Succession planning is crucial for business continuity and organizational performance. Take these steps to implement succession plans for employees in your company.
A key employee has left your company, and you did not see it coming. This puts you in a serious bind, which could have been prevented through succession planning.
Read on to learn about succession planning, how it can benefit your company, and steps in the process.
What is succession planning in companies?
Succession planning is the process of identifying critical roles in your company and developing a plan for filling those roles when the respective current employees leave. The employee who ends up assuming this critical role is a “successor.”
Succession planning enables you to have the right talent in the right roles at all times. The reality is that employees can fall sick out of the blue, their personal priorities can shift in the blink of an eye, and a natural disaster can strike at any moment.
Without a succession plan, you’ll be unprepared for such unforeseen events. In other words, succession planning is crucial for business continuity and organizational performance.
Ultimately, succession planning is about identifying the disruptions likely to occur if certain employees leave unexpectedly and preparing replacements to step in at a moment’s notice. The goal is to always have backups for mission-critical roles, and to avoid entrusting all knowledge of critical operations to just 1 individual.
Succession planning is crucial for business continuity and organizational performance.
Note that employers should not limit succession planning to executive positions. If an employee’s sudden absence could disrupt your operations, then you should have succession planning in place for that position, executive or not.
What’s your biggest 2022 HR challenge that you’d like to resolve
Answer to see the results
What are the risks of not having a succession plan?
If your most critical employees suddenly leave, would you have people with the necessary knowledge, skills, and abilities ready to step in? If not, here’s what could happen:
- Significant pressure to immediately find a successor, upping the risk of assigning an unqualified person
- Excessive time spent trying to find qualified successor candidates
- Disturbances in scheduling, workflows, and other operational activities
- A chaotic work environment, where frustration and burnout are real possibilities
- Loss of vital organizational information held by the departed employee. Once the employee is out the door, it might be impossible to recover the information from them.
How can succession planning benefit employers?
A succession plan helps you:
- Promptly adapt to talent shortages
- Bring potential successors up to speed in a timely manner
- Retain organizational knowledge so that your business can still run smoothly during staffing changes
- Increase morale and retention through employee development
- Find replacements for highly specialized or unique knowledge, skills, and abilities
How long does succession planning take for employers?
Succession planning typically takes anywhere from 12 months to 36 months, according to the Society for Human Resource Management (SHRM). The process is based on preparation, not pre-selection. At the end of the preparation process, the successor should be well-prepared to assume the role when the time arrives.
How prepared are employers with succession plans?
The numbers show that most employers are not prepared for untimely exits by key employees. Here’s how HR professionals responded in a 2021 SHRM survey:
- 21% said their company had a formal succession plan in place
- 24% said they had an informal succession plan
- 20% said they did not have a succession plan but intend to create one
- 36% said they did not have a succession plan
More narrowly, PwC’s 2021 Family Business Survey found that only 34% of U.S. family businesses “have a robust, documented and communicated succession plan in place.”
Granted, the mere mention of “succession planning” can invoke images of a complex and intimidating process. However, succession planning does not have to be complex if you take a systematic approach.
What are the steps in succession planning for employers?
While exact process requirements vary by employer, below are some general steps.
- Pinpoint current and future business challenges, including factors that could cause disruptions to your business in the near and distant future (e.g., disasters, retirement, injury, illness, etc.).
- Identify critical and vulnerable roles. These are the positions for which no successor has been named and whose vacancies can prevent you from achieving your mission.
- Determine the eligibility criteria for each mission-critical position. This involves identifying the requirements for the successor role, including work experience, education, hard skills, soft skills, and any unique institutional knowledge.
- Consider openly informing your employees about the successor requirements. This allows for a larger candidate pool plus helps you promote equity, trust, and engagement in the succession process.
Additional steps to take for succession planning
- Build a talent pipeline for mission-critical roles. Include not only employees who can readily and successfully assume the successor role but also high-performing employees who have the potential to gradually grow into the role.
- Decide which employees are most qualified for succession planning development. Qualified employees should have a continuously high performance, a healthy relationship with colleagues and customers, the drive to keep improving their performance, and a track record of respecting your values and norms.
- Let candidates know that the position is not guaranteed to any single person, and that performance is the primary determinant. If an employee’s performance is not up to par, then they can be removed from consideration for the role of successor.
- Build a strategy to prepare successors, including training, coaching, and mentorship. The strategy should cover dual transitions. Remember, you will need to fill the successor’s role, as well.
If none of your employees are qualified for the successor role, you can include the successor requirements in your recruiting efforts. That said, a lack of qualified candidates could be a sign of deficiencies within your employee development program. These deficiencies can occur if the design of the program is such that it obstructs or restricts career advancement opportunities.
What are some pitfalls to avoid when succession planning?
Common blunders in succession planning include:
- Waiting until something unforeseen happens to start succession planning.
- Failure to get the employee’s input. Don’t assume that an employee wants to be the successor just because they are thriving in their current role. Ask them instead.
- Injecting bias into the succession planning process. The process should be objective, based on qualifications, and devoid of discrimination and favoritism.
- Not properly vetting successor candidates. No matter how outstanding the candidate has been performing in their present position, you still need to verify their fitness for the successor role, including any leadership competencies.
Can technology help with succession planning?
Definitely. Employee performance management software can help you identify potential successors through data-driven insights. The solution lets you analyze and track associated metrics, including attendance and performance metrics. These metrics can deliver critical insights into employee readiness and flight risks — thereby strengthening succession planning decisions.
If you’d like to simplify your succession planning process, the Zenefits people management platform is a good place to start.