What is succession planning?

Succession plans are strategies for identifying and developing top performers within your company capable of taking on future leadership roles. Though sometimes they are used to fill a specific position before an impending retirement or promotion, it’s wise to have them in place even before an event occurs.

Related: 5 Steps to Creating an Effective Training and Development Program

Why you need to have a succession plan

Succession plans allow companies to address and prepare for the inevitable changes that occur when someone:

• Passes away
• Becomes ill
• Gets fired
• Retires
• Resigns

Aside from preparing for potential organizational changes, succession plans often lead to better employee retention. This is because top-performing employees feel valued and invested in when a succession plan is in place. Additionally, companies experience fewer disruptions to productivity when they have a plan of succession in place.

How to create a succession plan

Here are the steps you need to take to develop an effective plan of succession:

1. Start planning immediately

Even if there is little reason to expect an impending change in leadership, it’s always a good idea to have a plan in place. To ensure that your company is successful in the long-term, it’s wise to begin succession planning as soon as your business is becoming sustainable. Ideally, you need to begin planning within the first five years of starting your business.

2. Look further than obvious candidates

It’s important to look for ideal candidates based on their skills and characteristics rather than their current job title. You can sometimes find promising employees outside of the obvious options that already hold leadership positions.

3. Communicate the vision and goals

Aside from collaborating with your board of directors and human resources department, begin strategy conversations with potential successors. By purposefully communicating the organization’s vision and objectives, you are developing their leadership and planning skills and ensuring that they are successful in their future role.

4. Develop a strategy for hiring based on your plan

After you have identified employees within the organization that are qualified to fill important roles, evaluate the talent gaps that have to be addressed. This allows you to create a comprehensive hiring strategy by identifying the kind of talent that you need to recruit.

5. Provide regular feedback to prospective successors

Develop the skills of your potential successors by consistently communicating with them about their strengths and areas of improvement. If they do especially well during a presentation, make note of it and let them know that their hard work has been recognized. This allows them to understand how success is measured and repeat the behavior in the future.

It’s a good idea to start a file where you can track the accomplishments of top performers. By making a note of their achievements, you have something to reference when a leadership position becomes available. This information is also helpful when it’s time to conduct performance reviews.

6. Offer training opportunities to top performers

Once you have identified potential successors, dedicate resources to develop their skills by offering:

• Training
• Job shadowing
• Mentorship

Remember to vary the types of training that you offer. Though technical knowledge is important, a successful leader also needs to possess strong verbal and written communication skills, interpersonal skills, diplomacy and tact.

7. Conduct a trial run

Gauge how prepared an employee is for a leadership role by giving them an opportunity to take on more responsibility. One way to do this is to allow them to take on an acting managerial role while someone is away on vacation because it gives them a chance to gain more experience and you the opportunity to evaluate their leadership abilities.

Related: Best Practices for Managing Change in the Workplace

Business succession planning FAQs

Here are some answers to frequently asked questions regarding succession planning:

When is succession planning ineffective?

As important as succession plans are, they can sometimes fail because:

• Identified successors leave to work for another company
• The position remains unavailable because of a person’s decision to delay retirement
• Successors are ineffective in the new position
• Succession plans are considered an HR function rather than a strategic necessity
• Management focuses on filling the position with an identical personality and leadership style
• Successors struggle to align with the culture and values of the company
• The process becomes overly complicated

How can you measure succession planning?

There are a few ways that you can track the success of your succession plan, such as:

• Track the identification and training of each successor.
• Record the measures being taken to engage the staff and retain potential successors.
• Be mindful of the improvement of leadership abilities, goals and overall performance of prospective successors.
• Remain aware of the number of openings that you can fill from within the company as well as the turnover rate among those employees.
• Note the level of diversity among potential successors.

What are some questions you need to ask when succession planning?

There are certain things that must be addressed when creating a plan for succession. Help guide the process by asking these key questions:

• What training opportunities do we need to make available so that we can develop the skill setsof our employees?
• How will our company grow in the next three to five years, and what kind of people will we need on our team?
• Where will we look for candidates?
• What external variables could impact our ability to recruit the candidates we need?
• Do we want to recruit employees from within or look externally?
• About how many people will leave the company in the next five to seven years?
• What gaps in skill sets will we experience in our team when they leave?