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Succession Planning: What You Need to Know

27 February
by Josh Hrala
14 minute read

When employees leave your organization, you need to have a plan to retain all of the knowledge that they have gained over the course of their tenure. This generally means that you need to have a plan for another employee to step into the role and keep your business marching forward. This process is known as succession planning, and it’s more important now than ever.

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But how do you start implementing a succession plan? What do you need to know for your plan to be successful?

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Since these questions are so common, we’ve decided to make a full guide about what succession planning is, why it’s so important, and what tools you may need to get started with your own plan.

Let’s jump right in.

What Is Succession Planning?

Succession planning is a process that focuses on the development of new leaders in an organization so that they can take over senior roles when current leaders leave the organization.

In other words, succession planning is a way to make sure that your organization has little to no knowledge loss across the generations. When one leader steps down, another should be ready to step into the role, allowing business to continue smoothly.

If, for example, you neglect the development of future leaders, you could wind up with an empty role that you cannot fill, forcing you to look outside of the company to fill that senior role, which is a process that can take an extremely long time while costing you a ton of money.

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“All organizations can benefit from the principles of identifying crucial job skills, knowledge, social relationships and organizational practices and passing them on to prepare the next generation of workers, thereby ensuring the seamless movement of talent within the organization,” reports the Society of Human Resource Management (SHRM).

Succession planning involves taking a deep look into what talent your company values, what knowledge is ultra important for your business to retain, and what skills are learned over the course of a career that are hard to replace.

Once those key areas are identified, your company can start taking steps to ensure that those skills are not lost when employees leave your organization. In a way, it’s all about future-proofing your organization, making sure that it can continue running even after turnovers take place.

What Goes Into Succession Planning?

Let’s take a deeper look into what it takes to start succession planning.

Like we said above, the first step in the process is to identify what knowledge (or role) you need to retain. Is there a process that is super unique to your company? Are there leaders who have worked in a position for a very long time that know the ins and outs of every task? Can you identify leaders who are working in roles that will be hard to fill once they leave?

Chances are, you can spot areas like this in your organization even if it is with less senior staff members.

This brings up a good point: succession planning isn’t always about older workers retiring. Though retirement is a giant concern when it comes to knowledge transfer and talent retention, younger workers can also perform jobs that no one else in the organization can handle. If you only have one person working a role with no one else aware of what it takes to succeed in that role, you are setting yourself up for talent gap if that person leaves.

Once you have taken a step back and looked at the talent you have inside your company, you need to create the actual plan to make sure that you can retain that talent. But what does that look like?

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A succession plan to be viewed as a series of events that happen over the course of the employee lifestyle. Here are a few:

  • Initial Training: This entails ensuring that your onboarding process completely prepares workers for their role while also identifying areas they may need to develop further.
  • Leadership and Personal Development: Developing leaders and workers is a process that should be ongoing throughout the person’s tenure with your company. It’s vital for you to offer workers ways to improve their skills because doing so engages workers, retains them for longer, and greatly improves your business practices over all.
  • Career Planning: While it can be easy to ignore a person’s career ambitions when they are at your company, you should try to keep an open conversation with employees to understand what motivates them, what will retain them, and what they want to achieve. Workers will be more likely to stay with your organization when you show your support for their personal and professional goals.
  • Workforce Planning: This is when you make sure your talent aligns with your business needs. Companies that plan their workforces have a huge competitive advantage over those that do not because workforce planning allows you to stay nimble while developing the right talent for the right job.
  • Proactively Planning Exits: This can be called ‘replacement planning.’ Basically, you want to make sure that you have a plan for when talented individuals - whether they are younger workers or old workers - leave you organization. This is typically what people think about when they here ‘succession planning,’ though - as you can see - succession planning starts long before this aspect comes into play.

Now, let’s dig a bit deeper into these issues.

The Importance of Onboarding

To understand succession planning, you need to first understand the employee lifecycle. Basically, the employee lifecycle is everything that happens during an employee’s time at your company. The first step of this process is the hiring stage when your company is actively looking for talent to fill a role.

The second step, though, is to make sure that your onboarding process covers all of the tasks that the employee will have to do, testing to see what talents they already have mastered and which ones they may need developed.

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What does this have to do with succession planning? Well, it helps you start to figure out where your talent pool is lacking. What talents in your organization need increased so that if someone should leave, there is someone to take their place. By paying close attention to the talents of your staff you can be better prepared for the future.

Also, the onboarding process is the start of your development plan. Workers continue to develop their talents as they work for your organization. So, in a way, the onboarding process - which is usually just about doing paperwork and getting the employee ready to start working - should be looked at as the first developmental step you are taking with the employee. Who knows, the person you just hired may stay with your organization for decades. They may be the next leader that takes over.

“When designing and implementing a cohesive onboarding program or process, HR professionals need to engage with key stakeholders throughout the organization to ensure that all new hires have an optimal onboarding experience,” SHRM reports.

This brings us to our next point:

Continuous Leadership and Professional Development

In order to have a leader primed to takeover a role, it stands that reason that your organization has to develop them over the course of their career to do so.

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Leadership development is a continuous process that starts as soon as the employee takes up a role in the company. Once onboarding happens, it can be easy to let employees just keep doing their day-to-day tasks without paying attention to the bigger picture.

This makes sense. After all, doing good work every day is important and is a challenge itself. However, those daily tasks and workflows should also be coupled with opportunities for workers to become better workers and leaders.

Many high-powered CEOs claim that there most important task is to identify and groom future leaders to ensure the continued success of their companies. This is true with smaller companies as well because every company will have turnover and every company will need leaders and workers that can perform a variety of tasks.

If you can create an environment of continued learning in your organization, you can ensure that a wide variety of staffers will progress through their careers in a way that will let them eventually take over for more senior staff.

Basically, the continuous development of leaders is a way to ensure that succession planning continues to unfold at a smooth pace. If your organization is short on leaders, how will you ever know who should step up to the plate when you have a vacant role at high levels?

This brings us to our next point: making sure that your staff has the ability to also grow in their given areas of expertise.

Career and Personal Development

When it comes to retaining staff, some organizations offer a wide variety of perks and benefits that do more entertaining than they do engaging. This is the wrong approach because these types of benefits don’t last as long as they seem like they would.

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One of the best benefits a company can offer its staff is to give them ways to continue developing personally and professionally. Some companies can see this as a negative thing because it might make the employee want to leave the organization once they gain new skills. This is a largely unfounded worry. If you allow the staff member to develop, use their talents where they are applicable, and use workforce planning tools to ensure that you are using your staff’s talent where they should be used.

This means that some people will naturally grow out of the role they were hired for but have become experts in others, meaning that you should always be ready to give new projects to staff members who want to give them a shot even if they don’t fully align with what their day-to-day tasks might be.

It's all about retention at this point. If you offer ways to grow, you will retain staff, according to numerous reports looking into Millennials and non-Millennial needs in the workplace.

“Even though 69 percent of non-Millennials and 87 percent of Millennials — the bread-and-butter employees of startups — cite continued development as a workplace must-have, few feel it can be found at current employers,” reports Falon Fatemi in an article for Forbes.

“More than nine in 10 U.S. workers choose to leave their stomping grounds when they’re ready to change roles. For a startup, it becomes even more painful — their much higher growth rates necessitate role changes more often.”

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In other words, providing a path for continued learning in your organization will allow you to not only make your staffers better and better at their jobs - possibly even finding tasks that they didn’t know they were naturally gifted at - it also retains them, which is important because  you have a high turnover rate, how will you ever implement a succession plan?

Again, this leads us to the next step, a proper workforce plan.

The Importance of Workforce Planning

In a nutshell, workforce planning is when an organization examines their business needs and then finds the right talents to push to that goal.

While that seems like a super simple procedure, many HR departments report that workforce planning is one of the most important tasks that they wish they did. Why don’t they do it? Largely because they don’t know how to start or keep pushing it off because other, daily tasks take precedent.

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“Workforce planning enables evidence-based workforce development strategies using the combined input from HR, recruitment, finance and business analytics,” reports Mark Liebenthal.

“In order for an organization to run smoothly, it’s important to implement strategic workforce planning, and the key to running your business smoothly is to get efficiently organized.”

Liebenthal continues by saying that workforce planning can help with problem solving, allow for corporate forecasting, aid in leadership development, keeps your reputation on track, and helps to improve overall KPIs.

When it comes to succession planning, workforce planning is a vital step because succession planning is basically a part of your overall workforce plan. Succession planning is just the part where you are more concerned with how people will take over different roles where workforce planning is more about making sure you find, retain, and train the right talent for your needs.

The folks over at Workforce sum this up succinctly:

“The goal of workforce planning and succession planning is the same: putting the right people—across the organization—in the right jobs, doing the right things at the right time. However, the difference between workforce and succession planning is distinct. Workforce planning is typically budget-driven and focused on staff-level jobs, hiring forecasts and internal resource projections.”

So, workforce planning is more immediate where succession planning is more about the future, focusing on what roles will need filled and what roles you can successfully plan successors for.

This, finally, brings us to the last section of the list: proactively planning for when your leaders step down.

Proactively Planning Exits and Succession

We briefly mentioned above that a lot of high powered CEOs who work for Fortune 500 companies talk a lot about how a big part of their role as leaders is to identify, groom, and implement people who will take over for them - and other senior staffers - when they make their exit.

“Before you are a leader, success is all about growing yourself. When you become a leader, success is all about growing others,” Jack Welch, former CEO of GE, reportedly said.

Welch - who led GE to have a market capitalization of just under $400 billion - talks a lot about how GE looked for successors during his time there because it’s vital for GE’s success to make sure that there’s someone ready to fulfill the role once he left.

When it comes to the succession of CEOs, a lot of preplanning takes place. Sometimes CEO are let go suddenly and the board has to figure out a way to get a new leader in place quickly. Other times, there is a set date for when a CEO will turn over the reins to a new leader.

While general succession planning is not just at the CEO level, examining how companies identify, develop, and eventually implement new CEOs can be beneficial because it gives you a look into the pipeline of what succession planning is at its core.

Stephen A. Miles, in an article for Forbes, lays out a four step process for organizations to go through when dealing with high level succession planning. They can summed up as:

  • Engage stakeholders: Identifying areas of succession planning should be a process handled by stakeholders, current leaders, and HR. The more input you have, the better off you will likely be at finding a proper replacement.
  • Assess Internal Candidates: If you have been grooming future leaders in your organization, you can start to look at which ones would fit the about to be vacated role. However, looking outside the company might have to be an option, too. It really depends on how your organization is currently working.
  • Conduct Tests: There’s no better way to see if a future leader is up for the challenge than to test them and see where they stand. There are many ways to do this from having them handle special projects, gauging their abilities of the short term and long term, and seeing if there are internships available to guarantee that the future leader will handle the transition well.
  • Onboarding: Miles says that this is the most overlooked part of the process because once a leader is tapped many organizations believe they are ready to go. This is, sadly, not the case. Development and onboarding doesn’t stop once the successor is brought on.

“Boards can--and really must--play an important role in succession planning. Directors must be aggressive and unwavering in their efforts to make the process as real as possible,” Miles goes on to say.

“Honest external evaluation of current talent and a system to develop a rich talent pipeline are just two of the areas where diligent board involvement can make a big difference. In this effort, directors have to remember that the search for a "ready now" candidate is a fool's errand.”

So, looking at this level of succession planning can give us an idea of how general succession planning works. You need to look inside your company, create an honest investigation into what leaders and ready to move up, bring in as many eyes as possible to ensure that you are making the right choice, and then onboard them properly to the new role.

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For smaller companies, succession planning can take on other forms. Say you have a senior staff member in a valuable role who is looking at retirement. This person may not be in the C-level of your company, but they have a whole plethora of knowledge that you need to retain for your organization to continue marching forward.

This role also needs a succession plan because without one you will not be able to retain that knowledge, which is a disadvantage to your company.

For this type of succession, you should use the similar steps as a CEO to ensure that that talent gap is filled. This can come in the form of having the upcoming retiree phase out of work by mentoring his or her successor. It largely depends on your corporate culture, how well you have developed talent internally before the succession plan needs to take effect, and if you have staff members who are willing to step into the role.

The key takeaway when it comes to succession planning is that it is a lot easier when you have been working at over the course of the employee lifecycle. If you onboard new talent, train them over the course of their careers, allow them to personally and professionally grow in your organization, finding a new leader to take over a senior role will be all the easier.

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Succession Planning: The Final Say

Alright, we’ve covered quite a bit here. Let’s go over a brief summary:

Succession planning is a way for businesses to ensure that they have suitable leaders and talented staff members ready to take over the roles of longtime staff members once they make their exit.

Having a plan on paper allows businesses to plan their workforces while also making sure that they have no gaps in their talent pool.

Succession plans change depending on what staff members you’re talking about. For example, finding and grooming a replacement CEO is a different task than finding a successor for a more creativity-driven role or a technical role.

However, despite these differences, there are a few things that are common across the board. For example, a typical succession plan starts with onboarding, continues with leadership and career development, and ends, finally, with offboarding. The name of the game is to keep developing your talent while also paying close attention to the needs of your workforce.

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For high level roles, individuals should be identified and tested to see if they have what it takes to take on the role. This process should involve the every stakeholder to ensure success.

By following a plan like this, your business can be prepared for when a senior staff members steps down due to retirement, a new opportunity or whatever else may pop up. It also helps you future proof your business by forcing you to examine and plan your workforce needs in advance, making sure that talented individuals transfer their knowledge before they exit.

Want to learn more about succession planning? Check out our free, downloadable guide:

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