5 Powerful Steps to Do Better Succession Planning

Succession planning has become an increasingly important aspect of modern business environments. With the impact of an aging workforce, talent shortage, and evolving skills in the business world, it has become crucial for businesses to plan for the future and ensure a smooth leadership transition. In this blog post, we will outline a 5-step approach to better succession planning. Whether you are a small business or a large corporation, this approach will guide you through the process of succession planning and set you up for success in the long run.

What is Succession Planning?

Succession planning is an important process that aims to ensure the continuity of the workforce and employee engagement in a company. 

It involves identifying and developing talented employees who can take over critical positions in the company when the current occupants retire or leave for other reasons. The succession planning process aims to create a pool of potential employees who can step in and continue the operations seamlessly. 

Companies often focus on senior executive positions for succession planning. In fact, every role in the business is important. The process should be for employees who can take over any position in the company, not just high-level managerial roles. This comprehensive approach ensures that the company is not caught off guard in case of any sudden changes. Additionally, it boosts employee morale and engagement as they feel valued and appreciated, leading to increased productivity and better results.

The Importance of Succession Planning

Succession planning has become indispensable in the current market, given the wider market issues that companies face. These issues include industry-specific skills shortages and the shrinking global talent pool. An extensive Korn Ferry report found that over 85 million positions could go unfilled by 2030 because of skills shortages, resulting in an $8.5 trillion loss in potential annual revenue.

Due to the scarcity of suitable candidates in the open market, companies need to focus on upskilling and promoting their employees. Failure to do so might lead to the loss of intellectual capital when valuable or long-tenured employees leave. This is when succession planning comes in. A strategic approach can prevent this loss and ensure business continuity. 

However, succession planning is like a “double-edged sword.” If not done well, it could lead to a significant disruption in the operations, resulting in a loss of productivity and revenue. Additionally, without a clear objective, it can be difficult for companies to identify and groom the next generation of leaders, which can lead to a leadership vacuum that can be difficult to fill.

The 5-Step Approach to Succession Planning

Step 1: Establish the Succession Planning Parameters and Identify Key Positions

The first step is to establish succession planning parameters and identify key positions. 

• You want to define which roles are critical and then identify the skills and experience required to fill them. 
• Once these roles have been identified, you need to review and prioritize them based on business risk and recruitment time. Understand which positions take you the longest time to fill and their time-to-productivity.

Step 2: Understand and Categorize Your Talent Resources

Prior to assigning an employee as a succession candidate, it's crucial to understand where each stands in their career development. 

• Take a snapshot of your employees' current stage of development to categorize their talents and skills better. 
• This will help you identify which employees are ready to move up within the company and which require further development.
• Take advantage of data visualization. It can help illustrate the number of employees who are already prepared for the next stage, those who have the potential to advance to the next level, as well as the ones that have the potential to become senior leaders within the company.

Step 3: Select and Develop Succession Candidates

Once you have categorized your talent resources, the next step is to carefully select and develop potential candidates for critical roles within the company. 

• When assigning employees to these roles, you need to understand the skills and experience they already have and are missing in order to succeed in the position. 
• You can then determine the development requirements for these potential successors, such as training, mentoring, or job shadowing opportunities.

Step 4: Evaluate the Succession Strategy and Identify Gaps

Now that you have established your succession parameters and identified potential successors, it's time to evaluate the success of your plan. 

• Take a close look at your overall succession status and talent status to determine if any adjustments need to be made.
• It's important to identify any gaps in your plan, including positions with no identified successors and employees without clear career paths. 
• Remember to regularly review and update your succession strategy to ensure its continued success.

Step 5: Develop Mitigation Actions for Succession Risks and Implement Best Practices

Developing mitigation actions for potential succession risks will help you avoid any loss of valuable talents due to a lack of opportunity. 

• This involves planning for positions that do not have identified successors and for employees who do not have clear career paths in the company. 
• You can then develop cross-training programs for the most suitable employees so they can improve the skills needed for the roles.

Keep in mind and incorporate these best practices into your process to increase the chance of success:

• Don’t just focus on the leadership roles. Ensure broad coverage of the workforce during your succession planning.
• Regularly update and maintain your plan to account for any changes that may arise.
• Communicate and be transparent about the extent of your plan and the level of preparedness of candidates. This ensures that everyone involved knows what needs to be done and what to expect moving forward.
• Ensure process uniformity by sticking with a single process only.
• Make sure that your plan aligns with the company's performance management and talent development procedures.

Conclusion

Succession planning is essential for any business that wants to ensure continuity and adapt to any changes in the current talent marketplace. It can be a complex process, but using the five-step strategy explained in this article can make it simpler and more effective.  

By establishing the succession planning parameters, categorizing talent resources, selecting and developing potential successors, evaluating the succession strategy, and developing mitigation actions for succession risks, companies can create a pool of potential employees who can step in and continue operations seamlessly. With a strategic approach to succession planning, businesses can prepare for the future and set themselves up for long-term success.

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