What Is Succession Planning?

Succession planning, as a function of workforce planning, is about replacing leaders and

managers with high-potential, internal (sometimes external) replacements. Essentially, it is about
identifying, developing, and replacing employees, to make a shift in responsibilities as smooth as
possible.

Succession planning is a strategy for passing on leadership roles—often the ownership of a

company—to an employee or group of employees. Also known as "replacement planning," it
ensures that businesses continue to run smoothly after a company's most important people move
on to new opportunities, retire, or pass away

Succession planning can also provide a liquidity event enabling the transfer of ownership in a
going concern to rising employees.

KEY TAKEAWAYS

 Succession planning is a strategy for passing on leadership roles—often the ownership of

a company—to an employee or group of employees.
 Succession planning ensures that businesses continue to run smoothly after a company's
most important employees retire and leave the company.
 Succession planning involves cross-training employees so that they develop skills,
company knowledge, and a holistic understanding of the company.

Why Should You Build A ‘Succession Plan’?

 Building a succession planning process or framework is about mitigating organizational

shifts. This way, when a change at the very top occurs, the friction between departments,
teams, and employee is as smooth as possible, because there is no longer a ‘vacuum’ of
institutional knowledge.
 Succession planning is an important part of the talent management process. It provides a
way to identify key roles, people with the right skills and positions that may need filling
in a short space of time. It also provides a way to cut the costs of recruitment, enabling
organisations to manage recruitment in-house

What Is The Purpose Of Succession Planning?

 The purpose of succession planning is complex. It is not simply about damage control or
replacing a key leader as quickly as possible. Instead, it’s about replacing a leader with
someone prepared for the job, with the potential to succeed, who can shift into that role
both quickly and successfully (added emphasis on successfully).
  it ensures that businesses continue to run smoothly after a company's most important
people move on to new opportunities, retire, or pass away.
 Succession planning is about filling organization’s talent pipe and building internal bench
strength.
 It is about leveraging the talent that the organization already possesses by developing it to
full potential.
 The focus is on developing employees so that the organization has a pool of qualified
candidates who are ready to compete for key position and when they become vacant.

Following are a few terms surrounding succession planning processes:

 Training. The preparation of an employee to perform the tasks required for his or her
current role.
 Development. The practice of equipping an employee (or group) for future roles and
responsibilities.
 Career planning. An employee-centered practice of identifying the interests of the
employee and assisting that individual, as well as providing personal development
options consistent with his or her talents and interests.
 Career management. An organization-centered practice of creating jobs and
organizational structures that promotes the achievement of business objectives.
 Replacement planning. A shorter-termed practice of identifying replacements for
personnel in key operating functions.
 Succession planning. The future-focused practice of identifying the knowledge, skills and
abilities to perform certain functions and then developing a plan to prepare multiple
individuals to potentially perform those functions.

Benefits of Succession Planning

6 benefits of succession planning

Having a plan that enables you to regulate and maintain workforce stability and
organizational capability brings with it several positive effects. Below we explain 6 benefits
of succession planning for your organization to consider.

1. protect the business from sudden, unexpected change.

Perhaps most importantly, succession planning contributes to the resilience of your

organization in the face of sudden change. It’s easy for business leaders to be too swept up in
the day-to-day to notice patterns affecting the workforce. And it’s easier to replace your
employees as positions become vacant. But if you take this road, your talent strategy will
always be focused on external resources, which as we explain in our article 8 steps to
successful succession planning, we think is unsustainable.
Without succession planning, you’re taking for granted the health and loyalty of your
workforce. What would you do if one of your top employees developed a long-term illness or
was poached by a competitor? Sure, you might be able to recruit effectively to replace them
but how much will that cost you, in terms of fees, increasingly competitive salaries and loss
of intellectual capital?

2. reveal vulnerabilities and highlight skills gaps

Continuing on this theme, succession planning provides a risk assessment that will uncover
vulnerabilities and gaps in your workforce and skills base. By reviewing your current
organizational structure by department, you can begin to see points of weakness that could
impact your business strategy.

With this knowledge, you can take action well in advance to mitigate these risks and
motivate your top talent in the process. In essence, succession planning shifts the focus of
talent planning from external to internal.

3. promote training and development

It’s worth remembering that succession planning doesn’t have to be about linear career
progression. If there isn’t a clear path for your best people to progress, they could end up
leaving the organization – unless you’re able to provide alternatives.

Supported by a well-rounded training and development program, succession planning can

highlight opportunities for employees to move laterally into positions that have skills in
common. This opens up possibilities for a rewarding career that your best people might not
have considered.

A good training and development program shouldn’t just provide courses and learning
materials, it should also offer opportunities for coaching, mentoring, job shadowing and
support for professional certifications.

4. knowledge transfer and process refinement

When experienced employees retire or leave the business after a long tenure, they take with
them a font of knowledge that will be hard to replace. One of the aims of succession planning
is to stop this drain on the business and smooth the transition of such changes.

By prioritizing succession paths that involve employees whose departure from the business is
planned or otherwise anticipated, knowledge can be passed on to those who will take up the
reins. Most retiring employees will be happy to help rather than see such an important
product of their labour go to waste.
Alongside knowledge transfer comes the opportunity to review processes and procedures, to
question existing methods and look for opportunities to improve them. Ambitious succession
candidates will be open to the recommendations of outgoing colleagues concerning pitfalls
and weaknesses, as this presents a chance for them to make an early impact.

5. long-term talent planning and retention

Another important benefit of succession planning is improved retention of your top

employees by offering them clear opportunities for growth. By planning longer-term,
organizations can reduce their reliance on recruitment, so that talent is only sourced
externally as a last resort.

Your succession plan should be closely aligned with the business strategy, so that it provides
answers to talent questions relating to organizational growth, business expansion and
innovation. You might think this is what strategic workforce planning does, but succession
planning differs in that it actively pursues workforce continuity rather than workforce
resourcing.

6. preserve brand integrity and reputation

When done badly, succession planning can have an impact on the business beyond its remit,
particularly for publicly visible positions. There are many examples of failed c-level
succession plans that have caused substantial reputational damage to the organizations
concerned.

When a senior executive comes into the organization from outside, it’s vital the leadership
team takes steps to ensure the new appointee understands the values that bind its people and
business. Rash attempts to impose change and make a mark could undermine the
organization’s core purpose and overlook the needs and expectations of both customers and
employees. This is a very real concern, as the Disney example below illustrates.

By placing the emphasis on internal succession to senior positions, these threats have less
chance of materializing, as senior leaders are more likely to understand what’s right for the
business and its people. Microsoft CEO Satya Nadella is an excellent example of this.