All You Need to Know About Succession Planning

Do you know that only 49% of organizations are confident in maintaining clear and consistent succession strategies to develop next-generation leaders?

We don't intend to blame them we understand that making succession plans is challenging. Every forward-looking owner desires to see their business continue to grow long after their active years. And they don't want their business to collapse because of the sudden exit of a crucial team member.

However, they need to take specific actions to make their desires a reality. This guide will give you insights into succession planning and how to get started. Let's explore!

What is Succession Planning?

Succession planning is the process of transferring leadership responsibilities to another employee or group of employees. This process ensures that organizations continue to operate smoothly and without interruption, after key people retire, move on to new opportunities, or pass away.

But succession planning is not strictly for leadership roles. It's also designed to replace key employees in case they leave the organization abruptly.

When is Succession Planning Needed?

All companies should have an effective succession plan in place. But there are a few cases where succession planning is especially essential.

Your business is family-owned. Having a formal succession plan in place is critical to avoid informal or verbal succession agreements. Besides, it will help the business run smoothly whenever a position change happens.

You have roles with specialized skills. For instance, a developer with decades of experience with special software skills can be a difficult loss. If your leadership role requires specialized skills, ensure you build in that cushion to help develop the right employee.

Retirement. It’s best to build succession planning when senior leaders are a few years away from retirement. And it should be implemented as early as possible. As retirement approaches, succession planning becomes more urgent. Finding and training the right person for the role can take a couple of years.

The Importance of Succession Planning

Having a well-prepared succession plan can bring a lot of advantages for employers and employees, such as:

• Succession planning safeguards businesses from sudden occurrences.
• It helps identify employees with appropriate leadership qualities.
• It saves on recruitment costs. For example, if a key employee resigned abruptly and there was no succession plan in place, the company would have to hire a new employee. It would cost more than expected.
• Employees know that there's a chance for ownership and advancement, which can lead to higher job satisfaction and more empowerment.
• Employees know that there's a plan for future opportunities in their career path.
• Employees will gain more knowledge and expertise.
• Leadership and employees can better share company values and vision.
• Proper succession planning can benefit shareholders, particularly when the next candidate is involved in business operations and well-respected years before the current leader retires.
• Besides, investors won't sell the company's stock if they observe a well-communicated succession plan.

Additionally, succession planning can help develop a new generation of leaders, giving owners who want to sell their stakes a clear way out.

Challenges of Succession Planning

Large or small, most organizations face similar challenges in succession planning. Here are some of the most common blocks.

• Bias: Gender bias easily comes to mind here, as some companies might favor a specific gender over another. Other biases include race, religion, ethnicity, education, and socio-economic background.
• Lack of trust: Trust is one of the hurdles of succession planning for sensitive positions like the CEO. The CEO might not trust anyone to run their business as they do. Paranoia may set in and make it challenging for the CEO to take steps toward succession planning.
• Choosing the wrong successor: Succession planning is sometimes hampered by a bad selection. An insecure leader may choose an unthreatening, safe, and thus less qualified successor. Or, the company may make the wrong pick due to disengagement from succession planning.

How Does Succession Planning Work?

Depending on your organization’s size and goals, the succession planning process can vary widely. However, the basic process includes:

• Gaining key stakeholders’ support, including the CEO or executive director.
• Identifying key positions and employees to focus on.
• Assessing the extent to which chosen employees can fill roles, and which roles HR (Human Resources) should look externally for the right talent pool.
• Creating learning and development processes that support the succession planning strategy, particularly experiential development, like job shadowing and cross-functional moves.
• Deciding which software will be used to support the succession planning strategy and process.

6 Strategies To Implement Succession Planning

The best succession plans are dynamic, fluid structures that require frequent assessment and updating. Your company should revisit these plans to ensure people are on track and re-evaluate if there have been any movements or changes within the organization. Your company should revisit these plans to ensure people are on track and re-evaluate if there have been any movements or changes within the organization. You can observe employee behavior using a feature of Troop Messenger.

To get you started, consider the following strategies:

1. Be proactive with your plan

Sometimes it's easy to know in advance if a key team member is going to leave the company for example, through a planned retirement. But other times, you will be caught off-guard by a sudden employee departure. So, you'll need to enforce a plan right now.

Firstly, consider all the critical roles in your company and answer these questions:

• What's the daily impact of X's position on your department or company?
• If the employee currently in X position left, how would it affect your operations?

2. Identify succession candidates

After you've had a handle on the effect that the departure of a key employee might have, choose another member who could step into that position.

Make sure to have feedback on these questions:

• If you were to hire internally for X position, which team members would be the strongest candidates?
• Would these candidates need training? If so, what type of training?

In your organizational chart, the successor might be the person who is directly below the departing employee but doesn't discount other deserving workers. Look for people who can exhibit the necessary skills to succeed in higher positions, regardless of their current titles.

You may need succession plans for the C-suite, but how about your shop foreman, who can solve all the problems he has ever met? What about the customer care agent whom every customer adores and requests by name?

The key to a successful succession planning strategy is to look at all employees and ensure you haven't missed any vital information about them (in this case, you may need to read customer feedback examples to understand them better).

However, don't assume you understand how your team members view their career goals. You may have specific employees in mind for specific roles, but are you sure they'll be interested in your offer? Before making succession choices, you should talk to them about how they view their professional future.

3. Let them know

Explain the situation to each candidate in private meetings. Let them know that there are no guarantees and that everything can change due to circumstances encountered by the company or the succession candidates themselves.

4. Do a trial run of your plan

Don't wait until a crisis happens to test whether an employee is appropriate for a more advanced role.

Instead, have a potential successor assume some of the tasks or responsibilities of a manager who’s taking a vacation. The employee will gain unique experience and appreciate the opportunity to shine. Then, you can assess where they might need some training and development.

5. Balance transparency with confidentiality

It's crucial to strike a balance between openness and discretion because succession planning may involve sensitive material.

Is it necessary for everyone to be aware of every detail of your succession plan? If yes, do they need to know at the same time?

Getting the successor to agree on which types of information can be treated as confidential or shared internally is a good action for HR leaders to take. It's essential to take time to assess who needs to know what.

6. Review your succession plan regularly

You shouldn't view your succession planning strategy as a one-off document or plan. The employee you identified as the natural successor some time ago may no longer be with your company or not be the right fit for the role if the business requirements have changed.

So reviewing your succession plan every six months is ideal.

HR leaders should work with senior managers to envision alternative organizational scenarios for a vacant position. Team leaders will have ideas about how things could change when a position is vacant. Put those concepts on paper, then look internally to develop talent pools for succession based on the most likely outcomes.

Conclusion

Research reveals that only 35% of firms have a formalized succession planning process. Many business owners are busy with their workday and daily operations and ignore the succession plan, which only comes to light when it's too late.

So, it's essential to communicate with critical executives early and frequently about your intentions for the business to gauge their interest and feedback. As a result, you can collaborate with experts to design a succession plan that will enable you to accomplish your goals.