5 Things All Business Leaders Should Know About Succession Planning

managers discussing succession planning in a meeting

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Laura Berlinsky-Schine2.3k
June 20, 2024 at 12:29AM UTC

How does your company prepare for the future? Given the nature of today’s workforce, including high turnover rates, it’s becoming increasingly essential for businesses to have succession plans in place before key personnel leave the organization. This way, you’ll be able to keep the company growing and thriving in spite of the loss of talent. So, how do you create a success plan that works?

What is succession planning?

Succession planning involves retaining talent in your organization. That doesn’t necessarily mean holding onto individuals at all costs; rather, it means taking stock of the most pertinent skills and qualities your organization needs to keep it moving forward. It entails planning for the future and accounting for the inevitable loss of top personnel by identifying individuals who possess or can cultivate key talents to fill pivotal roles, often those in top leadership positions at the C-suite or presidential level. 

When you create a successful succession plan, you’ll establish a pipeline of individuals who can help you meet your business objectives and grow the organization through sound leadership. Not only does it aid your organization, but it also helps people advance in their careers, benefiting everyone.

5 things managers need to know about succession planning.

1. It’s important for every type of business.

No matter what the size, structure or type of business, succession planning is essential. Whether you’re a three-person startup or huge, long-established corporation, you still need to plan for the future and consider how you’ll grow your organization and keeping it moving.

2. Multiple methods are necessary.

Success planning doesn’t just involve replacing leaders with other employees in your organization. You’ll need to use a variety of methods, including recruitment, retention, promotions and more. Search for ways to incentivize talented individuals to stay or work at your business. 

3. It’s not just about promotions.

Promotions aren’t the only vehicle for keeping critical employees within the organization and filling essential roles. Consider methods like lateral moves, too. Many employees may have multiple skill sets and will thrive in many different roles. Moreover, you should incorporate outside hiring practices into your succession plan. How will you identify outside talent and attract them to your organization?

4. Everyone has potential.

You may have identified certain employees as natural leaders, but keep an open mind. Don’t overlook employees who might be quite talented just because they haven’t spoken up in meetings. Look at every department — and keep everyone on your radar.

5. It’s not just a one-off.

Succession planning requires constant review and honing. You’ll need to revisit your strategy frequently and revise it as necessary — when turnover occurs, when the industry changes, when your objectives evolve and so on.

What are the seven steps to succession planning?

Your succession planning strategy will look different depending on many factors, including your industry, the longevity of your organization, size and more. Here are some important steps all businesses should include when mapping out the future.

1. Have a vision.

Before you create a succession plan, you’ll need to take stock of your strengths as a company, your mission and where you want to go. You’ll need to have a clear identity and establish your objectives for the future to know where you’ll go and who should be involved in meeting them.

2. Involve leaders and managers.

Current leaders and managers need to be involved in this strategy. They will be critical in directing your strategy and identifying individuals to fill critical roles, as well as mentoring them and help them develop their talents.

3. Have standardized measures of performance.

While this process can’t be entirely objective, one way to keep it as fair as possible is to have a standardized system of evaluating performance. This will give you a clearer idea of the skills employees have and how they might approach given scenarios in the future — and who would be best for critical roles. 

4. Provide feedback.

All employees deserve feedback. This doesn’t just help them grow in their careers, but it also helps you grow as an organization. Have frequent conversations about prospective future leaders’ strengths and areas upon which they can improve (remembering to keep the criticism constructive).

5. Think outside the box.

The next CEO could be your current COO, but it could also be that super-talented social media specialist. Don’t just think in terms of the “natural” progression; consider lateral moves and people from multiple departments as well.

6. Offer training and development opportunities.

Employees will have a hard time advancing in their careers and gaining skills if you don’t give them the opportunity to do so. Mentorship, seminars, workshops and other development opportunities are great vehicles for making this happen.

7. Tweak your plan.

As we’ve discussed, succession planning requires continual review. Keeping revisiting your plan and revise it as necessary, accounting for new objectives, changing goals and holes within your organization.

How does succession planning help an organization?

Succession planning is all about preparation. When you create your plan, you’re not just thinking about the present state of your business — you’re also looking ahead and considering what it might be like, say, one, three or seven years from now. People will retire. Some people will move onto competitors. You may need to let others go. The industry will evolve. By planning ahead, you’re taking these possibilities into account and not letting cracks in your organization grow into real foundational problems. 

Moreover, you’re helping employees in their careers, which, in turn, allows them to improve your organization. By preparing them for leadership roles, you’re equipping them with skills that can aid your business, too. Plus, when they know they have bright futures in the company, they’re more likely to be engaged and stay there. 

What is succession planning in human resource management?

Human resources (HR) specialists play a critical role in succession planning. Often, they lead these initiatives by establishing hiring and promotional practices, creating performance measures, incentivizing talented employees to stay, attracting new employees and more. Leaders and HR managers should work together to develop a succession planning strategy that helps them meet and build upon their vision and key goals and objectives

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