A Guide to Succession Planning: What It Is, Benefits, and Best Practices
Proactive and timely succession planning is critical to ensuring continuity, minimizing disruption, and boosting employee retention. Learn more here.
Your company’s success depends on your employees. That’s why talent acquisition and retention strategies are always top of mind. But there’s a strategy that’s equally, if not more, important: succession planning.
Sooner or later, even the best, happiest employees leave the company. Whether that’s because they have a better offer, or simply because they retire, you have to be prepared. Succession planning can make this process smooth and ensure that, when the time comes, you can replace key employees with minimal effort.
What is succession planning?
Succession planning is a two-pronged approach that includes identifying mission-critical positions and skill sets within your company and creating a plan to prepare specific employees to step into those roles when needed. This ensures a smooth transition in the event of an employee’s departure and prevents skills and leadership gaps.
The process is more common for executive and leadership positions, but this practice can also be applied to roles that require specialized skills. In both cases, you’ll want to make sure there’s someone ready to fill that position, should it become suddenly available.
Why is it important to have a succession planning strategy?
The importance of having a succession planning strategy includes cost savings, employee loyalty and retention, and a lack of disruption to daily operations. Here are some specific benefits of succession planning strategies for those on the fence about whether or not they need one.
1. Improve retention and company loyalty
A transparent and equitable succession strategy improves retention and company loyalty. People are more inclined to stay in companies where they know they have a real chance of promotion.
Plus, employees want to learn new things continuously. Succession planning may not be all about upskilling or reskilling. But these are two key components that, when used right, will increase employee satisfaction and loyalty.
2. Create a resilient workforce
If the past few years have taught us anything, it’s that changes are inevitable and they may come when you least expect them. Your best weapon is creating a resilient workforce that can adapt even in seemingly unforeseeable scenarios.
Succession planning ensures your employees are ready for future changes, and that they can adapt, change the way they work, improve, and grow regardless of the circumstances.
3. Minimize disruptions during leadership transitions
Whenever someone leaves the company, there will inevitably be some disruption. But if you already know who will take over, and they’ve been trained for the position and know exactly what to do, the process will be a lot smoother.
Plus, they already know the expectations, the company culture, and the other employees, so disruptions will be minimal.
4. Better employee performance
What happens when your employees are happy with their job and the company and know that they have opportunities to grow and learn new things? They perform better. They’re more efficient and effective at their work, and they’re likely to be more engaged, helping the company reach its goals faster.
7 succession planning best practices
Succession planning is certainly a key to success. But it’s not entirely risk-free. For instance, not everyone is meant to be a leader. Some may not even want that responsibility, even if they seem to check all the right boxes. Plus, if you start your planning at the wrong time, it might all be for nothing. But that doesn’t mean that you should shy away from the potential risks of succession planning. Instead, you should follow some key succession planning best practices. Here are some golden rules to keep in mind.
1. Start early
If you thought this was something you could start when you get word someone is getting ready to leave the company, think again. When talking about leadership positions or those that require highly specialized skills, real training could take years.
Even if you could do it faster, waiting until you hear someone is leaving or until they hand in their 2-week notice will make things very difficult, causing disruptions in all departments. But if you make succession planning a continuous strategy, you will never be caught off guard.
2. Focus on a few key roles at first
It can be tempting to create a plan that will encompass every role in your company. But if you’re just starting with succession planning, this strategy will get overwhelming quickly.
Instead, start by focusing on the key roles. Those will often be C-level positions and any roles that require highly specialized skills. These positions are the hardest to fill and can cause a lot of disruption if left empty for too long or if you hire the wrong person.
Once you have the succession plan on its way for these key roles, you can start thinking of other positions as well. How many? That all depends on the size of your company and your budget. Department managers could be next, followed by team leaders, for instance.
3. Be transparent and talk to employees
Once you identify the positions for which you’ll need a succession plan, you’ll probably start looking for suitable candidates. This is where you need to be open with your employees. Try to understand their goals and ambitions, and if they would really be open to filling in a different position.
Sure, many people would be more than happy to be promoted. But some people may have different goals. C-level positions, for instance, come with many more responsibilities, and people often need to dedicate more time to their work. Some might feel that will take away from time spent with their families, for instance, so they may not want that type of position.
Before you start training someone, consult a wider talent pool and talk to multiple people about everything this new role will entail. That will help you select those who are most qualified and excited about the opportunity.
4. Involve both managers and the HR department
There will be instances when managers and the HR department need to collaborate. For instance, when creating your talent pipeline, HR can play a key role. They can help you navigate HR metrics and people analytics data that will show you who the most suitable candidates are.
Managers know what is needed in key leadership roles. They can help select people and talk to them but also create learning programs that will support your succession planning efforts.
5. Create a continuous learning culture
The easiest way to be ready for succession planning at any given moment is to create a learning culture within the company.
Create L&D programs for everyone to encourage and support all your employees. Then, once you identify those who can advance to senior positions, you can naturally include the new skills in the L&D programs you already have.
6. Predict business needs
Look at your long-term goals and see where the business is going. Predictive HR analytics can be very useful at this stage. It can help you identify which employees are most likely to quit, and which ones are most likely to become top performers.
Most companies use this data to create targeted retention programs and improve engagement and productivity. But you can also use it in combination with your long-term goals, to identify
The positions that are most likely to remain empty over the next few years
The employees you can consider for upskilling and senior positions.
7. Conduct periodic evaluations
It’s tempting to think that once the succession plan is in motion, you can let it work without any worries. Unfortunately, that’s not always the case.
You will need to periodically evaluate how the program is working. Are you meeting your goals? What about your employees? How do they feel about it?
You can also look at performance evaluations, especially for those who are preparing for senior positions. Has anything changed in their performance since they began training for the new roles? If yes, is it a positive change, aligned with your expectations and predictions? Or, on the contrary, is the program having a negative impact on their performance?
All this will assist you in improving your succession planning strategy so that you can have the best results.
Succession planning means identifying future skill gaps and finding ways to address them efficiently. It is more commonly used to fill in senior leadership positions and roles that require highly specialized skills, but you can use it for any role you’d like.
Succession planning works best when you start ahead of time. Leaving everything for the last minute, when an employee is weeks away from departure, will inevitably lead to disruptions.
Start planning long before you get word anyone wants to leave and create a learning culture that integrates succession planning seamlessly.
On the Outsmart blog, we write about workforce-related topics like what makes a good manager, how to reduce employee turnover, and reskilling employees. We also report on trending topics like ESG and EU CSRD requirements and preparing for a recession, and advise on HR best practices how to create a strategic compensation strategy, metrics every CHRO should track, and connecting people data to business data. But if you really want to know the bread and butter of Visier, read our post about the benefits of people analytics.