While it may be very difficult for key people to consider (much less plan for) their own departures,  failing to plan for succession is bad for business. This is especially true when shifting demographics mean that significant numbers of experienced people will be leaving the workforce in the coming years.

What is Succession Planning?

Succession planning is “a means of identifying critical management positions, starting at the levels of project manager and supervisor and extending up to the highest position in the organization”.[1]

Awareness of the need for succession planning is growing around the globe, but research shows that few companies have prepared a succession plan or actively manage the succession process, even for senior roles. This is in spite of knowing both the need for and the potential benefits of succession planning.

The Benefits of Succession Planning

Some of the many benefits associated with succession planning include:

• Aligning strategic goals and human resources to enable the “right people in the right place at the right time” to achieve desired business results.
• The development of qualified pools of candidates ready to fill critical or key positions.
• Providing stability in leadership and other critical positions to sustain high-performance.
• Helping individuals realize their career plans and aspirations within the organization.
• The opportunity for timely corporate knowledge transfer.[2]

When succession planning is linked to internal leadership development activities, additional benefits are realized:

• Retention of talented employees who see clear opportunities for career advancement and who experience the value of leadership development.
• Smooth leadership transitions when the ultimate handover of responsibilities happens.
• Internal successors are already part of the business and the culture, so ramp-up in new roles will be much faster and disruption will be minimized.[3]

When managed as an ongoing process, succession planning is usually based on the assumptions that:

• A goal is to identify a talent pool of many people who are willing to be considered for promotion and be developed for it.
• The future may not be like the past, and the competencies required at each level may be different in the future so that merely “cloning” past leaders is not appropriate.
• Development occurs primarily on the job rather than by off-the-job training experiences[4]

Certain HR activities are often referred to interchangeably with succession planning: specifically, replacement planning, succession management, and talent management. Although these activities all overlap succession planning, each activity has a slightly different focus. These nuances are described as follows, by William J. Rothwell, PhD., SPHR in his whitepaper, The Nuts and Bolts of Succession Planning:

“Succession planning focuses on building internal bench strength. It differs from replacement planning, which focuses on identifying “backups.” [for key positions]. It differs from succession management, which focuses on the daily development of talent by supervisors. It differs from talent management, which integrates recruiting, developing, and retaining the best people.”

The Succession Planning Process

Rothwell further defines the succession planning process as having the following seven essential components, which he acknowledges are similar to those required for talent management in general:

1. Get commitment.
2. Analyze the work and people now.
3. Evaluate performance.
4. Analyze the work and people needed in the future.
5. Evaluate potential.
6. Develop people.
7. Evaluate program results.

Rothwell’s visual representation of this succession planning model demonstrates the cyclical nature of the process, which would, as a best practice, be ongoing.

Succession planning is not new. It has challenged some of the largest corporations on the planet, sometimes in very public ways, and it continues to hang over the heads of most small business owners. According to one survey of small business owners, only 10% have a formal, written succession plan; 38% have an informal, unwritten plan; and the remaining 52% do not have any succession plan at all.[5]

Whatever the size of your organization, actively engaging in succession planning ensures that you have the bench strength you need to fill the leadership vacancies that are bound to occur over time. At the same time, as employees are continually developed, the best and brightest will choose to stay—for both the learning and the career advancement opportunities. Add to this the business advantages you will gain from promoting from within and the case for active succession planning is irrefutable.

 

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