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What Is Succession Planning?
Succession Planning can be summarized by three key points:
- Developing your high-potential employees
- Ensuring critical roles to your business have backup plans
- Building a solid pipeline, so when vacancies occur you aren’t scrambling
1. Developing high-potential employees
Your high-potential employees raise the bar for everyone around them and help you refine your product. By investing in these employees you’re investing in the business. They truly are your business leaders of tomorrow.
2. Critical roles have backup plans
You’ll want to ensure you have a backup plan when your business profitability highly depends on specific roles or departments. You don’t want to have vacancies in these positions. By building up possible replacements over a longer period of time, you can avoid very stressful situations.
3. Solid Pipeline
Let’s be honest, you have enough on your plate right now and could do with a little less stress. By having succession planning, you have a few options to choose from internally for your mid and senior positions should vacancies arise. The individuals who are leaving may also know external people who would be a perfect fit for the role they are vacating. The process of building a pipeline can help reduce stress and workload for you.
Succession Planning Versus Talent Management
The Society of Human Resource Management (SHRM) defines succession planning as a focused process for keeping talent in the pipeline. It is generally a 12- to 36-month process of preparation, not pre-selection. Let’s simplify this even more. At its core, succession planning is ensuring that the next generation of leaders and workers have the skills and knowledge to keep the business profitable.
Talent management is broader than succession planning because it focuses on attracting, developing, retaining and using employees to meet current and future business needs. There are a lot more activities going on in talent management than succession. However, you will need both of them to keep your business growing.
Why Succession Planning Is So Important
You already have a lot of tasks on your agenda, so why should you add this task to it? Here are three things succession planning helps maintain:
- Stability. Your business has people and roles that influence the success of your business. Training another individual is a solution, but it takes time to help them achieve the performance of the previous employee. Succession planning can help prevent that.
- Talent. Recruiting, hiring and training can take a significant portion of your time. Succession planning can ensure you have a strong applicant pool to choose from when a position becomes available.
- Experience. It takes time for a new employee to become familiar with your business. While external employees bring new ideas and energy to a company, succession planning enables employees to build on all of their previous experience and knowledge of the business.
How To Develop a Succession Plan
You’ve learned why succession planning is important, but you may be wondering where to begin. Here are five steps you can start taking to build your own succession plan for your company:
Step 1: Obtain Leadership Support
Having your leadership team support and promote succession planning will bring more results than if you try and tackle this on your own. These individuals want the business to be successful and they can provide critical insights.
Step 2: Identify Critical Roles and Functions
Ask yourself “What would happen to our business, if we lost this role or department?” If it spells disaster for your company, then you have identified an area to create a succession plan for. Depending on the disaster size determines where it goes on a list. Feel free to ask another leader to review your assumptions.
Step 3: Find Potential Successors
Now you can build a list of potential employees to fulfill roles in the future. Remember that succession planning timing is between one to three years. Not all employees may have the necessary skills or experience to do the future role, but they can still be great candidates. You can use the remaining time to build up their skills.
Step 4: Development Opportunities
There are a lot of different things you can do here, but let’s begin with baby steps. Your potential successors can shadow the job they will do in the future. This allows them to ask questions and get advice from the individual who currently holds the role.
Some candidates may need to gain or build up an additional skill. Find the experience that works best for you and your organization. It could be a class, attending a conference, or participating in a professional organization.
Step 5: Evaluate
Your first attempt will not yield a perfect program and that is okay. Determine when and how you will evaluate the program every six months or every year. Review your potential candidates’ progress and if someone is in a new position, identify how the transition went. You will find things that you can do better, and that is the purpose of evaluating the program.
Three Examples of Succession Plans in Action
Let’s take a look at some businesses that have executed their succession planning. Remember that building a successful succession plan is about taking baby steps. You can apply the same principles even if you are part of a small business.
McCormick & Company
This CEO transition happened back in 2008. Their current CEO tied a portion of their compensation to finding and developing their successor. The company intentionally decided to spend five years on this transition. This timeline helped them find the successor who was best fit to deal with frontline issues and matched the culture they were promoting.
Steve Jobs created a succession system for his company in the form of Apple University. This provided a consistent experience for all candidates. What stands out the most about this program is that the content was based on Job’s experience leading Apple. This transition is a prime example of how your current leader’s experience is an asset in succession planning.
Barneys New York
The transition between Mark Lee and Daniella Vitale is a gold standard of transition via succession planning. Lee was Daniella’s mentor at a previous organization before and during his time as CEO at Barneys New York. Lee ensured that Daniella had leadership experience with most if not all the departments before taking over, and her previous role before CEO was COO over all departments. She had a very clear picture of what was going on in the business which allowed a smooth transition into her new role.
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