What is Succession Planning?

What is succession planning?

Succession planning or replacement planning is a strategy to identify and prepare individuals within an organization to take over critical roles after leaders or top performers move on to new opportunities, retire, or pass away. It outlines specific steps, resources and timelines for talent development, ensuring a seamless transition and minimizing organizational disruption. 

The main goal of succession planning is to evaluate each leader’s skill, identify potential gaps, and develop a pipeline of capable individuals ready to take on critical roles, safeguarding continuity in leadership. This process not only identifies and grooms internal talent but also considers external candidates when necessary.

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Why succession planning is important for organizations?

Based on the fallout from our collectively experienced pandemic, creating a future-proof plan for your organization cannot be overstated. Many employees are re-evaluating their priorities and seeking more flexibility, work-life balance, and alignment with their personal values. Employees now look to retire early or quit for better opportunities, triggering the “great resignation.” In 2021, nearly 48 million Americans voluntarily left their jobs, followed by another 50 million in 2022. Additionally, 1,337 CEOs left for the greener pastures in 2022. 

This mass exodus underscores the need for succession planning. Succession planning is not just about preparing for retirements or unexpected departures; it’s about proactively developing internal talent, fostering leadership growth, and ensuring long-term stability. 

Benefits of succession planning

Succession planning is a crucial investment in an organization’s long-term success. Here are some of the top benefits of creating an effective succession plan:

Ensures business continuity 

Leadership pipelines are often affected when highly specialized roles decide to leave. It causes a huge strain on the organization’s bottom line and knowledge retention. By identifying and training future leaders for key roles, organizations can reduce downtime and safeguard long-term success.

Fosters employee engagement and retention 

Employees with high potential are less likely to leave for opportunities elsewhere when they see a clear future within the company. According to Gallup, 87% of millennials say career development is important to them. This underscores the importance of succession planning in creating an environment where employees feel valued and motivated to grow within the organization.

Mitigates talent shortages 

The talent shortage is real, and this problem will only grow more pronounced in the years to come. By creating a robust succession plan, you can identify and train internal candidates for key roles, reducing reliance on external hiring, which is often costly and time-consuming. This proactive approach maintains operational stability in a competitive labor market.

Related: Explore effective strategies for increasing employee retention rates

Facilitates knowledge transfer 

Effective succession planning facilitates knowledge transfer by ensuring the seamless exchange of insights and expertise from one generation of leaders to the next. Structured mentoring and training programs preserve critical intellectual capital, prevent knowledge loss, and promote a culture of continuous learning and improvement.

Reduces stress and burnout 

There is a notable decline in the morale and productivity of remaining employees as they are burdened with extra responsibilities to compensate for departed colleagues. Preparing successors in advance creates a smoother transition process, allowing for the redistribution of responsibilities and reducing employee burnout.

5 steps to create an efficient succession plan

Creating a successful succession plan requires thoughtful planning and ongoing attention. According to Deloitte, 86% of leaders believe leadership succession planning is an “urgent” or “important” priority. However, only 14% believe they do it well. 

By following the steps below, you can help your employees develop their skills, achieve their goals, and contribute meaningfully to your organization.

Step 1: Identify current and vulnerable positions

The first step is to find the roles and positions within your organization that are critical to its success. This step is crucial as it sets the direction for the entire development plan. 

To make this process easier and reduce the number of positions to assess, consider two major factors: vulnerability and criticality.

• First, determine which critical position doesn’t have a successor. 
• Next, consider the impact of each position on the day-to-day operations and long-term goals of the organization. 

Step 2: Evaluate potential internal candidates

After understanding the potential ripple effects of some employees’ departures, find high-potential employees who could step into those specialized positions. 

Ask yourself: 

• Do they possess the skills and knowledge required for the role?
• Have they demonstrated leadership potential and a growth mindset?
• Are they aligned with the organization’s values and long-term goals?
• What training or development would they need to succeed in this position?

While the obvious successor would be the employee who is next in line according to the organizational chart, consider thinking beyond the hierarchy. Look for employees from other departments or teams. Leverage performance evaluations, talent assessments, and feedback from their managers to ensure the right person is being considered. 

Step 3: Let them know

Once you’ve identified potential successors, engage in open discussions with them. Let them know they’re being considered for future leadership roles and outline available development opportunities. Align their career goals with the organization’s needs to motivate growth. Make it clear that there are no guarantees, as circumstances may change within the company or candidates’ careers. This approach maintains clarity and manages expectations.

Step 4: Establish an action plan

With potential successors identified and informed, the next step is to create a detailed action plan. This employee development plan should outline each candidate’s specific development goals, timelines, and milestones. Here are a few things to consider when creating a development plan for a successor:

• Identify skills gap: Conduct a skills gap analysis to identify the discrepancies between the current and expected skills that are important for the role’s success.
• Development goals: Clearly define each successor’s skills and competencies to develop to succeed in the target role. Actively listen to their career aspirations and learning objectives to ensure their individual development plan aligns with their personal goals.
• Training and learning opportunities: Develop well-prepared and relevant employee training programs, workshops, or courses to help candidates acquire the necessary skills. Consider both formal education and on-the-job training experiences.
• Mentorship and coaching: Pair potential successors with mentors or coaches who can provide guidance, support, and feedback as they progress through their development journey. This relationship can enhance learning and build confidence.
• Timelines and milestones: Set realistic timelines for achieving each goal and specific milestones to track progress. Regular check-ins ensure that candidates stay on track and make necessary adjustments.

Step 5: Evaluate the succession plan

The final step is to evaluate the succession plan and integrate it into your talent management efforts. Like most talent acquisition strategies, succession planning isn’t a one-time effort. It requires constant monitoring, evaluation and adjustments.

In the ongoing evaluation process, remember to:

• Set up regular check-ins and progress reviews to track employees’ development and growth. 
• Gather feedback from peers and managers to pinpoint areas for improvement and make adjustments as needed. 
• Stay agile and adapt the development plan to align with shifting organizational priorities and each employee’s evolving career path.

Examples of succession planning

Let’s look at the examples of effective succession planning.

Executive succession planning

McDonald’s transition from Jim Skinner to Don Thompson, and later to Steve Easterbrook, demonstrates the importance of long-term succession planning. Skinner proactively identified potential successors, including Thompson, who built a diverse skill set through operations, strategy, and innovation roles over 22 years. When Skinner retired in 2012, Thompson was ready to take over. When Thompson resigned in 2015, the board reactivated its succession plan.

Emergency succession planning: Apple

Apple is a prime example of emergency succession planning. In 2011, Steve Jobs had to step down as CEO due to his ongoing battle with pancreatic cancer. Considering the situation, a well-planned succession plan was already in place. Tim Cook, who had been with Apple for over a decade and held various leadership roles, was named Jobs’ successor. Cook had been managing Apple’s day-to-day operations during Jobs’ medical leaves, making the transition smooth and seamless. His leadership ensured Apple continued to thrive, maintaining its innovative edge and solidifying its position as a tech industry leader.

Overcoming succession failures with effective strategies

As organizations begin to re-evaluate their succession planning process, it’s important to understand the potential succession failures that many have experienced. 

Failure 1:  Prioritizing titles over talent

In succession planning, an all-too-common mistake is prioritizing replacement over meaningful development. The emphasis is often on who can take up the specific role or job title as early as possible. Unfortunately, the focus becomes on immediate needs, resulting in unprepared leaders taking on positions they aren’t fully equipped for.

What can be done? 

Implement skill assessment and mapping tools to evaluate current competencies and identify future leadership potential. Combine this with regular feedback mechanisms to foster continuous professional development and ensure employees are well-prepared for leadership roles. For example, you can use Simpplr Surveys to capture rich feedback with built-in pulse, engagement, and ad hoc surveys, and prompt action on the insights to improve the employee experience.

Related: Learn how to give a constructive feedback

Failure 2: Keeping the process a secret

Traditional succession planning practices often operate in secrecy, leading to speculation and uncertainty among employees. When employees are unaware of the criteria or processes involved in succession planning, it can also lead to concerns about fairness and bias, potentially causing talented individuals to feel overlooked or unrecognized. 

Strategies you can implement: 

• Create a strong diversity, equity and inclusion (DEI) policy that will hold managers accountable for progress toward goals and the development of a company where all employees are supported with equal opportunities.
• Another best practice is to directly communicate and engage with your people. Syncing across communication channels like email, Slack, and SMS may not always be effective. Therefore, hold one-on-one meetings with your team members or organize a company-wide town hall meeting to foster two-way communication where employers and employees can talk freely. 

Related: Discover 17 practices to improve internal communication

Enhance succession planning through Simpplr

A change in leadership isn’t easy on anyone. It requires careful planning, seamless knowledge transfer, and a strong connection between employees and organizational goals to ensure continuity and success.

Introducing Simpplr for Human Resources: a simple yet dynamic duo of employee experience (EX) and artificial intelligence (AI). Simpplr’s platform leverages state-of-the-art AI models to deliver a cohesive and personalized employee experience by unifying engagement, enablement, and services.

Here’s why HR leaders adopt Simpplr for effective succession planning:

• Brings employees together: Connects employees by uniting them in a Digital Work Hub, where they can access knowledge bases, policies and documents across the enterprise, providing seamless access to their information needs.

• Understands employee sentiment: Uncovers underlying sentiments and emotions, whether employees are in the office, at home, or on the frontline. HR leaders leverage these insights to identify high-potential talent and address engagement concerns.

• Provides a platform to show appreciation: Recognize and reward your top performers publicly by acknowledging their amazing work and sharing it across your intranet or social media.

Ready to see these features in action? Get a live demo to discover how Simpplr can help streamline your succession planning process.