Succession planning, also known as replacement planning is a strategy to pass on leadership roles. It ensures that businesses continue to run smoothly after a company’s most important people have to leave the company. It involves cross-training employees to help them develop skills, company knowledge, and a holistic understanding of the company.
As per Harvard Business Review, each year about 10% to 15% of corporations must appoint a new CEO, whether because of executives’ retirement, resignation, dismissal, or ill health. A 2010 survey by the search firm Heidrick & Struggles and the Rock Center for Corporate Governance at Stanford University revealed that 39% of boards had no viable internal candidates who were able to immediately replace the CEO if the need arose. Estimates suggest that up to 40% of new CEOs don’t meet performance expectations in the first 18 months. So what really goes into succession planning?
1. Plan your strategy
As the name suggests, succession ‘planning’ involves mapping out a process with all the details to be implemented. A common approach used in prestigious companies are leadership training programs and executive development programs so the best candidates can be identified early. In most companies where executives are exposed to a variety of work and opportunities, the candidate who adapts to it easily is considered suitable. Identify and analyse the strict performance metrics against which the ideal candidates would be evaluated. Plan the extensive transition process to help with onboarding to make the newly appointed CEO’s process easier, especially if they haven’t served in a chief executive role before.
2. Traits of top management
Identify the key performance indicators required in a top position. A leadership culture must be present in all organisations that follow succession planning. When all employees are given the opportunity to qualify for a position, the ones who are more keen to learn and develop new skills can easily be recognized. Once those traits can be identified in the employees, they can set up a training program to further help them prepare for a higher position.
3. Training program
A training program must be planned in order to help the employees develop the skills they need to qualify for a top position. Proper structure of the program and training under the allocated department boosts confidence in the employees. Moreover, it becomes easier for the company to understand who is worthy of being promoted. However, the employees must be given enough time to develop the skills required and it doesn’t necessarily mean that an employee understands the role will consistently perform well.
4. Employee Assessments
Between regular intervals of the training program, employees can be assessed on the basis of various factors needed for the position. Employee assessments simplify the process of choosing the right employee based on their expertise and skills in the field. As employees are being trained to fill a top management position, one of the most important assessments will be for leadership development to identify whether they have the ability to make their own decisions and manage a team. However, employees should be given enough time to adapt to the necessary skills to be analysed in-depth by the team.
5. Retain employees
One of the main reasons employees leave an organisation is due to the limited opportunities for growth and development. If they are not rewarded and promoted for their best efforts, they will eventually reduce their efforts in performing tasks. This not only affects the quality of their work, but also but their motivation to perform. A promotion might be very satisfying for one employee, whereas public recognition and appreciation might be satisfying for another.
6. Long- term perspective
The ultimate long- term objective of succession planning is to become self-sufficient to internally fill a position in the top management whenever the need arises. With realistic development expectations over a period of time, candidates can easily train and qualify for the position. Moreover, knowing that the company is planning for future opportunities reinforces career development and higher motivation among employees to perform better.
Although succession planning doesn’t promise that leadership roles will be easily filled internally, it surely does help the company to make the employees future-ready. A structured plan to internally fill positions is a great way to keep the employees motivated and for the company to save time and money on hiring externally.