may need filling in the future, and key employees that may be suitable replacements. This is where you will implement the succession profiles and job descriptions that you created in the previous step. The more information you include in your profiles and descriptions, the easier it will be to identify the right match within your existing workforce.

Generally speaking, the best candidates will be supportive, proactive, engaged with learning and development, great problem-solvers, adaptable and able to take on more responsibility.

It’s important to be as objective as possible in this stage. You also need to consider that potential candidates may not currently be in leadership roles. It’s all about finding potential. The most effective way to do this is by using succession planning tools and metrics, rather than relying on personal opinions. More on this shortly.

Establish Professional Development Opportunities

As soon as you have your list of potential candidates and you know what skills they need to work on in order to eventually fill the role you have matched them to, it’s time to create a professional development plan to help them get where they need to be.

Which skills does each candidate need to develop? What learning opportunities would help them get the right experience and expand their current skillset? Are there any knowledge gaps that you need to address?

Create a list of the skills each candidate currently has vs. the skills they need to acquire, then work out the best way to offer them suitable opportunities for learning and development. Create individual development plans, offer formal training, consider creating a mentoring or coaching program to support them, and encourage continuous feedback and communication.

Implement Your Plan

The final stage is implementing your business succession plan. This will usually be a gradual transition with multiple short and long-term layers.

The first layer involves officially announcing your succession plan and notifying potential candidates. You then need to roll out your individual development plans and arrange training. Introduce candidates to their mentors, if you are using them, and encourage them to meet regularly. This will show your employees that you support their professional development, and you can see that they have potential.

Most importantly, make sure you collect regular feedback to see how your individual development plans are progressing, and if potential candidates are on track to reach their succession objectives.

Business Succession Planning Best Practices

Here are a few business succession planning best practices to help you create a plan that sets you up for success:

  • Formalize your plan . The sooner you create and formalize a detailed succession management plan, the better. Make sure your succession planning process focuses on all key stages. That means not just identifying the roles and skills you need for your future leaders, but also implementing individual development plans to get your workforce where they need to be.
  • Make sure your succession planning in HR plan is dynamic . Succession planning is all about change management. Be prepared to adapt to change by constantly updating your plan.
  • Collect regular 360-degree feedback . This will help you keep track of your employees’ interests, skills, performance, strengths, weaknesses, and opportunities.
  • Promote open communication . This will help you build trust and set clear expectations.
  • Consider your entire workforce . Don’t just focus on your managers. Your leaders of the future might be hiding in lower-level positions. Look for potential, not existing skills.

Succession Planning Template

One of the most valuable tools you can use for this strategy is a succession planning template. The right template will help you define key roles within your company and identify suitable replacements. Make sure you include a template in your HR audit checklist (check out this HR audit checklist template if you don’t already have one!)

Here are a few examples of the information you can collect with a succession plan template:

  • Current key employees and potential replacements
  • Key skills and experience that each position requires
  • Candidate training and/or experience level
  • The time it would take to onboard a candidate for an existing position
  • An overview of upcoming vacancies (for example, key employees that are due to retire)

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Succession Planning Tools

In order to create and manage an effective business succession planning strategy, you need to use the right succession planning tools. These are the tools that will help you identify which candidates could potentially be future leaders at your organization. They also help you identify potential succession gaps and map the right candidates to the right positions.

Ideally, you should be using a range of tools to help you get a full picture. Here are a few examples of succession planning assessment tools that will help you with this:

  • Personality assessment tools : to help you get a comprehensive picture of your existing culture (e.g. tools for tracking motivation levels)
  • Behavioral assessment tools : to help you identify and analyze employee leadership skills and assess how they behave at work (e.g. situational judgment tests)
  • Cognitive assessment tools : to evaluate critical thinking and reasoning skills related to performance (e.g. a cognitive aptitude test)
  • 360-degree feedback : to gather valuable input from employees and their peers in order to understand their readiness to take on future roles (included in most performance management software solutions)

Succession Planning Software

Finally, once you have designed and implemented your business succession plan, you need to regularly monitor progress. This will help you determine if your plan is working and if potential candidates are on track to reach their succession goals.

And this is where succession planning software can help.

Succession planning software isn’t as daunting as it sounds. In fact, most HRIS systems can provide you with the data you need.

The first thing you need is access to key metrics and KPIs . This includes turnover rates, retention rates, cost-per-hire, time-per-hire, and the rate of planned positions being filled. You also need to evaluate performance metrics to determine if business succession planning candidates that have taken on their new role were ready for it.

Did they achieve the training and experience they needed during the development phase in order to take on their new leadership role? If not, what could you have done better?

By analyzing the right data, you can determine what areas of your business succession planning strategy you need to work on in order to continuously improve the quality of your succession candidates. And by using the right HR software and performance management software you can easily identify talent gaps, make comparisons between employees, and simplify the succession management process.

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How to Create a Business Succession Plan

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For many small business owners, maintaining positive cash flow and a stable balance sheet can be an ongoing battle that consumes virtually all of their time. Even retirement often seems like a distant speck on the horizon, let alone plans to hand over the business. However, establishing a sound business succession plan is beneficial for most business owners and can be absolutely necessary for some.

For business owners that are at or near retirement, the issue of succession cannot be ignored. In this article, we will take you through the steps you'll want to take to create a successful succession plan.

Picking a Successor Isn't Easy

Many factors determine whether a succession plan is necessary, and sometimes the logical and easy choice will be to sell the business lock, stock, and barrel simply. However, many owners prefer the thought of their businesses continuing on even after they're gone.

Choosing a successor can be as easy as appointing a family member or assistant to take the owner's place. However, there may be several partners or family members from which the owner will have to choose — each with a number of strengths and weaknesses to be considered. In this case, a lasting resentment by those who were not chosen may happen, regardless of what choice is ultimately made. Partners who do not need or want a successor may simply sell their portion of the business to the other partners of the business in a buy-sell agreement .

How Much Is the Business Worth?

When business owners decide to cash-out (or if death makes the decision for them), a set dollar value for the business needs to be determined, or at least the exiting share of it. This can be done either through an appraisal by a certified public accountant (CPA) or by an arbitrary agreement between all partners involved. If the portion of the company consists solely of shares of publicly-traded stock, then the valuation of the owner's interest will be determined by the stock's current market value.

Life Insurance: The Standard Transfer Vehicle

Once a set dollar value has been determined, life insurance is purchased on all partners in the business. In the event that a partner passes on before ending his relationship with their partners, the death benefit proceeds will then be used to buy out the deceased partner's share of the business and distribute it equally among the remaining partners.

There are two basic arrangements used for this. They are known as "cross-purchase agreements" and "entity-purchase agreements." While both ultimately serve the same purpose, they are used in different situations.

Cross-Purchase Agreements

These agreements are structured so that each partner buys and owns a policy on each of the other partners in the business. Each partner functions as both owner and beneficiary on the same policy, with each other partner being the insured. Therefore, when one partner dies, the face value of each policy on the deceased partner is paid out to the remaining partners, who will then use the policy proceeds to buy the deceased partner's share of the business at a previously agreed-upon price.

As an example, imagine that there are three partners who each own equal shares of a business worth $3 million, so each partner's share is valued at $1 million. The partners want to ensure that the business is passed on smoothly if one of them dies, so they enter into a cross-purchase agreement. The agreement requires that each partner take out a $500,000 policy on each of the other two partners. This way, when one of the partners dies, the other two partners will each be paid $500,000, which they must use to buy out the deceased partner's share of the business.

Entity-Purchase Agreements

The obvious limitation here is that, for a business with a large number of partners (five to ten partners or more), it becomes impractical for each partner to maintain separate policies on each of the others. There can also be substantial inequity between partners in terms of underwriting and, as a result, the cost of each policy.

There can even be problems when there are only two partners. Let's say one partner is 35 years old, and the other is 60 years old — there will be a huge disparity between the respective costs of the policies. In this instance, an entity-purchase agreement is often used instead.

The entity-purchase arrangement is much less complicated. In this type of agreement, the business itself purchases a single policy on each partner and becomes both the policy owner and beneficiary. Upon the death of any partner or owner, the business will use the policy proceeds to purchase the deceased person's share of the business accordingly. The cost of each policy is generally deductible for the business, and the business also "eats" all costs and underwrites the equity between partners.

3 Reasons to Have a Business Succession Plan

Creating and implementing a sound succession plan will provide several benefits to owners and partners:

  • It ensures an agreeable price for a partner's share of the business and eliminates the need for valuation upon death because the insured agreed to the price beforehand.
  • The policy benefits will be immediately available to pay for the deceased's share of the business, with no liquidity or time constraints. This effectively prevents the possibility of an external takeover due to cash flow problems or the need to sell the business or other assets to cover the cost of the deceased's interest.
  • A succession plan can greatly help in establishing a timely settlement of the deceased's estate .

The Bottom Line

Proper business succession planning requires careful preparation. Business owners seeking a smooth and equitable transition of their interests should seek a competent, experienced advisor to assist them in this business decision.

American Bar Association. " Forms of Stock Purchase Agreements ," Page 1.

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The Ultimate Guide to Succession Planning

Katrina Kirsch

Published: September 30, 2021

At one of my first jobs out of college, my manager admitted that my professional growth "wasn't a priority." I knew I wasn't in a leadership role that required succession planning, but the admission still stunned me. Without support for career development, I wound up leaving the company.

business leader discusses succession plan

This situation may seem dramatic, but it points to the importance of having a succession plan in place. Of course, senior leadership roles take precedence because these can create a larger vacuum if the position is left unfilled. But succession planning can (and should) extend to all leaders across a company.

→ Click here to download leadership lessons from HubSpot founder, Dharmesh  Shah [Free Guide].

Developing a succession plan can set your company up for smooth transitions when leaders resign or accept a promotion. It can have a major impact on employee morale and can position your team to skillfully handle future business challenges.

But you don't want to wait until you absolutely need a successor. At that point, you're scrambling and may choose the wrong person. Let's look at the ins and outs of succession planning so your team is prepared for any transition.

What is succession planning?

Succession planning is a strategic process for identifying high-potential employees and taking steps to prepare them for future leadership positions. It helps your business develop and retain the talent pipeline so you can quickly fill vacant leadership roles.

Some succession plans look ahead 12 to 36 months for when a leader retires, steps down, advances, or leaves. Others, including CEO succession plans, look years into the future to secure the next several generations of leaders. We'll cover the specifics of C-suite transitions later on. But all succession planning has similar benefits for thinking ahead and identifying what you want in a successor.

Why is succession planning important?

In the Global Leadership Forecast 2021 report, 11% of surveyed organizations said they have a "strong" or "very strong" leadership bench — the lowest reported in the past decade.

The benefits of strong leadership are apparent. It improves employee turnover, ensures the execution of goals, and contributes to the company's survival. So if a crucial leader leaves, a succession plan can help ensure the role is filled and your company continues to thrive. But that's not the only upside.

Benefits Of Succession Planning

  • Finding and developing people for future leadership roles allows you to promote from within. These employees have organizational knowledge and internal relationships that outside hires lack.
  • Letting employees know that you're investing in them is a huge morale boost. It can also increase motivation and loyalty to the company.
  • Training employees for leadership roles forces you to identify the skills, knowledge, practices, and relationships needed for each role in your succession plan. This can attract new talent, retain current employees, and keep you competitive.
  • Hiring for highly specialized roles isn't easy. Succession planning helps you find people with unique competencies when it comes time to replace the current employees.

Currently, leaders looking to develop skills outside of their daily work want more coaching and development assignments, in addition to assessment and formal training. Succession planning is the perfect way to formalize training for both present and future leaders.

Succession Planning Best Practices

Succession planning isn't simple. But if you consider these best practices as you choose successors, your company will be well-equipped to manage transitions and unexpected changes.

Formalize a Plan

The earlier you set a succession plan, the better. You don't want to risk a leadership vacuum that leaves teams feeling unsupported. That can quickly waterfall into an entire team or department leaving, especially if the leader is particularly strong and has a close relationship with their direct reports. Once you have a succession plan, write it down. Then, make it clear there's a plan in place for when the inevitable transitions happen.

Stay Dynamic

Volatility is common at every company. People move cities, find new jobs, and retire. Your succession plan should be able to adapt to change. Instead of creating a plan and only revisiting it when the time comes to fill a role, see the plan as an evolving process that needs to be constantly updated.

Evaluate Talent

Part of a fluid succession plan is taking the time to assess employees' interests, skills, performance, and opportunities. This can be done through 360-degree feedback, weekly check-ins with managers, informal training, or tools like the nine-box grid. The goal is to get an idea of people's strengths and weaknesses, career goals, and growth opportunities so you know who may be the right fit for leadership roles.

Communicate Openly

Communication builds trust, which makes it easier to set expectations and ensure everyone is on the same page. As you build a succession plan, have honest conversations with employees. Find out where people want to be, and tell them where they're currently at. The whole point is to make your plan a reality, and successors will appreciate your openness when the time comes to offer them a role.

Make Diversity and Inclusion a Priority

Companies with women in leadership roles experience almost 50% higher profit and share performance. And since women, especially women of color, have been most affected by the pandemic , it's wise to consider gender ratios in any succession plan — including the 2SLGBTQI+ communities.

Succession Planning Example

When asked, a whopping 61% of organizations said they didn't have a direct report who could step into their CMO role tomorrow. That's a bad sign for C-suite succession plans. Without a strategy to replace leaders, a company can quickly go downhill.

To avoid chaos, here are a few examples of how succession planning can play out:

McDonald's Smooth CEO Succession

How does a multi-billion dollar company thrive after losing two CEOs in one year? They had a concentrated effort to develop high-potential employees and created a backup plan for their succession plan.

Coca-Cola's Failed CEO Succession

The repercussions of a poor succession plan can affect a company for decades. See the implications of Doug Ivester's term as CEO and the stakeholder concerns that caused his resignation after two years.

Succession Planning Steps

Succession planning example

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1. Make a plan for your plan.

This step is all about defining the goals of your succession plan and aligning with everyone involved. For some companies, this will mean meeting with your board to outline strategic priorities. For others, it will require meeting with senior leaders to define what you're looking for in a successor.

You'll be ready to move on to the next step once you:

  • Define the roles, skills, core competencies, and experience required for a successor.
  • Gather information and feedback on the above from your team or experts within your network.
  • Forecast your company's needs. Consider turnover trends, retirement dates, compensation strategies, and management training.
  • Update your job descriptions and any leadership models to reflect the information you've gathered. You want to be clear about your expectations before looking for candidates.

2. Identify potential candidates.

Using the succession profiles and job descriptions you've created, you're ready to seek out candidates. Make sure your approach is easy to repeat and introduces as little bias as possible. It can be helpful to get support from the HR team, who can share the tools needed to engage candidates and help facilitate the process.

To identify candidates, you can:

  • Look for leaders who develop others, follow through on projects, take action to support the company vision, and have strong leadership skills.
  • Get insight into each candidate's goals, disposition, and potential by holding interviews, creating surveys, and setting up focus groups.
  • Ask people for ideas on how to improve succession and leadership to get buy-in and discover who's engaged with the process.

3. Inform candidates.

There's a great debate on whether or not companies should let employees know they're succession candidates. But informing people of their potential will not only motivate them—it will prevent them from wondering about their future with the company. A great candidate may jump ship if they're in the dark and think they can find a better opportunity elsewhere.

Instead, communicate your intentions about the positions, people, and planning. Just keep your expectations incredibly clear on the included roles and people involved.

4. Set up professional development efforts.

Your company likely has programs in place for onboarding and training employees. But development is about creating opportunities for people to get experience beyond their current role and skillset. This is especially important for team members who can get caught in a specialist silo.

Once you identify candidates who you want to develop, you'll want to figure out the specific skills and knowledge they'll need to move to the next level. This often involves an individual development plan , continuous feedback, mentoring or coaching, formal training, and open conversations between the employee and their manager.

5. Do a trial run.

As potential successors accelerate their growth, they'll become true contenders for leadership roles. This is the ideal time to start trial runs to test their knowledge and expose them to various aspects of a position. Exposing candidates to real-world situations can highlight what effective leadership looks like and give them insight into overall company goals.

There are a variety of ways to get candidates involved, just choose the method that makes the most sense for the role.

  • Job shadow a senior leader to learn about their day-to-day tasks
  • Take on responsibilities when their manager is away
  • Invite them to sit in on higher-level meetings
  • Bring them into discussions on strategy, execution, or company forecasting
  • Involve them in the hiring process for junior candidates
  • Give them more responsibility on projects or involve them in cross-functional work

6. Adjust your hiring strategy.

Eventually, the time will come when you extend an offer to a potential candidate. And you'll need someone else to fill their role. Luckily, the successor can use their new leadership skills to help interview or train the person filling their position. This can be an employee a few levels down or a new hire.

That's why it's important to adjust your hiring strategy to account for successor's roles. Without them, your plan won't go as smoothly and their team will likely be scrambling to fill the gap.

7. Implement the plan.

Succession planning is a complex process with multiple short- and long-term layers. But eventually, it will be time to make the transition. Make an announcement and celebrate the succession. This will show employees that your company prides itself on strong leadership and has a plan for everyone's career development.

Sometimes, a more gradual transition is needed. Family businesses often struggle with smooth succession planning because of familial relationships, emotions, and intertwined histories. In this case, a clear succession plan based on business needs is exceptionally crucial to ensure the company's continued success

CEO Succession Planning

Only one in three CEOs rank their company's leadership quality as "very good" or "excellent." That's a low score for such a high-stakes business priority — especially considering the majority of CEO successors are internal hires.

Harvard Business Review (HBR) ranks CEO succession as "arguably the most important decision a board can make." Replacing a CEO needs to involve a long-term, well-devised plan that's linked to both short and long-term company priorities.

CEO succession planning can follow similar steps to employee succession planning, but there are specific considerations for this top-level role. HBR outlines the following tips for developing a CEO successor:

  • A candidate's competencies, personal attributes, and experiences need to be connected to business priorities. A charismatic senior leader may seem like the top pick, but a company may need a successor with expert-level technical skills in addition to social skills.
  • Think several generations ahead instead of focusing on the immediate successor. Succession is a long game, so you want to position it as a continuous process to develop top talent.
  • Identify seven potential CEOs in your company across all generations. This can take the stress off of each CEO transition and help keep your talent pipeline top-notch.
  • Train CEO candidates through a combination of on-the-job experience, executive coaching, education, mentoring, and cross-functional training.

Developing talent to take on the CEO role will require time and effort from high-level stakeholders. But it's absolutely worthwhile to prevent the vacuum this leadership role can leave if succession is poorly managed.

If a board is involved in the process, HBR recommends using board meetings to combine strategy sessions with talent development. That way, stakeholders can make sure strategy changes reflect the skills needed for potential successors.

Employee Succession Planning

Succession planning extends to employees in all roles across a company. Viewing it this way, rather than saving succession plans for senior leaders, helps you identify high-potential employees at all levels. You can then take steps to develop them into leaders who are able to take on additional responsibilities when a role opens up.

When looking for successors, keep an eye out for employees who are interested in learning new skills, are comfortable with change, can adapt to uncertainty and new leadership, and can manage various work environments. All potential successors should be motivated and engaged in the process because they have a chance to grow their knowledge and take on more challenging, rewarding roles.

When you see a path for an employee's growth, they'll see it too. So the next time a key leader steps down or a new director position is created, you'll know just the right people to recruit for the role.

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Successful Succession Planning in 2021 (The Ultimate Guide)

Learning and Development | 10 Min Read

Successful Succession Planning in 2021 (The Ultimate Guide)

Table of contents, there is no success without a successor, says management guru peter drucker..

Yet, many businesses are not receptive to having a succession plan . This apathy stems from either by delaying the inevitability of their retirement or the sheer reluctance to let the next generation assume leadership positions. Imagine a situation where a potential employee in a critical position leaves abruptly, or an unforeseen circumstance forces a key leader to retire. The absence of a successor or a robust succession plan will create a domino-like effect, leaving leadership gaps all along the succession line. It will jeopardize the establishment’s future besides diminishing its legacy. Without an anointed successor, the company may not have a rescue plan to ensure business continuity. 

Finding a rightful successor for business continuity has been an ongoing part of humankind’s existence. Be it succession in monarchies across the globe in ancient history or the succession to crucial business roles in an organization now – succession planning is a recognized motto that should be embraced by all. 

No defined protocol covers all the details or points out a path best suited for planning your succession. Companies devise policies and processes they deem fit, considering the bigger picture. And somehow, this cavernous content often overwhelms and confuses those involved in succession planning.

So, here’s the ultimate guide book to succession planning that works. This book will familiarize you with and reveal some of the most critical components of succession planning, enabling you to navigate this valuable strategy and save you from future disruption. It will also lay the fundamental groundwork for understanding and prioritizing your organization’s current and future requirements.

This refined knowledge is all you need to get started on a succession planning model if you’re still contemplating it. 

In this comprehensive guide, we’ll cover: 

Chapter 1: What is Succession Planning

  • Chapter 2: The Types of Succession Plans

Chapter 3: Objectives of Succession Planning

  • Chapter 4: Succession Planning Importance 

Chapter 5: Disadvantages of Not Having a Succession Plan

  • Chapter 6: Who Needs Succession Planning
  • Chapter 7: Succession Planning Process

Chapter 8: Succession Planning Tools

Chapter 9: case study.

  • Chapter 10: Frequently Asked Questions
  •  Conclusion

Let’s begin!

Succession planning is a strategically tried out process of identifying the next generation of leaders who can ensure business continuity when key leaders move on to new opportunities, retire or pass away. It is a means of preserving the company’s future and stakeholders associated with it.

By identifying possible successors for crucial roles, honing and nurturing their talent, and ensuring they seamlessly fit into the organization’s structure, companies future-proof themselves against the most visible and unforeseeable odds. 

But succession planning is not done on a whim. It is orchestrated as a well-structured step-by-step process that combines regular activities and ongoing procedures to comprehend and evaluate potential employees as future leaders. Various companies ensure that the succession plan is adhered to periodically and is adapted, considering the evolving workforce. After all, it is ideal for mitigating risk and building value. 

Technically, succession planning covers the senior-most positions in the company’s hierarchy, but companies should also consider critical roles along the various stages of the corporate ladder. 

Employee development is also integral to succession planning. It builds a high-level of engagement in the high-potentials who desire achievements and career advancement. Companies also undertake a succession planning model to anticipate the skill set of their talent pool.

Chapter 2: Types of Succession Planning

Each business structure will require a different type of succession plan. for example, sole proprietorships and partnerships, the owners and managers can make decisions on succession rather freely, whereas a corporation with a board of directors, will need to follow the formalities of the corporate bylaws and rules., david reischer, esq. attorney & ceo of legaladvice.com.

There is no one-size-fits-all approach to implementing a succession plan. There are various types of succession planning  models that a company can implement at all organizational levels. It might be to fill in an inherent leadership position that employees look up to in an organization or find an ideal board member replacement. A succession plan is placed at all levels of the organization. 

But, there are broadly two types of succession plans prescribed by experts. They include-

two types of succession plans

If followed in an orderly manner, they ensure minimum impact to operations and functionality in the long run. It is an ideal way of planning for succession across several levels, including business succession planning, CEO succession planning, management succession planning or employee succession planning in a given organization. 

Let’s explore them in detail.

company succession planning methods

1. Leadership Succession Planning:

To minimize the effects of sudden instances or to have a back-up when a key leader puts in their papers, a l eadership succession plan is incorporated to ensure smooth operations. It involves analyzing and evaluating specific skills or competencies in a shortlisted talent within the organization to take the helm appropriately. It is undertaken for senior executives such as Vice Presidents, CEO, CMO, CFO, COO, Directors and board members to replace dormant members or fill in the committee expertise and skill gaps.

*Two types of leadership succession planning

   A. C-Suite      B.   *Board Members

company succession planning methods

2. Non-Leadership Succession Planning:

HRMs can also utilize succession plans for specialized blue-collar or white-collar employees in niche roles under employee succession planning, staff succession planning, workforce succession planning or managerial succession planning categories. These niche roles may not only be mission-critical but are also difficult to replace. Hence, a company must be prepared for the same with a succession plan that is facilitated via cross-training processes and individual- and team-work goals, aligned with the department or organizational strategies to find viable successors.

* Type of Non- Leadership Succession Planning

   Critical Roles

Why does one bother with a succession plan? Why is it imperative to create a plan early on in the setup? 

Apart from the fact that it positions your leadership for success and helps prepare for the unknown, here are some key objectives of succession planning in an organization that bring more perspective to the entire process.

Ensures Continuity

One of the goals and objectives of succession planning is to ensure all-round business continuity effectively. Building a leadership pipeline by shortlisting or developing the skills needed to maintain a forward-looking trajectory for your company automatically makes it future-ready. It ensures that you are less likely to rush into making wrong decisions during crises.

Succession Planning Identifies Critical Positions in an Organization 

A perfect objective of succession planning in HRM is to identify mission-critical frontline positions crucial to a company’s success. C-suites aren’t necessarily the only significant positions. Middle-management and market vulnerable roles such as sales are equally important in many companies. With a succession plan, companies can outline a defined structure with role-specific job descriptions and strategic contributions that offer clarity to the executives and board members. Concurrently, you also identify obsolete or declining positions within the organization. 

Underlines the Organization’s Competency Levels 

Another succession planning strategic objective is implementing competency mapping criteria in the organization. When you’re eyeing sustenance and growth in a competitive environment, critical competencies help you understand the attributes already possessed by your organization. It offers a detailed understanding of talent competencies that is to be recruited, promoted or developed for long-term stability. Competency mapping is a comprehensive matrix that is practical and worthwhile when planning for succession.

Identifies Potential and Promotes Development

Not all employees are leaders. However, their talents can be honed to ensure they have the desired qualities to meet, if not exceed, business demands.

Hence, succession planning’s smart objective is to understand their strengths and vulnerabilities, enabling HR to identify existing employees’ latent talent or untapped potential. Such insights enable the management to initiate functional cross-disciplinary training, mentoring and skill development for the designated employees to enhance their existing capabilities. This initiative ensures a better understanding of the talent pipeline available internally while creating awareness of the current individuals’ strengths. It also keeps the company a step ahead of its talent needs. 

Gives Valuable Insight into Workforce and Departments 

High-potential identification is the first step to any succession planning exercise. To begin with, HRs must gain valuable insights. For example, which employee is nearing retirement? Is an individual donning several hats? Is that employee a perfect asset and, therefore, must be retained? Which employee is a misfit and needs to be given a different role? Whose expertise requires a departmental shift? Several such critical insights come into consideration. These cumulatively enable creating successful transitions without causing intermittence.

Vinay Amin, CEO of Eu Natural , states, “Succession planning must be done subtly, progressively and in the background. Group training, team building, extra responsibilities all play a part in preparing employees for key roles, but this should occur within the natural scope of a working day.”

Chapter 4: Why Succession Planning is Important

What are the benefits of succession planning in an organization or the purpose of succession planning are usually the two most common questions that employees tend to ask the management when a succession planning system is implemented. Well, let’s just say succession Planning  should be an underlying philosophy of every organization. Here’s why:

company succession planning methods

Avoids Transitional Shortcomings

A succession plan upholds the company’s vision and mission, ensuring that owners and executives understand the business’s future direction. The board can often be rigid about its values. The board members wish to maintain the company’s culture and how values are implemented. A well-charted succession plan provides the board with the necessary confidence in new leaders to maintain continuity in the company’s broader intangible objectives.

company succession planning methods

Ensures Availability of High-Potential Future Leaders

A succession plan also creates awareness about the quality and strength of your high-potential employees. High-potentials exhibit high competency levels in their current role and a high propensity for taking up more significant future responsibilities and challenges. Your awareness about an employee’s ability to take on critical future roles makes your workforce future-ready, providing a distinct business advantage. IBM is an excellent example of internal succession planning done right.

company succession planning methods

Boosts Retention and Engagement

Succession planning’s importance extends to offering excellent incentives to employees. If the employees understand the value accorded by their company to them, they are motivated to work toward the business goal. It improves the company’s retention and employee satisfaction rate. The succession planning process also attracts quality and dependable candidates from the onset.

company succession planning methods

Competitive Advantage

Amid a fast-transforming business landscape, a thorough succession plan bolsters your chances of managing disruptions. Only able and foreseeing corporate leaders can embrace the risks and uphold the company’s reputation and long-term growth. This enables them to focus on longer-term business opportunities rather than on the opportunities in the next few quarters. Hence, in business, succession planning’s importance is undeniable.

company succession planning methods

No Lengthy Vacant Period

Internal candidates are well-familiarized with the company’s culture. Hence, they are inclined to proactively take charge and smoothen the transition from one leader to another. Hence, succession planning benefits extend to disaster-proofing your business against such odds.

company succession planning methods

Lower Expenditure

Having a succession roadmap is often perceived as an expense by the company. But it is the other way round. One can’t prepare a succession plan overnight. It’s an ongoing process that minimizes time and financial resources in shortlisting, recruiting and grooming leadership from outside when you already have a qualified pipeline of candidates internally.

While some businesses have a definite succession plan, others do not possess such a structure.

As per a study conducted by the Canadian Financial Executives Research Foundation (CFERF), only 40% of Canadian private companies have a clear business ownership succession plan .

Such instances pose grave challenges and disadvantages to the business continuity in case of unforeseen situations. Here’s how:

company succession planning methods

Uncertainty

Not having a succession plan will expose the company and its stakeholders to unnecessary risks, adding more confusion and chaos. Leaving critical roles vacant for an uncertain period may severely damage the business infrastructure.

company succession planning methods

Thinning of Internal Loyalty

Alienating potential successors and promoting the wrong talent due to hasty decisions will only create a volatile work environment and a lack of motivation. Many may perceive the action of training their subordinates or outsiders over them for leadership as wrongful. A textbook example is that of P&G. It did not or was not able to promote a successor from within its ranks . Many experts and in-house veterans have claimed that choosing an outsider may have endangered the employees’ loyalty.

company succession planning methods

High Attrition

According to the Work Institute’s 2019 Retention Report, 36% of employees quit within the first year of their work for various reasons. But according to a report by HR Drive , 75% of causes for employee turnover can be prevented. Employees want a growth opportunity in the company. If they don’t see the company investing in their professional development and career advancement, they may choose to leave their jobs. Consequently, the company may end up losing a high-performing employee.

company succession planning methods

Unorganized Architecture

We agree it is challenging to foresee business challenges. But in the absence of a succession plan, it isn’t easy to survive an evolving business landscape. For example, It’s not prudent to announce someone’s retirement and not name a replacement. Microsoft was in a similar position when Steve Balmer abruptly announced his retirement in 2013, without naming a successor . With a plan, neither the company’s structure exposes itself to such developments nor reflects poorly on its fundamental responsibilities.

company succession planning methods

Misguided Hiring

A succession plan lays down the fundamentals for new hires by matching them with the existing pool. But what happens when the metrics to evaluate the hires are missing? We don’t blame them, but hiring managers do end up missing the red flags, taking missteps in the hiring process and hiring a bad fit. It leads to talent shortages and various other issues that exacerbate the problems.

Josh Baron, the co-founder of Boston-based firm Banyan Global, in his book, Harvard Business Review Family Business Handbook, writes, “Even with good intentions, many owners find it difficult to plan their own eventual transition from the business that has become part of their identity. But delaying or poorly planning your transition can wreak havoc on the business in the long run.”

Chapter 6: Who Needs Succession Planning and When

It is a misguided assumption that only Fortune 500 companies undertake succession planning. They might have had a head-start in implementing the process, but it doesn’t diminish the need for small and medium-sized businesses. Any company can develop and execute an effective succession plan as it benefits organizations of varied sizes at numerous stages of growth. But one must establish the process to do the job right. 

When is the right time for it, you wonder? Well, here are some experts suggestions to fill you in: 

  • Stewart Dunlop, the founder of Digital Marketing Agency PPCGenius.io , says, “ There are numerous reasons to start succession planning as soon as possible. First, a well-designed succession plan will inspire you to work hard to grow and establish your business in a way that it will still hold its worth after you’re no longer a part of it. ”
  • Trond Nyland, the founder and CEO of Cordless Drill Guide , states, “ Succession should begin three years before your retirement. It allows the time to comfortably research and find the perfect candidate. Enough time to teach the company culture and ensure that the new leader embraces it fully. It allows you both to sit down and create 5-year plans and set subsequent goals.” 
  • Dan Bailey, the President, WikiLawn Lawn Care , has a different perspective. He states, “ Even if you’re not filling the vacancy of CEO or another C-level position, having a plan for filling management roles benefits everyone and keeps things moving smoothly. Hence, your plan should ideally start before succession is even a consideration, with training people to take over vacant roles.”  
  • According to Drew Stevens, CEO/Managing Partner, Stevens Capital , “ Succession planning needs to begin immediately. Two reasons a) small business owners need to create a plan when they desire to exit the business or become disabled and b) for public organizations similar to the President of the United States, plans must be in place during a disability or in the case of death. There have been a myriad of CEOs over the years who have passed while in office without proper plans of success, throwing the organization into a tumult.”

Chapter 7: What Are The Seven Steps to The Succession Planning Process

Jim Pendergast, SVP of altLINE (a division of The Southern Bank Company), i s of the opinion that “ Organizations have years to plan out end-to-end transitions, particularly for senior and executive staff. There should be an established checklist in place as soon as positions are formed. Without some formal approach ready, even a rough one, you’ll face significant cost creep in your succession process, not to mention enormous amounts of management limbo and stress.”

Below is an insightful, seven-step succession planning process to help you get started with the succession planning procedure.

The s even steps of succession planning include:

7 Steps to the succession planning process

1. Uncovering Key Business Positions

Key business positions are those that are extremely important for an organization’s continuity and success. These positions are significant as either they are too critical to be left vacant for long or are extremely difficult to recruit for.

company succession planning methods

2. Mapping Key Competencies To Build Success Profiles

This step involves identifying the behavioral requirements of a specific role to find the perfect fit to make your evaluation more streamlined, objective, efficient and effective.

company succession planning methods

3. Shortlisting Potential Successors

Shortlisting candidates as successors should span the whole organ­i­za­tion. Apart from senior management, you must look across departments, positions and teams for any employee in any area who can be a likely successor.

company succession planning methods

4. Choosing The Right Succession Planning Tools

Working out the right new tools and systems that must be in place to support the roles derives fruitful results.

company succession planning methods

5. Assessing Potential Successors

Devising in-depth, robust strategies and exercises to assess whether the nominated candidates have the knowledge, skills and caliber to perform the new role.

company succession planning methods

6. Charting The Way Forward

Not every candidate is going to be a born successor. Hence, chart out a customized way-forward for each potential’s journey to nurture them to reach a certain level.

company succession planning methods

7. Act Upon The Decision

Be proactive and implement the succession planning process the minute your hiring begins. What seems like a one-off process is fairly time-consuming, stretching into months or even years. If a sudden need arises, it’s better to be prepared than sorry.

Here is a free succession planning template that supports businesses and employees across any industry or organization to make life simpler. It’ll help you get started on your succession planning process at the earliest.

Succession Planning Template

Succession Planning tools and Template

While many companies look outside of their domain for an ideal successor, we propose investing in your internal talent pool when initiating a succession planning process. It is likely to yield better results.

Businesses are expected to remain relevant by adapting, innovating and accelerating toward the digital ecosystem. They need to prepare and prioritize their vision, identify vulnerabilities, shortlist pipeline potentials and envisage a path forward. These can’t be undertaken without a leader, a plan or the right tools.

Tools? Yes, you read that right. 

Succession planning tools help determine who amongst a set of employees has the potential knowledge and skill sets to fill in many critical roles. They allow you to navigate ahead by syncing your vision with a suitable leader. By providing in-depth knowledge of essential, work-relevant personality traits and behavioral tendencies of individuals, the succession planning toolkit identifies and prepares top talent for various roles and indispensable challenges for achieving organizational success.  

Here are the succession planning assessment tools one must leverage to the core when instituting a succession planning model   :

Succession planning tools

These succession planning tools and techniques are the building blocks of any assessment. Let’s elaborate on them for better understanding.

company succession planning methods

1. Personality Tools

In succession planning, it is vital to gain a more comprehensive understanding of personality, of which the management might not be aware. Therefore, companies assess p ersonality traits that are the determining characteristics exhibited consistently despite changing circumstances. 

Personality assessments are commonly undertaken at the mid and senior levels. 

This top succession planning software tool is validated and optimized to test beyond the traditional ‘Big Five’ framework of personality. It provides a comprehensive picture of the culture and role-fitment while evaluating the likelihood of handling integral work-related activities. It also proffers objective insights into how others might react to the same situation. Many state-of-the-art personality tools also measure motivation as it is synonymous with related personality traits such as commitment, accomplishment and enthusiasm.

company succession planning methods

2. Behavioral Assessment

A behavioral assessment tool requires candidates to demonstrate chosen and critical behavioral competencies in one or multiple exercises that mirror actual workplace situations. It identifies and analyzes behaviors required of employees when they take the lead, professionally and socially. 

A behavioral tool brings clarity on how people behave at work. Hence, they combine innovation and scientific rigor to assess the role-fitment. Different types of behavioral assessments can be used independently or in combination for an individual’s holistic overview. It includes caselets, situational judgment tests and inbox exercises, etc., to gauge an employee’s mindset and potential. Hence, it is ideal for implementing behavioral assessments, such as employee succession planning software .

company succession planning methods

3. Cognitive Assessment

Cognitive ability is the brain’s ability to undertake core tasks such as thinking, learning, memorizing, paying attention, visualizing, recognizing, organizing and interpreting the surroundings (perception). 

In succession planning, cognitive tests assess critical thinking and reasoning logic related to on-the-job performance. The test measures two intelligent types- crystallized intelligence and fluid intelligence – through a series of complex questions.

Succession planning tools

When succession planning for top management, cognitive tests help measure leaders’ aptitude to achieve excellence that is aligned with business goals – various research studies have indicated that cognitive ability predicts job performance twice better than job interviews, thrice than work experience, and four times the education level!

company succession planning methods

4. Technical Assessment

A technical competency framework handbook provides detailed insights into identifying stellar IT/ non-IT skills sets to companies assessing technical roles. Various professional tests provide comprehensive knowledge of the on-job-relevant behaviors and the technical expertise required to be successful.

company succession planning methods

5. 360-Degree Feedback

Apart from utilizing the four tools above-mentioned, it is advised to gather stakeholders’ perspectives when succession planning. That is because they are the ones with whom the potential successor works and interacts regularly. Hence, seeking feedback from multiple stakeholders such as the employee’s superiors, peers, direct reports, and even clients enables them to understand their perceptions of the employee’s readiness to take on future roles.

Leveraging this information can help the employee develop a more well-rounded perspective on performance, skill levels and behavior as perceived by others. Using a multi-rater feedback mechanism, such as Mercer | Mettl’s 360-Degree Feedback survey, allows one to understand whether the concerned employee has demonstrated leadership qualities. Using this tool as an additional metric to determine the right fit ensures that multiple perspectives are factored in when making the final decision. 

Even the most successful individuals often have flaws that are blind-sided, and various succession planning examples state the same. Hence, it is advised to apply a combination of personality, behavior and cognitive tools to achieve an in-depth measurement of crucial, work-relevant personality traits and behavioral tendencies for individuals positioned in specific high-priority roles. These time-tested succession planning tools can either be administered independently or in a more organized manner through a ssessment/development centers. We encourage you to read this blog for greater clarity on the subject.

Assessment & Development Centers

Assessment and development centers (ADCs) are scalable, cost-efficient and tailor-made tools that help identify successors across various jobs and levels. ADCs bring together roleplays, situational judgment tests, group discussions, presentations, interviews, simulations, psychometric and aptitude tests, and similar activities to make crucial people decisions. These multiple assessments provide a detailed evaluation of candidates to determine their most appropriate roles. 

The ADC toolkit can be administered either virtually or in a blended format.

company succession planning methods

Virtual Assessment & Development Centers

A virtual assessment & development center involves employing multiple online tools to evaluate the extent to which chosen participants display select competencies. It is a detailed evaluation of individuals’ role fitment by assessing each person’s various aspects for success in a critical role. With zero logistical hassles, no bias and simple infrastructure requirements in internet connectivity and computers, decision-makers gain a holistic understanding of the candidates through multiple lenses.

Virtual ADC toolkit mostly consists of:

Succession planning assessment tools

Blended Assessment & Development Centers

Blended assessment & development centers are a combination of onsite and online assessments. The assessors gain insightful and data-backed outcomes by expanding the means and methods of measuring a potential candidate. This interwoven scenario is a valuable addendum to the repertoire of assessments available, also providing different perspectives on each outcome. Few competencies are mapped using online tools with life-like simulations. The rest are assessed concurrently based on physical activities.  

In addition to the online succession planning software tools mentioned-above, the blended ACDC toolkit consists of:

  • Group Discussion and Group Activities: These are conducted among a select few candidates tasked to work together with all the group members to solve a given problem. Through such group activities, candidates are assessed on social skills, leadership propensity, influence, inclusivity and other values. They are undertaken with assessors as observers who evaluate the candidates on the concerning competencies. Candidates are assessed on active participation, along with their quality of ideas and perspectives. 
  • Case Study Presentation : A hypothetical business-related case study is presented to the participants. This activity takes them out of their regular day-to-day roles. It offers them a glimpse of the problems while allowing them to experience critical interdependencies, execute best practices and explore alternatives to devise an all-embracing succession planning system.
  • One-To-One Roleplay: This activity enables examining how the participants behave with others in a given situation. This exercise allows the assessors to observe how the participants respond when dealing with challenging interpersonal conditions. An individual’s ability to perform well in this activity is likely to directly correlate with the role’s required competencies and behaviors. This is an ideal HR succession planning software feature. 
  • Competency-Based Interview : This interview’s premise is that past behavior is the best predictor of future performance. Hence, a competency-based interview uncovers the participants’ past performance through questions. It highlights their abilities to perform the job.

Each of these succession planning solutions can be administered online and/or in-person, factoring in a myriad of demands of the present-day business environment. These tools are customizable for all employee levels throughout their employee life-cycle, from frontline employees to managers and other senior positions. 

So, which succession planning toolkit are you leveraging for your organization? 

Are you still confused? We understand. All this information can get a tad bit overwhelming. Especially when there is no one-size-fits-all approach, selecting the fight set of tools depending on your requirement does become difficult. Thus, to ensure the management undertakes the best succession and talent management practice that ensues significant benefits, here are a few factors to keep in mind.

Factor Affecting The Succession Planning System

Here are the four most critical requirements or decision- making factors on which banks your choice of succession planning tools:

Factor Affecting The Succession Planning System

Let’s explore them in more detail.

company succession planning methods

The role or title for which you are planning is a crucial factor that affects which succession planning toolkit you would need to shortlist. This is because the profile specifies how complex or simple the tools need to be while deciding. For example, a senior leadership role will require a more comprehensive succession planning system than a junior role. After all, a higher role demands a more thorough assessment of the candidates’ leadership qualities, knowledge, future-thinking approach and actions through the tool.

company succession planning methods

Just as every fingerprint is unique, the succession planning requirements of every industry is distinct. For instance, a software firm’s requirements don’t need to be similar to that of a retail firm. While one will need to evaluate technical performance on priority, the other will prefer different skill sets. Therefore, you cannot follow a one-tool-fits-all approach here. Hence, businesses considering employing succession planning tools should comprehend their industry’s goals in sync with their business requirements and dynamic workforce before taking a call.

company succession planning methods

It is well-known that succession planning is a time-consuming process. It takes time to design and is implemented in the future. Similarly, you need to factor in time to track and evaluate your tools’ effectiveness. Hence, time is a critical factor that helps decide the kind of succession planning tools one can wield in a succession planning model . For instance, the more time you have at your disposal, the greater your advantage is in expanding the tool kit, viz-a-viz someone who needs to fill a role urgently. 

Suppose you are an organization restricted by time. In that case, you can employ virtual a ssessment and development centers that work in a virtual setting and bring together various exercises and multiple assessments. They are quick to administer and easy to manage within a given time-frame while providing a detailed candidate evaluation.

company succession planning methods

Like any organizational initiative, a systematic succession plan cannot be initiated without budgetary considerations. After all, scouting, recognizing, developing and evaluating talent needs financial inputs. Hence, fiscal consideration allows organizations to keep a focussed approach toward the tools availed to implement a succession planning system . That way, depending on your spending capacity, you can employ one or more tools to achieve your goals. For example, if you are a business owner with a small-scale budget, you can employ a readymade set of assessments to achieve the purpose of the succession planning system . Such tests are mapped to pre-defined competencies that are not specific to any organization but cater to a standard succession planning framework, typically used across industries and/or seniority levels.

The Mercer | Mettl team recently helped India’s largest engineering & construction conglomerate initiate its succession plan . 

  • Problem : The firm wanted to objectively identify its high-potential candidates to train them for assuming leadership roles in the future.
  • Solution: Mercer | Mettl’s subject matter experts formulated a solution by creating a customized behavioral assessment and emotional quotient report for screening high-potentials. They covered various critical parameters such as people management, ambition, tactics and learnability. The assessment instantaneously provided detailed insights into candidates’ strengths and weaknesses, enabling the firm to gain a holistic understanding of its talent pool. 
  • Impact: The firm could roll-out a fast and accurate high-potential identification program. It also contributed toward engagement and rewards to ensure that deserving people were invested in and continued with the company.

Chapter 10: FAQs

Before you move on, we’ve listed down the answers to some common questions on the s uccession planning model, succession planning procedures, succession planning templates, and the succession planning strategy .

What is succession planning in human resource management?

The succession planning process in human resource management essentially means initiating a strategically tried out process of identifying the next generation of leaders who can ensure business continuity when key leaders move on to new opportunities, retire or pass away. 

Who is responsible for succession planning? 

Succession planning is a decision undertaken by the senior management and board members but is implemented by the human resource team.

Nurturing a star talent is always easier said than done. After all, you can’t always be foresighted to identify the right talent and then develop them for precisely what the future may demand. Nor can you rely on instincts to forever make promotion decisions – that you will always have an ideal fill-in and fit-in is just too good to be true. This is why succession planning is a requisite for every organization. It improves the choices we make about employees, business associates, top executives and corporate leaders. It gives us the fuel necessary to deal with an unplanned crisis . The unfolding challenges in what may be a brutally uncertain business landscape, scarred by the experiences of the Corona-induced disruption, necessitates implementing and accelerating the succession planning process for companies. It is best to be future-proof.

For a business, moving forward without a succession plan in place creates uncertainty. Uncertainty promotes disruption and endangers future competitiveness. The goal of succession planning is to maintain continuity and even enhance future operations.

Ceo of loanry.

Originally published February 24 2020, Updated December 19 2023

company succession planning methods

Shirisha Jain

Shirisha has been helping countless brands gain traction with her content. Her deep understanding of the education sector and sound knowledge of technical skills have helped her structure the most creative solutions for key stakeholders. Shirisha has also ghosted pieces for several industry honcho’s successfully published both online and offline. When she's not keeping up with the world, you're sure to find her catching up on bollywood stories or gramming for fun.

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Succession Planning: What the Research Says

  • Eben Harrell

company succession planning methods

While every organization inevitably must replace its CEO, most firms are ill-prepared for succession. In this article, HBR senior editor Eben Harrell reviews the most salient studies of succession planning and offers context from the experts. Some key takeaways:

  • Though turnover among CEOs is rising, only 54% of boards are grooming a specific successor, and 39% have no viable internal candidate. The consequences of poor planning are serious: Companies that scramble to find replacements forgo an average of $1.8 billion in shareholder value.
  • Grooming leaders takes years but pays off: Chief executives who have gone through executive development at “CEO factories” like GE deliver superior operating performance. But directors need to get more involved. The majority don’t understand the capabilities of the executives below the CEO, and only about a quarter participate in their evaluations.
  • The trend toward external hires is growing, and outsiders command higher median pay. But studies suggest that on the whole, insider CEOs deliver better returns.
  • More researchers are studying the traits of the ideal CEO. So far they’re finding that younger CEOs outperform, that execution matters more than interpersonal strengths, and that a military background makes leaders more honest, but this line of inquiry is in its early days, and the jury is still out.

Most organizations aren’t prepared.

All CEOs will inevitably leave office, yet research has long shown that most organizations are ill-prepared to replace them. In this article, we review the most salient studies of succession planning and offer context from experts on the process of picking new leaders for organizations.

  • Eben Harrell is a senior editor at Harvard Business Review. EbenHarrell

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Engaging in Succession Planning

Succession planning is a focused process for keeping talent in the pipeline. It is generally a 12- to 36-month process of preparation , not pre-selection .

Overview Business Case Factors to Consider Potential Obstacles Components of Great Programs Additional Resources

All organizations can benefit from the principles of identifying crucial job skills, knowledge, social relationships and organizational practices and passing them on to prepare the next generation of workers, thereby ensuring the seamless movement of talent within the organization. 

Many business leaders and HR practitioners believe that succession planning is a complex process and a practice restricted to the largest organizations with the most sophisticated organizational development departments. On the contrary, succession planning can be of great value to smaller organizations that have fewer resources available for knowledge management programs and the formal, structured development of employees. See  Succession Planning Is Easier Than You Think .

Effective job design, varied internal development opportunities and smart organizational structure are important practices to promote the achievement of organizational objectives while creating an environment that promotes employee engagement and retention. The convergence of the organization's needs and the employees' interests can occur in succession planning because of its wide scope and open process.  See  Rebuilding the C-Suite .

This article will discuss:

  • The business case for succession planning.
  • Factors to consider when designing a program.
  • Potential obstacles to implementation.
  • Characteristics of great programs.

Following are a few terms surrounding succession planning processes:

  • Training. The preparation of an employee to perform the tasks required for his or her current role.
  • Development. The practice of equipping an employee (or group) for future roles and responsibilities.
  • Career planning. An employee-centered practice of identifying the interests of the employee and assisting that individual, as well as providing personal development options consistent with his or her talents and interests.
  • Career management. An organization-centered practice of creating jobs and organizational structures that promotes the achievement of business objectives.
  • Replacement planning. A shorter-termed practice of identifying replacements for personnel in key operating functions.
  • Succession planning. The future-focused practice of identifying the knowledge, skills and abilities to perform certain functions and then developing a plan to prepare multiple individuals to potentially perform those functions.

Business Case

Reasons for engaging in succession planning include the following:

  • Adapting to demographic changes and talent scarcity.
  • Identifying skill gaps and training needs.
  • Retaining institutional knowledge in a knowledge economy.
  • Boosting morale and retention by investing in employees.
  • Replacing unique or highly specialized competencies.

Adapting to demographic changes and talent scarcity

Demographic shifts will create intense competition for talent—perhaps more rapidly or slowly than anticipated, but inevitably. Candidates in the labor pool will likely lack experience and many core skill sets required for crucial positions. Harvesting critical organizational knowledge so it can be shared with subsequent generations of workers will be crucial.

Business and HR leaders view the skills shortage as a top concern that needs to be addressed. The workforce simply does not have enough workers and skilled candidates to fill an ever-increasing number of high skilled jobs. See  SHRM Research: The Global Skills Shortage .

These trends, combined with the increasing retirement of baby boomers, present opportunities for comprehensive succession planning to fill the upcoming shortages in talent.

Identifying skill gaps and training needs

The process of articulating necessary skill sets and competencies for key positions yields the added benefit of identifying skill gaps and training needs in the existing population. Interventions such as cognitive and behavioral training programs can be developed during the planning period and customized to the particular learning needs of the target group.  See  The Training and Development Landscape Report .

Retaining institutional knowledge

More employees are now hired and paid for their thinking rather than for their labor. This means that what we know is likely more important than what we do . The entire concept of knowledge management focuses on identifying, harvesting, archiving and retrieving organizational knowledge. SHRM research on preparing for an aging workforce has found that less than 40% of HR professionals said their employers were analyzing the impact of workers over the age of 55 leaving their organizations in the next 10 years. See  The Aging Workforce and How to Make Your Organization Retirement-Ready .

Imagine the reductions in learning curves for critical positions that could be achieved if much of the tacit knowledge—that gained by experience—were passed from one generation of workers to another. With succession planning, that sharing can occur concurrently between the worker and the potential successor, giving the successor the unique opportunity to gain useful skills and knowledge without a long, on-the-job learning curve. In addition, succession planning substantially decreases the need for formal training programs—and the resources they consume—to recreate the learning opportunities. See  SHRM AACSB Leadership Development Report .

Boosting morale and retention

An organization's visible investment in its human capital can be a tremendous boost to employee engagement and morale. According to Herzberg's theory of motivation, meeting the personal growth, achievement and recognition needs of employees promotes motivation. With proper design and consideration given to the group demographics, succession planning can be structured to deliver all three motivators. See  How to Create a Recruiting Strategy: Buy, Build, and Borrow .

Replacing highly specialized competencies

Although the conventional wisdom is that no one is indispensable, replacing a leader or contributor with highly specialized knowledge or competencies is costly and time-consuming. Succession planning mitigates the effects of a sudden or unanticipated vacancy in a principal position.

Factors to Consider

Regardless of its scope, any succession planning program is enhanced with the consideration of a number of factors:

  • Organizational foundations.
  • Scope of succession planning program.
  • Implementation team.
  • A match of talents to tasks.
  • Job design and skill complements.
  • Standards and metrics.
  • Plans for successful transitions.
  • Alignment of existing practices.
  • Effective use of technology in support of record keeping.

See  Building Better Leaders .

Organizational foundations

Like most HR programs, succession planning cannot be performed in a vacuum. Well-constructed foundation components should be in place long before succession planning programs can be implemented.

Each of these steps lays groundwork for succession planning. For example, jobs can be designed with complementary or layered skill sets. An open organizational structure can be designed to reduce the barriers that prevent cross-functional learning. Candidates can be viewed in light of potential functions beyond the immediate vacancy. Through assimilation, new employees can learn the organizational culture from the outset. Once these processes are secure, the organization can identify, based on strategic objectives, key positions that are best suited to succession planning. See  Succession Planning Policy.

Scope of program

Succession planning can go in two main directions: choosing by position or by person. A program that does both will ensure the greatest likelihood of addressing the primary purpose—keeping talent in the pipeline. Sometimes the talent resides in a particular individual who has numerous skill sets that would be valuable in a number of positions. Sometimes, certain positions themselves serve as good "training grounds" for future roles. In either case, an individual employee is selected, so that person should be:

  • Comfortable with change.
  • Interested in learning new skills.
  • Accepting of uncertainty.
  • Adaptable to multiple work environments and leaders.

Identifying positions to include in a succession planning program is more of an art than a science as it is certainly an organization-specific process. However, considering the following positions may be beneficial:

  • Positions central to strategic goals or to a competitive advantage (which have the greatest effect on the consumers' buying decision—think of a housekeeper in a hotel or an architect with specialized and uncommon knowledge in a restoration business).
  • Positions that are organization-specific or in a highly specialized industry (roles in the judiciary system or technicians in titanium mining).
  • Positions of influence within the organization (those that influence resource allocation or decision-making).
  • Jobs with long learning curves (assistant to a senior leader, specialized equipment troubleshooter, contract negotiator).
  • Positions in which experiential learning is the main knowledge acquisition method (banquet chef, home inspector, case manager).

See  What is a 9-box grid?

Implementation team

Some areas of expertise and commitment will improve the success rate of the program—such as in HR, organizational development or among other leaders. Knowledge of job design concepts, effective performance management practices, training and development initiatives, and adult learner and mentoring programs gives the program coordinators a good foundation for a well-rounded program. Having a receptive organizational culture (silo-free, accepting of change, with a learning-organization mentality and a focus on active performance management) is also essential to achieving program objectives. 

Matching talent to tasks

Sensible job development requires that incumbent employees be suited for a series of positions. Fulfilling that objective entails matching individual talents with required tasks. A job analysis that reveals the knowledge, skills and abilities required for each role allows for mindful determination of practical succession steps. Identifying skill complements allows for easier transitions between roles, creates options for placement, reinforces desired performance of those skills and supports development-centered (i.e., future-focused) staff training. See  7 Steps to Developing a Replacement Plan .

However, remember that succession planning differs from career pathing in that it should equip incumbents with a wide range of skills to prepare them for a number of potential roles, in contrast to fast-tracking, which moves them through a linear path of jobs.

Planning the stages of a succession plan requires an understanding of job design concepts. Understanding specific position attributes allows the program coordinator to perceive the relationship between the incumbent's success in one job and the potential for success in the next job, as well as the individual's appropriateness for a role based on personal preferences. Specialization and task variety, task identity, task significance, autonomy, span of control, independence and interdependence, and job pace are all salient position attributes to consider.

Standards and metrics

Establishing standards and metrics (what success looks like and how it will be measured) is critical for determining whether a succession planning program has been effective. Deciding in advance what constitutes a successful program may include finding methods to gauge employee satisfaction with personal development, management satisfaction with employee performance and job readiness, the extent of goals achieved, and the time to full-function attainment.

The in-advance nature of succession planning significantly enhances the transition for all parties. The employee, new leader and team have the opportunity to interact and develop a work style. There is also an overarching culture of employee development as an investment in the interest of the organization as a whole, as well as a practice of ongoing transitions and shared expertise.

Succession planning cannot be accomplished as a stand-alone process. The principles that support succession planning must also influence the selection process and performance management. Identifying roles eligible for succession planning requires forethought during the selection phase to ensure that the right person, with development potential, is chosen. Future-focused performance management practices that highlight personal initiative, skill acquisition and development are most suitable.

Record keeping and technology

In larger organizations where succession planning may cross departmental, business unit or even substantial geographic boundaries, the collection and organization of records associated with the process can pose considerable challenges.  See Leveraging Data for People Decisions from Recruitment to Retirement .

To manage this - particularly in the early stages - administration of a succession planning program can be limited to:

  • Identifying portions of the organizational chart with target positions.
  • Creating informal charts showing skill complements and job design commonalities between target positions and potential feeder positions.
  • Maintaining summary skill set and interest resumes of incumbents in something as basic as a spreadsheet.
  • Creating a Gantt chart of development assignments and program milestones for project planning.

Once a program has a track record, it may be possible to make the case for acquiring software applications that compile succession planning data and integrate it with existing human resource information systems (HRIS). Such systems can even generate sensible succession planning avenues based on organizational structure. Of course, the quality of the data retrieved is directly related to the quality of the data entered and maintained, so records retention should be designed with this anticipated use in mind.

Potential Obstacles

Depending on the scope of the project and the organization's culture and readiness, the following obstacles to a formal succession planning program may exist. Consider them when planning and marketing the program.  See  Leadership Succession Risks and What HR Can Do About Them and The Art of Leaving: The Impact of the Incumbent’s Departure on CEO Succession .

Resistance to change

Succession planning is one initiative that can be done incrementally. Enhance existing selection and performance management programs to show the value and importance of building internal bench strength. Introduce the ideas of waning skill sets in the labor market and the existence of internal talent that can easily be developed. Start small, maybe with one major function, to create a success story and build credibility and agreement.

Lack of support by persons of influence

If outspoken naysayers get the floor, succession planning can be a tough sell. Find the source of their skepticism, and present facts and figures to support the program and neutralize issues such as these:

  • Concerns that jobs are at risk.
  • Worries about costs or lost productivity.
  • Tendencies to promote knowledge-hoarding rather than knowledge-sharing.

Organizational silos

One way to address silos in the context of succession planning is to start with a function that is partially shared among one or more business units. Find leaders who believe in knocking down silos to see if they have jobs that could be feeders into another area. Explore the possibility of temporary assignments in other areas that could be used to develop employees for future roles.

Equal employment opportunity

Succession planning involves preparing employees for possible future roles; it is not pre-selection. If the succession planning program is rooted in diversity and equal employment opportunity, the ultimate selection of employees to fill new roles will reflect that focus. During the succession planning process, choose positions generally filled from within, work to identify a number of potential feeder roles and incumbents, and ensure everyone knows that succession planning is intended to match the organization's needs with the employees' interests and that it makes no promises. See  Top Corporate Roles Are Rarely Held by Women .

Weakness in performance management

If the organization has not had a consistent practice of giving honest performance feedback, not only is that an obstacle for succession planning, it is a bad business practice that needs immediate correction. Educate managers about the legal and ethical reasons for giving honest feedback. Employees deserve to know when their behavior or performance is meeting expectations. They also deserve the chance to improve their behavior or performance when it does not.  There are four essential factors in an effective performance management program:

  • A feedback process that is continuous and timely throughout the review period, so employees know how they are doing and what is expected.
  • A dialogue that includes performance feedback measured against clear and specific goals and expectations established at the outset of the performance management cycle.
  • A documented process for acknowledging the outcomes of the performance review process between the manager and the employee.
  • A two-way individual conversation between the manager and the employee (preferably face-to-face) at least once a year.

Manager resistance

To some extent, a succession planning process involves asking managers to prepare to let go of their best performers. Approach that challenge by:

  • Fostering a sense that keeping talent within the organization, wherever it may migrate, is the goal.
  • Holding managers accountable for developing their subordinates and recognizing those who excel in that area.
  • Educating managers that employees will recognize as managers-of-choice those who invest in their subordinates' development and that they will likely have their choice of internal candidates as job vacancies arise.

See  Succession Planning Training for Supervisors.

Lack of time

This issue represents the age-old conflict between time spent and time invested. Consider the amount of time spent recruiting, selecting, training and managing new employees, not to mention the assimilation learning curve. Compared with those time-consuming activities, the investment in developing incumbents' skill sets does not seem so daunting. Time invested in succession planning prepares the employee for a wider array of responsibilities within the organization.

Rewarding the wrong behavior

Many employees seem reluctant to share expertise with others. Often their self-esteem is linked to being the local expert. However, it is in the organization's best interest to reward employees who willingly share their expertise and demonstrate interest in learning new things.

Components of Great Programs

To help ensure the succession planning program meets the organization's needs and expectations, a number of components are worth considering for inclusion. See  Retool Your Succession Planning to Meet Future Challenges .

Prepare leaders to participate

Cultivating high-level commitment and support will have a positive influence on the succession planning program. Succession planning involves not merely making time to provide learning opportunities for employees; it also involves leading the culture toward lowering barriers and creating a learning organization.

Align the program with business objectives

When selecting job functions for the program and methods for the transfer of learning, be sure to align them with business operations, practices and schedules.

Use a variety of methodologies

Adult learning occurs in different ways. Use a combination of techniques, including mentoring, cross-training, job enlargement or enrichment, job shadowing and case studies, vestibule training, and classroom training.

Incorporate in performance management

Employee interest in succession planning, willingness to be a part of it and efforts toward achieving goals associated with it should be part of performance management. Incorporating relevant goals in development plans is relatively easy.

Promote a long-term view

Succession planning is a 12- to 36-month process. Encourage team members and leaders to think long-term and big-picture during the program development. Reinforce the concept of preparation, not pre-selection.

Think of succession planning as creating a "farm team"

The sports analogy resonates with employees and managers alike. Responsiveness to new situations (including unexpected ones) and resilience in the face of conditions in the external environment are traits of successful organizations. Having all your knowledge or skill "eggs" in one person's "basket" is never good business practice.

Look beyond the obvious

Good candidates for succession are not necessarily already in traditional feeder positions. Look far and wide for employees with complementary skill sets who may be appropriate for the program.

Plan for knowledge transfer

Succession planning includes identifying skills and competencies next-generation employees will need to function well in key positions. Developing systems to identify and transfer that knowledge and shorten learning curves should be a primary objective. Partner with a trainer to determine the best way to promote learning.

Look at succession planning in layers

Layering competencies achieves many of the same benefits as developing skill complements for succession planning paths. Even if certain roles are not well suited for formal succession planning, the incumbents may be candidates for acquiring layers of related skills. Consider including them in a sort of "a la carte" learning along with the succession planning participants.

Job development is not limited to promotion

Succession planning might include job expansion in addition to job progression. That is, if traditional step-by-step succession planning does not work for certain functions, consider individual skill development opportunities such as enrichment, enlargement and cross-training as sources for enhancing employee skill sets.

Additional Resources

Succession planning training for supervisors

Succession Planning Policy

Career Development Plan (Succession Planning)  

Toolkit: Developing Organizational Leaders

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Succession Planning 101: Steps and Processes for Advisory Companies

Jul 13, 2021 2:05:03 PM

All businesses, regardless of type and size, have an organizational structure that determines how the company is managed on a daily basis. While they may have all the right advisors in place for the current state of the business, it is important for organizations to make sure they have a plan in place to keep the business thriving long-term, regardless of who is at the helm. Succession planning, as both a concept and a strategy, establishes a framework for identifying and developing next-gen talent to replace the founder when she/he exits the business.

Succession Planning 101

What Are the Seven Steps for Company Succession Planning?

While it may be difficult to predict when a succession event will (or should) take place, it is best to begin the succession planning process early enough to construct a thorough and seamless plan that facilitates both the qualitative and quantitative parts of the process. While seven to ten years before the founder’s retirement are ideal for internal succession, or two to four years for a merger/sale, timelines are often much shorter. Unforeseen events within a company, health issues, and changes-of-heart can occur, even for the steadiest of businesses and owners. This underscores the importance of defining a strategy and committing that plan to writing as soon as possible. Even if there is no inkling that changes are imminent, it is critical to begin with the end in mind since no one lives forever.

Here are seven key steps to succession planning to keep in mind:

  • Determine Objectives and Clarify the Owner’s Vision: The preferred outcome for succession planning may be different for each individual business, however, the goal for most will be for the business to continue to thrive with the next generation of advisors at the helm. It is crucial to have clarity on the primary objectives within a succession plan. This could include objectives such as improved retention, sustaining long-term growth, identifying successors for key positions, defining how the plan will be funded and taxed,, and creating business continuity.
  • Identify Key Positions and Leadership Requirements: A succession plan should clearly account for the integral roles that are critical for organizational success. An assessment of the career trajectory for the employees may inform the priority each role has within a succession plan and who will assume the duties of the founder upon his/her exit. If planned retirements are in place, a succession plan can be executed with even more focus and precision. For all key positions, it should be determined what the primary skills, knowledge, and qualifications are required to do the job effectively and ensure that a business continues to run smoothly with the next generation of leadership.
  • Evaluate Organization for Potential Candidates: The organization may already have several key employees with high potential that should be considered as part of the succession plan. By identifying and developing employees to meet the requirements of leadership positions in the company, a business can proactively plan for a succession event and give employees more incentives in the process. If the firm lacks such candidates, developing an alternative strategy as a back-up is critical.
  • Create a Development Process: Organizations should always be investing in the career development of internal talent within the company. However, in the midst of succession planning, this becomes even more important. Succession choices should have a plan in place for training and development to help them grow into viable candidates for leadership roles in the organization. A company may consider having these employees take part in mentorship programs, rotating jobs within the organization, or even furthering their education with courses that will help develop a relevant skillset for the long-term goals of the succession-planning process.
  • Look Externally: While there is significant value in working to develop employees for key roles in the future, an organization should have an open mind and be willing to look elsewhere for a successor/buyer. In some cases, the best candidates for stepping into an ownership role may be found externally. External candidates may already have the necessary experience, knowledge, and qualifications to help fulfill a successful transition. This may be especially valuable in instances where the succession planning period begins on short notice with an urgency to fill a key management role. In most situations, however, a thorough assessment of both internal and external talent is part of an effective succession planning process.
  • Communicate and Implement the Transition Plan: Once the succession plans have been established, it is important to begin communicating the plan to all key stakeholders involved since this takes time. If internal employees will be the successors, they should be aware of the plan and career development path ahead of them. This open communication will also give the employees an opportunity to verify that they are interested in working towards the ownership role within the company and understanding what that means. Once the key employees are on board, the development process should begin with long-term succession in mind. Trial runs can also be beneficial for helping employees test the waters of their future role. This could include shadowing, gradually taking on relevant responsibilities, or even filling in when the owner(s) are out of the office. As the date for the founder’s eventual retirement gets closer, it is a good idea to have some extended and planned absences so the next generation has an opportunity to fill the leadership role before the founder(s) are gone for good.
  • Formalize Plan Documentation: Since succession planning requires various forms of transition and financial implications, it is important to make sure to formalize the process through supporting documentation, including a formal valuation beforehand. The succession planning will likely include the detailed written plan as well as the agreements with key employees and shareholders. In addition to these agreements, company records and documentation should be well organized to help facilitate a seamless transition within the company.

As the succession planning documents are formalized and the career development of the key employees or candidates is underway, the company should be in a solid position to execute the transition following the agreed-upon timeline.

How Do You Create a Succession Plan for Your Company?

When developing a unique and comprehensive succession plan, there must be a deep understanding of the organization with situational context to lead to an effective strategy. It is highly recommended to work with third-party experts who are well-versed in the succession planning process and can provide objective recommendations to lead a company into a prosperous future. The general roadmap for creating a succession plan is as follows:

  • Information Gathering: The succession planning team will consult with the company’s management team to understand the business, their preferences, the participants, and goals. During these sessions, there should be an assessment of critical positions, talent within the company, and discussions around leadership development (among other issues). This will help shape initial recommendations for a company’s succession plan in a way that is compliant and tax-effective.
  • Analysis: Leveraging the insights collected in the information-gathering phase and evaluating the most relevant strategies for the company, a deeper analysis should be conducted. During this phase, the succession planning team should construct detailed financial models to explore the implications of the plan for all key parties involved. During this phase there should also be an assessment of the tax impact both before and after the succession process takes place for all parties.
  • Planning: Once all of the pertinent information has been gathered and analyzed, a detailed succession plan can be created . This should include key recommendations for the equity transfer, financing, tax strategy, timelines, role transition, compensation, and a strategy for implementation. The approach should be signed off on by all members of the team before moving the process forward. This will ensure that all parties are aligned and in agreement of the proposed succession planning strategy.
  • Execution: Finally, it is time to put the plan into action. The succession team should work with the company’s owner(s) to prepare and provide all of the aforementioned agreements and arrangements needed to support the succession strategy. The development of career skills and knowledge for identified employees within the organization can get underway as the company works toward a future with the next generation of leaders.

Why Is Succession Planning Important?

Coworkers Having a Meeting

Succession planning is a process that is very important for the long-term health of the organization as well as for the benefit of owners/founders within a company who may be transitioning away from the business.  

For the company itself, succession planning offers the potential to mitigate risks while putting them in a position to grow over time. When owners are planning on retiring or leaving the company, a succession planning strategy can ensure that the business continues to run smoothly and without significant interruption, while also allowing the exiting owner to monetize their equity. It can be an effective way to establish a framework to develop employees and help them obtain the skills needed to take on roles with more responsibility in the company. This also can lead to employees feeling empowered within their roles and help them set goals to bring more value to the business. An effective succession plan and a commitment from management to provide mentorship can facilitate more transparency, collaboration, and satisfaction with the job knowing that there is a program in place to develop and progress.

For owners of a business who are ready to move on to new opportunities or retire altogether, succession planning can be highly effective in facilitating that transition. It can offer the benefit of allowing the owner to sustain growth within the business as they gradually work less - and in some cases earn more at the same time. They will know that they are leaving the business that they built in good hands and in a position to be successful. Succession planning can also help address needs within the business to build more value and secure a higher sales price. As the “Baby Boomer” generation of business owners continues to exit the workforce, many companies will rely on succession planning as a means to continue serving their clients and community.

What Are the Challenges of Succession Planning?

Succession planning comes with its own set of challenges and roadblocks to success. Many of the pitfalls relate to basic human nature and relying on the engagement of employees and stakeholders to carry out the recommended strategy. By understanding the common challenges, they may be easier to overcome, which will ultimately increase the effectiveness of the succession plan.

  • Managing Emotions: Change and uncertainty within a business cause feelings of anxiety or stress - amongst employees, family, and clients. Even when change is positive, most are still resistant to it, at least at first. If done well, succession planning can help alleviate some of these negative feelings by presenting a roadmap for succession in a way that is gradual, clear, and transparent, and demonstrates the commitment to helping the organization thrive. During the succession planning and implementation process, the lines of communication should be open between the staff and owners so all parties can move forward with confidence.
  • Resisting Bias: Bias may naturally be present when determining the ideal successors. The assumption that since an employee has excelled in their current job that they will excel as an owner may also not always be accurate. Bias can also influence succession decisions to select talent that is similar to the previous person in the role or fits stereotypes of who would be expected to excel in the given job. Instead, skills and characteristics for each role should be determined beforehand and candidates should be assessed against that criteria as objectively as possible.
  • Development: Even with a career development plan in place, founders may not commit themselves to take on the necessary actions to develop the intended successor. When this occurs, the successor candidate will not have the training, skills, or knowledge required to take on the intended role. In this instance, a company may be forced to hire external talent that has a proven record of performance and experience to succeed in the job. During the succession planning process, it is critical to acknowledge that the strategy and written plan are important, but there is significant work to be done internally to prepare the next generation of owners to succeed.
  • Confronting Mortality: Succession planning requires some people to consider uncomfortable thoughts about the future, such as their own retirement, resignation, disability, or death. This can cause unexpected emotions or uneasiness, but not addressing the inevitable can put the organization at risk. Having a succession plan in place will establish continuity for the company moving forward. It is critical to address this before your team or clients ask; by the time they voice their concerns, they have likely been thinking about them for a much longer period.
  • Keep Planning for the Future: Succession planning is not something that a business can set and forget. In fact, it may need to be revisited on an annual basis to make adjustments. Things change amongst employees, relationships, conditions in the market, and business trends. By having an updated plan, the company will always be more prepared to address significant transitions when they arise.

Whether you are preparing for the future of your business or preparing for a profitable exit away from your business, succession planning is critical. It can help ease the transition process for businesses and departing owners alike, and set actionable steps in place to create the best outcome possible for all parties. Succession Resource Group is here to help you look forward, develop new leaders, and be ready for whatever the future may bring for your business.

Topics: Succession Planning

David Grau Jr.

Written by David Grau Jr.

David Grau Jr., founder and CEO of Succession Resource Group, specializes in succession and M&A consulting for advisors. As a leading M&A consultant with a history of service in the United States Navy, David is recognized as a thought leader and accomplished speaker. He is prominent in the financial services industry, especially on topics related to M&A and next-generation strategies, having delivered over 200 presentations for organizations like the Financial Services Institute (FSI) and FPA.

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Last updated on 12/07/22 in Performance Management

Succession planning: Beginner’s guide to proven success

Succession planning is an essential process to ensure continuity of business operations. By identifying and nurturing potential leaders, key positions can be filled at short notice.

This beginner’s guide to succession planning explores everything you need to know to make sure critical roles are filled with minimal fuss.

The purpose of succession planning

Succession planning is a vital process for identifying and developing potential future leaders within your organisation. Yet many businesses fail to properly implement this process, missing out on potential new leaders from their workforce.

Succession planning: Beginner's guide to proven success

A report from Deloitte , The holy grail of effective leadership succession planning, observes: “While 86% of leaders believe leadership succession planning is an “urgent” or “important” priority, only 14% believe they do it well.”

Succession planning accomplishes a variety of objectives that help leaders reach their full potential while driving a series of benefits for the company at large. While succession planning is most often associated with developing future leaders and senior managers, it can be applied to any role within the company. 

For example, certain business-critical roles which may require lengthy recruitment steps to replace will benefit a great deal from succession planning. HR leaders can adopt a targeted approach to succession planning, a generalist approach targeting a “pool” of roles, or a blended approach that encompasses a range of roles.

The benefits of effective succession planning

Well executed succession planning brings with it a range of benefits, including:

  • Reducing the risk of losing long-time employees who possess critical information and expertise vital to the company’s performance. 
  • Maintaining business continuity and minimising disruption by filling job vacancies quickly with personnel familiar with the organisation’s structure.
  • Improving employee retention, offering a clear path for career progression where leadership potential is valued.
  • Emphasising the importance of nurturing leadership throughout the company and understanding where the most talented employees are.
  • Saving time and money looking for external candidates to fill a role, with less recruitment costs and a streamlined onboarding process.
  • Motivating employees to build a comprehensive skills stack and focus on their personal and professional development.

By using these and other methods to develop potential leaders, employees can be confident their future success is a priority for the company. A transparent succession planning process builds trust and enhances the motivation to improve.

Approaches to succession planning

Effective succession planning requires a combination of data-driven insights and a people-centric approach. An objective and unbiased identification approach should be combined with a holistic approach to employee career development. Emerging leaders should be picked out from the crowd as early as possible, so their potential and ability can be nurtured.

Approaches to succession planning

Deloitte’s report highlights four different approaches to succession planning:

  • Competitive. This process-based aspect of succession planning segregates employees into “haves” and “have nots”. It gives an objective framework from which to make decisions.
  • Compliant. Another process-centric aspect of succession planning, compliance is a “check-the-box” annual exercise.
  • Centred. By contrast, the centred approach is empathetic and engaging while understanding the key behavioural factors involved.
  • Comfortable. This approach brings trust-based decision-making to the succession planning process. 

A centred and comfortable approach, to use Deloitte’s definition, is a favourable strategy for effective succession planning. This should be backed up with objective evidence around decision making. 

The Deloitte report concludes: “The “holy grail” of effective succession planning turns out to be surprisingly obvious but unsurprisingly difficult: balance empathy and attention to human factors with objective decision-making and the organisational discipline to see the process through.”

Performance_reviews_cta

There are other approaches to succession planning which some businesses adopt. These include:

Strategic leader development

Strategic leader development begins with identifying the company’s defining vision, then recruiting those who have the appropriate managerial skills to carry that vision out. This is an ongoing and proactive approach to succession planning, rather than one which reacts to a sudden void in a given leadership position.

Departure-defined succession

Whereas strategic leader development is a continual process. Departure-defined succession activates when a leader announces their resignation. At this point, the success process kicks into action, defining priorities and searching for a new leader. Typically, this approach to succession planning is carried out only for senior leadership positions.

Emergency succession planning

If a business leader dies unexpectedly, or otherwise vacates their position at very short notice, protocols for succession need to be in place. This is where emergency succession planning comes in. Roles and responsibilities are clearly defined so that continuity of business operations can be assured. 

Identify your rock stars

A company’s A-players can define failure or success. Understanding which employees are – or have the potential to be – A-players is essential if business leaders want to beat their competition. These star players are worth their proverbial weight in gold, responding to complex challenges, uniting teams and departments, and being able to succeed under pressure.

These A-players are also potential future leaders, so identifying them and nurturing their talent should be a top priority. Managers and team leaders can ask several questions of their employees which can help to pinpoint who the workplace rock stars actually are.

  • Have they successfully managed big projects?
  • Have they been promoted at least once in the company?
  • Do they demonstrate an ability to shift from one role to another notably different role?
  • Are they confident and assertive without being arrogant and overbearing?
  • Do they demonstrate a commitment to ongoing learning and development?
  • What is their attendance record and overall commitment to the company like?
  • Have they shown an ability to effectively delegate tasks to the best candidates?

Performance management software can also be used to help business leaders identify those employees best suited for leadership development. The tools available can also identify those key positions which require a thoughtful succession planning process. 

Succession planning questions

Aspects of employee performance that performance management tools can evaluate include:

  • Success achieving objectives and key results (OKRs) and key performance indicators (KPIs)
  • Training, qualifications and other indicators of their existing talent stack
  • Absence, sickness and overtime history
  • Manager-to-peer awards and recognition
  • Awards and recognition from peers and colleagues
  • Visual representation of employee performance and
  • Cultural alignment with Success Circles (supirior to the 9 box grid method) 
  • Position on performance leaderboards
  • Level of interaction across various communications platforms
  • Analytics and reports across a range of other performance-related metrics

All the above measures can, in combination, paint an accurate picture of where talent lies within the workforce. Once these high-potential employees have been identified, they can be integrated into an overall succession planning process.

Nurturing internal talent

Identifying and nurturing talent sits at the core of effective succession planning. A program of talent retention complements this process. This ensures that A-players who are given the resources to develop their leadership potential don’t take those skills elsewhere. 

An article for Forbes magazine outlines a variety of ways leaders can build internal talent without losing business focus. These include:

  • Creating a shared vision through alignment . Aligning individual goals with organisational objectives can be achieved in a number of ways. Putting together Personal Development Plans (PDPs) can be an effective method for bringing a high performance employee’s professional aims in line with the company’s mission.
  • Creating opportunities for growth through stretch assignments . Star players are at the peak of performance when their abilities are stretched to the limits. By offering them chances to work on ambitious, challenging projects, they are given additional avenues for growth.
  • Communicate and coach frequently . Leadership development is an ongoing process which requires ongoing interaction to succeed. Positive feedback should flow to these employees on a daily basis, with clearly communicated objectives.
  • Create a company culture which emphasises the importance of nurturing talent . One issue with succession planning can be having the perfect candidate for the role sitting right under your nose, but not realising it’s there. Employees need to be aware of the opportunities which are available to them, which includes placing the nurturing of talent front and centre in the company’s culture.

company succession planning methods

By nurturing your internal talent and developing potential future leadership, succession planning becomes a more streamlined process. When key positions need to be filled, HR leaders and managers can draw upon an internal pool of candidates who are already up to speed on what these positions entail.

Openness, fairness and diversity

As with any hiring decision-making, succession planning should be conducted openly and fairly. A merit-based approach to diversity can also be adopted, allowing employees of all genders, ethnicities and races the opportunity to grow within the company.

Diverse leadership teams can help to build confidence and motivation within an organisation, especially when these positions are appointed when based on merit rather than demographics. It shows the company recognises all talent wherever they see it, as well as a readiness to incorporate fresh perspectives.

Such diversity can also improve your company’s brand image, building a leadership team that reflects the composition of its customer base. This diversity can also help to reduce bias in decision-making processes, ensuring that potential talent within the company is identified and nurtured as broadly as possible.

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Look at your entire organisation

It isn’t always necessarily obvious who the most suitable person for a leadership role is at first glance. At the same time, in large companies, the best candidate for a role might come from a completely different team or department to the one where the position needs to be filled. 

This is why effective succession planning should cast a wide net and consider potential candidates from the entire organisation. HR databases and analytics can provide a useful starting point for this process. 

This can include:

  • Using the HR people database to create an overview of which employees might be best suited for leadership development. Such a database will also give clear information on their attendance, appraisals and a record of their training.
  • Understanding where these candidates work within the company through departmental and organisational charts . By seeing which teams and departments have the best talent, decisions about succession aren’t restricted to one area of the company.
  • Performance management timelines can give a clearer understanding of which employees have been improving over time. This helps to pinpoint those who are continually improving and might be most responsive to leadership initiatives.
  • Employees who are highly rated by their peers, communicate clearly and effectively, and get great feedback, can be identified through HR reporting. These reports can be easily viewed through a performance management dashboard covering a wide selection of metrics.

Using 360 degree feedback to gain additional insights into potential leaders

An employee’s ability to effectively lead can often go hidden from upper management. But the colleagues they work with directly can have a unique perspective on their performance. 360-degree feedback gives business leaders and senior managers much-needed insights into these qualities.

company succession planning methods

360-degree feedback is an important element of successful talent management and leadership development. Customised questionnaires can be sent to everyone who works alongside a potential leader to deliver a holistic overview of how they perform. 

Such questions can include:

  • Do they contribute to an environment where success is possible?
  • Do they provide resources to help others achieve their goals?
  • Are they effective at removing obstacles which might hinder success?
  • Are they supportive and mindful of health and well-being?
  • Do they consistently deliver constructive feedback?
  • Is this person approachable when faced with problems?
  • Do they communicate well with other employees?

Frequently asked questions

What is succession planning and why is it important.

Succession planning is the process of identifying where potential future leaders exist in the company and delivering the training to prepare them for the role. While succession planning is typically used for leadership positions, other business-critical roles can also be included in the process.

What are the examples of succession planning?

The principal type of succession planning is for senior leadership positions. These are the key positions that are essential for the smooth running of the organisation at the highest level.

Non-leadership succession planning can include putting in place successors for roles vital to the organisation’s success. This can include roles with a high degree of technical understanding, and other niche roles which require specialisation.

What are the key elements of succession planning?

Successful succession planning requires a number of key steps. These include:

  • Taking a proactive position 
  • Understanding the requirements of the role in detail
  • Identifying potential candidates
  • Giving the training and resources needed to bring them up to speed
  • Performing trial runs and shadowing of potential candidates
  • Integrating succession planning into the company’s recruitment strategy

Why is succession planning useful in HR?

HR departments typically have greater clarity regarding the organisation’s strengths and weaknesses. As such, they are in the best position to help manage successful succession planning. 

They can use their internal records to map where relevant skills and experience lie, shortlisting potential leadership candidates. They can also help with cross-departmental succession planning to ensure the best candidates are selected, regardless of where they are in the company.

What is the leadership succession planning process?

Leadership succession planning requires a deep understanding of the duties and expectations in a given leadership role. By working closely with the current post holder, business leaders can build a talent pool throughout the workplace so successors are properly equipped with the skills needed for leadership positions.

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Succession Planning Examples – Learning from Industry Leaders

In this article, we will explore real-life succession planning examples from successful companies.

Published by Orgvue   July 31, 2023

Home > Resources > article > Succession Planning Examples – Learning from Industry Leaders

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Succession planning is a critical strategic process that ensures the smooth transition of leadership within a company. It involves identifying and developing individuals with the potential to fill key roles, such as top executives or essential team members, when the current incumbents retire, resign or are promoted to higher positions. 

By proactively selecting and preparing successors, businesses can minimise disruptions, maintain stability and foster a valuable culture of growth and innovation.

In today’s fast-paced and competitive business landscape, organizations must also plan for the future to remain resilient and sustainable. Leaders come and go, and without proper preparation, their departure can lead to uncertainty, internal turmoil, and even financial setbacks. Succession planning is the antidote to these challenges, providing a strategic framework that ensures leadership continuity and a seamless transition of power.

In this article, we will delve into the significance of succession planning in business and explore real-life succession planning examples from successful companies. Additionally, we will discuss how to implement an effective succession plan, highlighting essential steps and best practices – revealing how succession planning can be an absolute game-changer for your organization’s long-term success.

Succession planning is not just a theoretical concept; it has been successfully implemented by industry giants like Apple and Microsoft for example.. Learning from their experiences can provide valuable insights into the significance and impact of effective succession planning.

However, it should be noted that successful succession planning is not just limited to Fortune 500 companies; it is always applicable to businesses of all sizes and in all sectors. Every company, regardless of its scale, should recognize the significance of preparing for leadership transitions to avoid disruptions and maintain organizational stability.

Here, we take a closer look at two succession planning examples, from Apple and Microsoft:

Apple: Successful Succession Plan Example 1

Steve Jobs’ visionary leadership was instrumental in shaping Apple into a revolutionary technology company. However, Jobs knew that his health challenges necessitated a well-planned succession to ensure the company’s continued success. He actively participated in identifying his successor and preparing him for the role. In 2011, before his untimely passing, Jobs handpicked Tim Cook, who was then serving as Apple’s Chief Operating Officer, to take over as CEO.

Jobs’ decision to appoint Cook was not solely based on their professional relationship; it was a result of careful consideration of Cook’s capabilities, alignment with Apple’s culture, and understanding of the company’s values. Cook had demonstrated exceptional leadership during Jobs’ medical leaves, showcasing his ability to manage the company effectively during critical periods.

Under Cook’s leadership, Apple continued to thrive and innovate. Cook’s operational expertise and keen understanding of the technology landscape allowed Apple to sustain its growth trajectory. Moreover, Cook infused his own strategic vision, which emphasized diversity and sustainability, while staying true to the core principles laid down by Jobs. This seamless transition ensured that Apple’s legacy persisted, and the company continued to be a global leader in the tech industry.

Microsoft Corporation: Successful Succession Plan Example 2

Microsoft, one of the world’s most influential technology companies, faced a significant leadership change in 2014 when CEO Steve Ballmer announced his retirement. The board of directors recognized the importance of finding a successor who could navigate the company through a rapidly changing tech landscape and capitalize on emerging opportunities.

The board selected Satya Nadella, who had been with Microsoft for more than two decades and had a proven track record of success in various leadership roles. As the head of the cloud and enterprise division, Nadella was at the forefront of Microsoft’s transformation into a cloud-first company. His visionary approach and technical acumen played a crucial role in expanding the company’s cloud services and harnessing the potential of artificial intelligence.

Under Nadella’s leadership, Microsoft underwent a cultural shift, focusing on fostering innovation, collaboration, and customer-centricity. The company embraced open-source technologies and formed strategic partnerships to remain at the forefront of industry trends.

Nadella’s appointment was a testament to the effectiveness of succession planning. By recognizing internal talent and choosing a leader who aligned with Microsoft’s evolving vision, the company seamlessly transitioned into a new era of growth and relevance for success far into the future.

Tangible Succession Planning Strategies for Long Term Success

The examples of Apple and Microsoft demonstrate that succession planning is not an abstract concept, but a tangible strategy that can significantly impact a company’s trajectory. By proactively identifying potential successors, training them for leadership roles and ensuring a smooth transition, organizations can secure their future and sustain their growth in the face of leadership or further-reaching structure changes.

Succession planning goes beyond merely filling a vacant position; it’s about nurturing a talent pipeline, empowering future leaders and fostering a culture of continuous development. By investing in human capital, companies can build a strong foundation for long-term success and resilience.

Ultimately, the success of succession planning hinges on the commitment of top leadership and the entire organization to embrace this strategic process. 

Businesses that proactively plan for the future, learn from industry leaders, and prioritize talent development will undoubtedly be better equipped to navigate the challenges and opportunities of tomorrow.

How to Ensure Successful Succession Planning in 7 Clear Steps

Implementing a successful succession planning strategy requires a systematic approach and commitment from the entire organization:

1. Identify Key Positions

Begin by identifying critical roles that, if vacated, would significantly impact your company’s performance and success. These positions might include C-suite executives, key department heads, or subject matter experts. Take into account the potential for future expansion and any emerging roles crucial for the company’s growth.

2. Assess Talent

Once key positions are identified, conduct a thorough assessment of existing talent within the organization to identify potential successors. Consider not only their technical skills but also their leadership qualities, adaptability, and cultural fit within the company.

3. Develop Leadership Skills

Invest in training and development programs to nurture leadership skills among potential successors. Encourage mentorship and coaching to help them grow into their future roles. This investment in talent development not only prepares future leaders but also improves employee engagement and retention throughout the organization.

4. Promote a Culture of Learning

Foster a culture that values continuous learning and skill development. This will not only benefit potential successors but also the entire workforce, enhancing overall organizational performance. Providing opportunities for employees to attend workshops, seminars, and leadership training sessions will contribute to a well-rounded talent pool.

5. Look Beyond Internal Talent

While internal talent is a valuable resource, don’t hesitate to consider external candidates when necessary. External hires can bring fresh perspectives and diverse experiences to the organization. A healthy balance of internal promotions and external recruits can invigorate the company’s leadership team and challenge existing paradigms. Internal candidates often have the advantage of a lower hire cost overall, but this can be easily mitigated by the right-fit candidate, saving business costs in the long term.

6. Succession Planning Committee

Form a succession planning committee comprising senior leaders and HR representatives. This committee can oversee the process, ensure transparency, and provide valuable insights into the selection of potential successors. Involve individuals from various departments to gain a broader perspective on talent within the organization.

7. Regularly Review and Adjust the Plan

Succession planning is not a one-time event; it should be an ongoing process. Regularly review the succession plan, assess the progress of potential successors, and make necessary adjustments based on changes in business needs, market dynamics, and individual performance.

Succession planning is a pivotal aspect of organizational sustainability and success. By identifying and developing future leaders, businesses can ensure a seamless transition when key positions become vacant. Examples from companies like Apple and Microsoft demonstrate the significant impact of effective succession planning on long-term success. Embracing a proactive approach, investing in talent development, and fostering a culture of learning will empower organizations to secure their future and navigate leadership transitions smoothly.

Succession Planning FAQs

No, succession planning is vital for businesses of all sizes. Whether a small family-owned enterprise or a large multinational corporation, preparing for leadership transitions is crucial to maintaining stability and continuity.

It’s advisable to review the succession plan regularly, at least once a year or whenever there are significant changes in the organization’s structure or leadership team. This ensures the plan remains relevant and aligned with the company’s goals.

In such cases, you will need to revisit your succession plan and identify new potential successors. This highlights the importance of maintaining a pool of talent to mitigate risks associated with unexpected departures. Ideally, you would have a list of candidates formed with a readiness assessment to clearly identify those employees in a natural hierarchy.

Succession planning enables companies to identify and develop employees with diverse skill sets. By fostering a talent pipeline, a business can respond quickly to changing market demands and leadership needs. For example, identifying those employees who have transferable skills into other departments, through shadowing programs or mentorship schemes.

When engaging in succession planning, watch out for these common pitfalls: Lack of Diversity: Ensure diversity and inclusion in the selection process to avoid a homogenous leadership team that may lack fresh perspectives. Overlooking High-Potential Talent: Be comprehensive in identifying potential successors, considering not just top executives but also emerging talent within the organization. Neglecting Development: Don’t assume potential successors are ready for leadership roles without providing adequate training and development opportunities.

Succession planning is an ongoing process that evolves as your company grows and changes. Embrace it as a strategic investment in your company’s future success. 

By nurturing a robust talent pipeline and creating a culture of continuous learning, businesses can secure their long-term prosperity and resilience in an ever-changing business landscape.

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Succession Planning: Complete Guide with Examples & Case Studies

  • Updated on November 27, 2023

Succession planning is an important part of making sure that a business stays open and that new leaders can take over smoothly. Finding and training new leaders to take over for old ones who leave, retire, or die is part of it. This isn’t just something that big companies do; it’s also very important for small businesses, non-profits, and family-owned businesses.

Let’s discover this business concept from all aspects!

Table Of Content

1. What succession planning is and why it’s important 2. Steps in Planning for Succession 3. Process for Planning Succession 4. Leadership Development in Planning for Succession 5. Framework for Planning Succession 6. Best Practices for Succession Planning 7. Problems that often come up in succession planning and how to fix them 8. Case studies and examples from real life 9. How to Measure and Evaluate 10. FAQs 11. Last Words

1. What succession planning is and why it’s important

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Planning for the next generation of leaders has many perks. It gives workers more power by getting them ready for leadership jobs in the future. By doing this, companies can help employees advance in their careers and make sure that information and skills are consistently shared. This kind of planning not only gets a business ready for sudden employee turnover, but it also makes sure that the growth of its employees is in line with what the company will need in the future. This makes the business more resilient and able to adjust.

This detailed guide goes into great depth about succession planning , including its stages, frameworks, and the best ways to do things. We’ll look at examples from real life, talk about common problems, and answer commonly asked questions. This will give you a plan for how to do succession planning well in your organization.

We’ll now talk about the different steps of succession planning.

2. Steps in Planning for Succession

Succession planning is a process that has several steps. Each step is important for getting ready for future leadership changes . Let’s break these steps down:

Phase of Evaluation:

  • Finding Business Challenges and Key Positions: The first step is to look at current business problems and find key positions that are necessary for the business to run. Knowing this helps plan around the things that will have the biggest effect on business stability.
  • Figuring Out the Competencies and Skills That Are Needed: Once the most important jobs have been identified, it’s important to list the competencies and skills that are needed for them. This makes it easy to evaluate possible successors and makes sure they are in line with the long-term goals of the company.

Employee Database and Evaluate the Employees and track performance of team

  • Think About High-Potential Employees: At this stage, the attention shifts to finding the organization’s high-potential employees. For leadership jobs, these people have the skills, knowledge, and drive to do well.
  • Choosing Competencies for Future Roles: This step includes matching the skills of possible successors with the needs of future roles. This kind of foresight is necessary to build a talent pool that can lead the company in the right way.

Phase of Development:

  • Getting Important Knowledge: Sharing knowledge is an important part of this step. Making sure that present leaders share important information with people who might take over, to keep the organization’s memory alive.
  • Developing Talent for Critical Positions: In this step, you’ll make personalized development plans for people who have been chosen to take over the job. These plans may include coaching, training, and job rotation programs. The goal of this part is to groom and train them for their future roles in the company.

The different steps in succession planning work together to make a circle that changes and grows with the business. The succession planning process stays fresh and useful by going over each step again and again.

Next, we’ll talk about the general process of succession planning and what it means for keeping the business going.

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3. Process for Planning Succession

The succession planning process is a thorough way to make sure that a company is always ready for changes in leadership, which keeps the business running. Let’s look at the most important parts of this process:

  • Regular Evaluations and Updates: Planning for succession is not a one-time thing; it’s a process that goes on all the time. It is important to keep an eye on both the organization’s needs and the development progress of possible candidates on a regular basis. This makes sure that the plan stays in line with how business tactics and the market are changing.
  • Putting the Focus on Critical Roles: Not all jobs need transition plans. Finding and focusing on key roles is a big part of the process. These are positions that are necessary for the operational and strategic success of the business. This targeted method makes sure that time and resources are used effectively.
  • Choosing and Training Internal Candidates: One of the most important parts of succession planning is finding and developing talent within the company. Developing workers to take on leadership roles in the future not only makes them more loyal and motivated, but it also makes sure that the new leader fits in with the organization’s culture and keeps its history alive.
  • Aiming for Business Continuity: Making sure the business stays open is the main goal of succession planning. An company can keep things running smoothly during transitions and avoid problems by having a plan for replacing key employees.

A good succession planning method fits in well with a company’s long-term goals and plans for its workforce. It makes sure that the company is ready for the future and that there is a strong pipeline of leaders.

Project Manager KPI Dashboard Google Sheets Template

We will talk about leadership growth, which is an important part of succession planning, in the next section.

4. Leadership Development in Planning for Succession

Leadership development is an important part of succession planning because it makes sure that people who might become leaders are ready to do their jobs well. This is how it can be added to the process:

Involvement of Senior Management

For leadership development to go well, senior management in the company needs to be involved and committed. Their job is very important because they find people who could be leaders and give them chances to learn and grow.

Combining Leadership Development and Performance Review

The review process should include leadership development as part of the whole process. This combination makes it easier to find employees with leadership potential and make sure that their growth plans are in line with the goals of the company.

Using Talent Development Programs

Organized talent development programs, like mentoring, coaching, leadership workshops, and on-the-job training, can help prepare high-potential workers for future leadership roles in a big way.

Stressing Variation in the Leadership Talent Pool

It is very important to make sure that there is variation in the leadership talent pool. This not only encourages inclusion, but it also brings different ideas and points of view to the leadership, which helps them come up with new ones and be flexible when business conditions change.

As part of succession planning, leadership development is about making sure that the organization has a steady stream of qualified leaders who can guide it toward its strategic goals and deal with the challenges of a business world that is always changing.

Next, we’ll talk about the concept of succession planning, including how it’s put together and how it works.

Project Manager KPI to take care of CLV metrics

5. Framework for Planning Succession

For succession planning to work, you need a well-structured system. Organizations can use this strategy to help them plan and carry out their succession plans. Let’s look at its most important parts:

  • Creating a Culture of Leadership Development: It is very important to create a culture that values ongoing learning and leadership development. This attitude pushes workers to look for ways to improve and trains them for leadership roles in the future.
  • Finding the Most Important Roles: The first step in the framework is to find the most important roles in the company. These are jobs that are necessary for the business to run and call for specific skills and knowledge.

Setting up a three-step process:

Finding and developing high-potential workers by giving them the training and experience they need to become better leaders is part of the talent development step.

  • Identification of Leadership Talent: Potential leaders are found by using both success metrics and potential assessments.
  • Leadership Development: During this phase, the chosen candidates are helped to grow through focused development programs, mentoring, and real-life leadership experiences.
  • Succession Decision: Finally, choices are made about who will play the most important parts. These choices are made based on how ready the candidates are and what the company needs in the future.

The framework for succession planning needs to be able to change with the company and its employees’ needs. It should also be clear and shared well with all stakeholders to make sure everyone is on the same page and supports it.

9-Box-Grid-Talent-Management-Excel-Template-SS3

– This image is taken from the Category-Based Employee Evaluation of Someka’s 9 Box Grid Template in Excel – 

Next, we’ll talk about the best ways to plan for the next leader.

6. Best Practices for Succession Planning

Best practices must be used in succession planning for it to work and be successful. Here are some important things to keep in mind:

  • Planning ahead: Don’t wait for a job opening to come up. Proactive succession planning means thinking ahead about what will be needed in the future and getting ready for it. When there is a change in leadership, this method helps keep things running smoothly by reducing disruptions.
  • Conversations That Are Open and Clear: It is very important that people talk about the succession planning process in a clear and open way. It helps keep workers’ expectations in check and lowers their uncertainty. Clear information about the process and the results builds trust and participation in the group.
  • Promoting Diversity and Inclusion: Including a range of people in succession planning makes the leadership team more active and open to new ideas. It makes sure that different points of view are heard and that the leadership is representative of the employees and customers of the business.

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  • Seeking Advice from Experts: Getting advice from experts outside your company can be very helpful when planning for succession. Consultants or pros in your field can give you new ideas and help you find holes in your planning.
  • Frequent Checks and Changes: Planning for succession should be an ongoing process that is reviewed and changed as needed on a frequent basis. Your transition plan should change along with the business world and your company’s goals. This makes sure that the plan stays useful and fits the wants of the organization now and in the future.

You can make your succession planning process much more effective by using these best practices. This will also make sure that your organization is ready for future leadership changes.

Next, we’ll talk about some of the most common problems that come up in succession planning and suggest ways to fix them.

7. Problems that often come up in succession planning and how to fix them

Planning for the next generation is important, but it can be hard at times. It is very important to understand these problems and have plans for how to solve them. Here are some usual problems and how to fix them:

  • Dealing with Resistance to Change and Managing Expectations: People often don’t want to change, especially when there are changes in leadership. To deal with this, get workers involved in succession planning and let them know why it’s important. Support a way of life where people see change as a chance to improve and grow.
  • Balancing Short-Term and Long-Term Goals: Businesses often have trouble balancing their short-term practical needs with their long-term strategic goals. To fix this, make sure that your succession planning fits in with the organization’s overall strategic goals. Make sure the plan takes into account both the present and the future needs of leadership.
  • Putting succession planning and talent management together: succession planning shouldn’t be a separate process; it should be part of the general strategy for talent management. This integration makes sure that all areas of employee development are taken into account, and it lines up succession planning with other HR tasks like hiring, keeping employees, and professional growth.

By properly addressing these issues, businesses can make more solid and useful succession plans that will ensure a steady flow of qualified leaders.

Next, we’ll look at case studies and examples from real life that show how succession planning can work.

8. Case studies and examples from real life

Looking at examples from real life can help you learn how to plan for succession effectively. Let’s look at some well-known examples:

Apple’s planning for the change from Steve Jobs to Tim Cook is a great example of this. Apple had prepared Cook by slowly giving him more duties and public attention, even though Jobs was a famous figure. When Cook took over, he already knew a lot about the business and how it worked, which made the change go smoothly.

Companies like General Electric (GE) and IBM are known for the way they plan for the next generation of leaders. GE, for example, has a strict process for finding and training future leaders. One way they do this is by rotating people through different business units for several years. IBM works on ongoing leadership development to make sure there are a lot of qualified people for all kinds of jobs. As part of their succession plan, these businesses stress how important it is to develop leaders in a proactive and ongoing way.

These case studies show that succession planning is more than just finding a replacement . It’s also about creating an environment where people are always learning and getting ready for new jobs. It’s about making sure the organization can stay open and succeed in the long run.

Next, we’ll talk about the metrics and review methods that are used to figure out how well succession planning is working.

9. How to Measure and Evaluate

Setting up metrics for review is important to make sure that succession planning works. These metrics help keep an eye on the succession plan’s health and growth so that changes can be made as needed. Here are some important factors to think about:

Monitoring Turnover: Keeping an eye on turnover, especially in key positions, can tell you a lot about how stable your leadership pool is. A lot of people leaving key roles could mean that you haven’t thought about how to replace them.

Bench Strength: Figuring out the strength of the bench means figuring out how ready possible replacements are to take on important roles. This metric helps you figure out if there are enough skilled people ready to fill important jobs.

Utilization of the Pipeline: This measure checks how well the chosen candidates for succession are being trained and used. It involves keeping track of the growth of people who might become leaders and the success rate of those who are put in charge.

By looking at these measures on a regular basis, businesses can keep their succession planning on track and make sure they have a healthy succession pipeline.

Ready-Made Template To Conduct Succession Planning

9 Box Grid framework is one of the most known tools to conduct employee evaluation and succession planning. You can use Someka’s 9 Box Grid Excel Template to create Potential-Performance Matrix for the future leaders of your company.

9-Box-Grid-Talent-Management-Excel-Template-SS1

– This image is from 9 Box Grid Succession Planning Dashboard created by Someka –

If you need an online version of this tool, you may also check 9 Box Grid Google Sheets Template , a ready-made online talent management tool with access from all devices.

10. FAQs about succession planning

Succession planning is a difficult but necessary task for businesses. It brings up many questions.

Finally, we’ll answer some questions that people often have about succession planning. Let’s answer some of the most popular questions:

  • What is the process for planning for the next leader?

The process of succession planning includes figuring out who will fill important roles in an organization, evaluating possible successors, and preparing these people to be leaders in the future. It’s a planned way to make sure that the business keeps running and that leaders are ready.

  • What are the five steps to prepare for the next leader?

There are five main steps: identifying key positions, evaluating possible candidates, developing talent, putting succession plans into action, and reviewing and updating the succession plan on a regular basis.

  • Which of these 4 methods of succession planning do you use?

Replacement Planning (looks at current needs), Talent Pool (builds a list of possible candidates), Strategic (fits with long-term business plan), and Hybrid (combines parts of other models) are the four main types.

  • What is an example of a succession plan?

Apple’s change from Steve Jobs to Tim Cook is a famous example. Apple got Cook ready by slowly giving him more duties and making him more visible. This made sure that the move went smoothly when he became CEO.

Last Words:

Succession planning is an important strategy for any business that wants to be successful and stable in the long run. Organizations can get ready for changes in the future and keep growing if they understand and use effective succession planning .

The goal of this in-depth guide on succession planning is to give business workers the information and tools they need to make their organizations’ succession plans work. This guide explains the process and gives examples from real life. It can be used as a road map to help leadership stay the same and organizations be more resilient.

Recommended Readings:

9 Box Talent Review: Complete Guide

Employee Performance Evaluation Process

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    Workforce planning Succession planning focuses on identifying and growing talent to fill leadership and business-critical positions in the future. This factsheet looks at approaches to succession planning as well as the type of organisations who use it, and how it's changed. On this page What is succession planning?

  14. Succession Planning: 6 Steps to Plan Ahead (+Template)

    Here are the steps involved in a succession planning process. 1. Assess. The assessment phase in a succession plan includes. Assessing an organization's requirements. Identifying business challenges in the coming years. Identifying critical risk positions to support business continuity. Identifying competencies and skill gap. 2.

  15. Succession Planning: What the Research Says

    Summary. While every organization inevitably must replace its CEO, most firms are ill-prepared for succession. In this article, HBR senior editor Eben Harrell reviews the most salient studies of...

  16. Engaging in Succession Planning

    The business case for succession planning. Factors to consider when designing a program. ... Positions in which experiential learning is the main knowledge acquisition method (banquet chef, home ...

  17. Succession Planning 101: Steps and Processes for Advisory Companies

    Here are seven key steps to succession planning to keep in mind: Determine Objectives and Clarify the Owner's Vision: The preferred outcome for succession planning may be different for each individual business, however, the goal for most will be for the business to continue to thrive with the next generation of advisors at the helm.

  18. How top companies manage succession planning

    Specialization Change management How top companies manage succession planning Leadership planning is a long and steady process BY Rachel Ranosa 18 Mar 2021 Share In the eyes of HR, Jeff Bezos executed the ideal kind of succession planning in business.

  19. Succession planning: Beginner's guide to proven success

    A report from Deloitte, The holy grail of effective leadership succession planning, observes: "While 86% of leaders believe leadership succession planning is an "urgent" or "important" priority, only 14% believe they do it well.". Succession planning accomplishes a variety of objectives that help leaders reach their full potential while driving a series of benefits for the company ...

  20. Succession Planning: 7-Step Guide & Template

    One of the most common succession planning tools is the 9-box method of sorting employees, ... Diversity, equity, inclusion, and accessibility is at the heart of the company's succession plan, so part of the program focuses on developing diverse candidates. They also expose candidates to a wide range of perspectives. That way, their future ...

  21. Succession Planning Examples

    Here, we take a closer look at two succession planning examples, from Apple and Microsoft: Apple: Successful Succession Plan Example 1 Steve Jobs' visionary leadership was instrumental in shaping Apple into a revolutionary technology company.

  22. Succession Planning: Complete Guide with Case Studies

    1. What succession planning is and why it's important 2. Steps in Planning for Succession 3. Process for Planning Succession 4. Leadership Development in Planning for Succession 5. Framework for Planning Succession 6. Best Practices for Succession Planning 7. Problems that often come up in succession planning and how to fix them 8.

  23. What records are exempted from FERPA?

    Records relating to an individual who is employed by an educational agency or institution that are made and maintained in the normal course of business, relate exclusively to the individual in that individual's capacity as an employee and are not available for use for any other purpose.