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What is the Importance of Succession Planning?
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As your organisation grows, so will your workforce. So, you need to consider what processes you have in place to manage your internal talent.
Replacing employees is never easy, especially for small businesses. Early retirements, sudden illnesses or an unexpected employee resignation can leave you struggling to fill essential leadership positions. This could lead to a drop in productivity, revenue or employee morale.
In this guide, we'll discuss what succession planning is, the benefits of it and the potential risks to your business.
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Succession planning (also known as replacement planning) is the process of identifying growing talent within your business. It can help you to fill critical roles and key positions. As well as prove useful when planning the future of your organisation.
When a business critical role becomes available unexpectedly, it can cause problems. Effective succession planning uses leadership development and talent management to keep things running smoothly.
It's important to remember that succession planning is not a pre-selection process. But rather an opportunity to identify key skills and prepare staff for future roles.
A good succession process is crucial for business development. All organisations can benefit from future planning, from family businesses to large companies.
Why create a succession plan?
Things can change very quickly in the business world, even if you're running a small business you should be prepared. A good succession planning strategy can protect your company from any changes that could affect day-to-day operations. This includes the loss of employees in valuable roles such as: team leader positions, IT manager or administrative positions.
Well-prepared businesses have succession planning processes in place for critical roles at all levels, not just line managers.
Effective succession planning involves spotting staff with leadership potential. But all internal employees with key skills should be considered when creating a succession plan.
Benefits of succession planning
Succession planning comes with a host of benefits. They can help you to source potential replacements and build the next generation of employees.
That's why it's crucial that you take time to plan ahead. It's best practice to have a plan in place for a potential successor before it's time to move them to a higher position.
Here are some of the benefits of succession planning.
Disaster-proof your business
Succession planning is almost like an insurance policy for your business. It's a safety system that makes sure that your business is prepared should the worst happen.
Many organisations can get caught up in the day-to-day operations of their company. Making succession planning a priority can help ensure that positions are filled quickly by high potential employees.
Identifies your most-qualified future leaders
Formal succession planning requires your company to identify the positions that are most crucial to your company's success. This allows you to spot potential vulnerabilities and fix them before they become a problem.
Succession planning also lets your more ambitious, but less qualified employees know that their hard work and skills are noticed. When staff feel valued, they're more likely to work harder and remain loyal to your company. This results in high productivity and low .
Creates structure for training and development
Once you know which of your employees are interested in senior roles, you can work to develop their professional weaknesses.
Noticing potential successors early, creates time for employees to develop both their hard and soft skills. This could be through mentoring and coaching programs that gradually increase responsibility. This would allow you to essentially have a trial run and assess how well an employee would handle a senior role.
Maintains brand identity
It can be a challenge for an outsider to understand the values and mission of a company. This is because they lack the internal knowledge that comes from developing your skills within your organisation.
Succession planning can help you avoid this. By identifying and preparing an internal successor you know that your company will be in the hands of someone who shares your business goals.
Helps companies plan for the future
Succession planning should be at the heart of your company's growth plans as it creates a path for you and your company's future.
Succession planning can help you to create realistic goals. It can help you spot your company's weaknesses and allows you to fix them before they become a problem.
Risks of not having a succession plan in place
Companies that choose to ignore succession planning may be putting their company at risk.
These issues include:
Financial risks.
Selecting the wrong candidate.
Poor talent management.
All of these issues can have real detrimental effects to a business and its output. Let's explore the below risks in further detail.
Financial risks
The sudden departure of a key employee can leave businesses with a critical role to fill. Important projects may be placed on hold while you scramble to find a replacement. This can lead to missed deadlines and a loss in revenue and sales.
A poor financial performance can reflect badly on an organisation's reputation. This means that a lack of planning can have long lasting effects on your business.
May select the wrong candidate
When companies lose key employees, they can be left trying to pick up the pieces. This panic can lead to hasty decisions that you may soon regret. While you may have many great internal candidates, it can be hard to find the right fit.
Job moves are a part of life, but make sure they're the right choice for your business. Following a fair selection process can help. This will ensure that a candidate is the right fit and remove any suspicions of bias.
Poor talent management
As an employer, you should constantly be developing talent and searching for promising employees
Internal recruitment is not only quicker and cheaper, but it helps to retain the talented employees that you already have. If you want your staff to stay, you need to show that their hard work is rewarded.
This can be shown through career development and the benefits that come with this. This could be as simple as a pay rise or a promotion to a new title.
Poor succession planning can lead you to overlook talented people with the core skills you need. This can result in unhappy employees that feel undervalued by their organisation.
What is the succession planning process?
Sometimes you'll know that an employee is leaving the company well in advance. For example, following a planned retirement. Other times you can be caught off-guard by a sudden departure from a senior role. This could be due to following
Having a plan in place helps you identify potential candidates, drive employee career development and ensure continuity during a turbulent time.
What are the steps of a successful succession planning strategy?
Most succession plans follow a similar structure. Regardless of business size or industry, you can break the process down into the following seven steps.
Identify key positions
The first step in the succession planning process is identifying key positions. Consider what key roles within your business would be affected by a sudden departure.
You should assess all the key roles in your business and ask how the departure of certain employees would affect day to day operations. Once you have identified these key positions, consider which team members within your internal talent pool would be suitable succession candidates.
Identify key needs of your business
This can be done through workforce planning. Take a look at your employees and ask yourself, what critical roles are at the risk of being vacant. This could be from retirement or a high turnover rate.
When succession planning, it may help to look at senior leaders' roles first. From there you can begin to slowly work down through middle management to more junior roles. This can also help you look at potential recruitment costs.
Develop your job profiles
A key part of the succession planning process is knowing exactly who you want to fill a key role. This can be done by creating a well-developed job profile that pin-points the qualities needed to fill the position.
A good job profile can be broken down into four easy steps:
The tasks that the position currently performs.
The qualifications needed for that position.
The potential evolution of the role over time.
Any additional skills that this position may need in the future.
Think of this as your template for identifying potential candidates. This strategy can help you find the best fit for the role.
Starting the recruitment process
This is where your succession plan begins to take shape. If you're looking to recruit for this position internally, look for people with institutional knowledge.
Your business is full of talented people who may see this position as part of their career goals. However that doesn't necessarily mean that they will be the right fit.
If taking a proactive approach you will likely have time to build your internal talent pool. Speak to senior leaders about what skills you think are lacking within their teams and who is ready for career development.
Appointing a 'successor'
This is arguably the most important part of the succession planning process. It signals the end of your succession plan as you now have a group of candidates that are capable of taking on the role.
You should hold private meetings with potential candidates to discuss their career goals and how they wish to develop. They may have no interest in taking on the role, so it's best to know your employees career intentions beforehand.
You should examine how candidates interact with their team members, their productivity levels and their institutional knowledge. Just because a candidate looks good on paper doesn't mean that they will fit in with your company culture.
The handover process
The handover process is the final step of the succession planning process. When done right it helps to support the new employee as they gradually learn their new role.
Depending on the seniority of the role, a successful handover may take months not weeks. The transition period may require patience on both sides but getting it right, will lead to long term results. Like higher levels of productivity and employee engagement.
Reviewing your succession planning process.
Once the ideal candidate has been chosen, you should review the effectiveness of your succession planning process. This may involve altering your approach or documenting other promising employees that could become a future key leader.
Reviewing your process can help you assess your process and consider what can be done in the future to improve employee development.
Why do succession plans fail?
Sometimes even the best plans fail. It's important that you identify issues within your plan to avoid them affecting your succession strategy.
Let's explore some issues that you may face.
Focusing only senior roles
Organisations can often fall into the trap of planning for senior roles only. However, there are plenty of jobs within your business that are crucial when it comes to daily operations.
This approach can leave you with gaps in very important roles. Remember to assess all key positions including those in admin and IT.
Using a one size fits all approach
One of the biggest mistakes employers can make when succession planning is using dated frameworks to evaluate success. While a rigid framework may speed up the interview process, many of the skills that companies seek are difficult to measure.
Those in leadership roles must consider alternative assessment methods to make sure that they get the right candidates in the right jobs. Instead of focusing purely on measurable targets and achievements, consider how an employee fits into your organisation as a whole.
Relying on one successor
When it comes to succession planning it's always good to have a backup. While it may be easy to assume that every employee in your organisation wants to move up the ladder, some may not be interested in senior positions. This is where your contingency plan comes into play.
Selecting a couple of possible candidates allows you to have a choice and means you're prepared for any eventuality. You definitely don't want to find yourself short on talent while managing the fall out of a senior resignation.
Keeping it a secret
You may think that it's best to keep quiet about your plans. But when developing future leaders within your company, transparency is key.
Let your employees know that their hard work is appreciated and you will be rewarded with more engaged and loyal members of staff
Get expert advice on succession planning with Peninsula
No business wants to be hit with an unexpected change. That's why it's important to ensure that you plan ahead for any eventuality.
As an employer, it can be tricky to identify the roles that help your business keep up and running. And even trickier to find the weak spots in your organisation. But if you do, you will be rewarded with the knowledge that your company is ready for anything.
We offer a 24/7 HR advice line available 365 days a year. Want to find out more? Contact us on 0800 028 2420 and book a free consultation with an HR consultant today.
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