What is Succession Planning? Definition, Benefits & Best Practices
Succession planning—a phrase that can either send shivers down the spines of leaders, HR, executives and business owners or light up their faces with excitement.
No matter how you look at it, it's intrinsically linked to the long-term success of any organisation. So, settle in as we dive into the world of succession planning, what it means, how you can do it, and whether it has anything to do with the HBO show (spoilers – it does not).
What is Succession Planning, Anyway?
Succession planning is essentially a backup plan for your business. It involves identifying and developing potential future leaders within your organisation so that when the time comes for your executive talent to move onto greener pastures, there are capable hands ready to take the reins.
It's all about ensuring a smooth transition and maintaining the momentum of your business.
Why Is Succession Planning Important?
Succession planning is essential for:
Maintaining continuity
Developing talent
Reducing risks during leadership transitions
Fostering employee retention
Ensuring cultural continuity
Boosting organisational adaptability
Instilling stakeholder confidence
Saving costs by promoting from within
As per the British Chamber of Commerce survey, a staggering 75% of companies face challenges in finding suitable candidates for leadership roles. To add to that: approximately 74% of US leaders and 83% of global leaders feel unprepared for their new roles.
Benefits of Succession Planning
Succession planning is extremely beneficial because it ensures a smooth transition of leadership, maintains organisational continuity, and allows you to retain institutional knowledge. By identifying and elevating potential successors, businesses can minimise disruptions and maintain momentum during leadership upheaval.
It can even help you cut down on costs. Some studies go as far to say that every time a business externally replaces a salaried employee, it costs 6 to 9 months' salary on average.
It also allows for the transfer of critical knowledge, preventing the loss of valuable insights and expertise. And the cherry on top: succession planning helps develop and retain talent within your organisation, demonstrating a commitment to employee growth and fostering a culture of advancement.
Ultimately, it safeguards the long-term success of your business and prepares it for future challenges and opportunities.
4 Different Types of Succession Planning
Succession planning can take various forms depending on your organisation's needs and circumstances. Here are four common types of succession planning:
1) Internal Succession
This type focuses on identifying and developing potential successors from within your organisation. It usually involves leadership assessments that reveal who would be best suited to take on leadership roles, either through promotions or through something known as internal mobility.
Internal succession planning is incredibly advantageous as it leverages the knowledge, experience, and familiarity of individuals already familiar with your organisation's culture and operations. Plus, it creates additional opportunities for internal talent development, ultimately enhancing employee retention and engagement.
2) External Succession
External succession planning involves looking outside your organisation to find suitable candidates for leadership positions. This can be useful when specific expertise or fresh perspectives are required (i.e. developing products and services, dealing with tech changes etc). Organisations may recruit externally to fill key roles or consider partnerships, mergers, or acquisitions to bring in experienced leaders from other organisations.
3) Emergency Succession
Also known as contingency planning, emergency succession focuses on addressing unforeseen circumstances like sudden departures, accidents, or incapacitation of key leaders. This type of planning involves having a pre-determined backup plan in place, designating individuals who can step in temporarily until a long-term solution is found.
This usually falls under business continuity planning (BCP), which is a proactive process undertaken by organisations to ensure that essential business functions can continue or be quickly resumed in the event of unforeseen disruptions or disasters.
4) Developmental Succession
Developmental succession planning focuses on identifying high-potential employees and providing them with targeted development opportunities to prepare them for future leadership roles (otherwise known as high-potential talent development). This includes mentoring programmes, leadership training, executive coaching, job rotations, and special assignments that expose individuals to different aspects of your business and enhance their skills and capabilities.
It's important to note that you can employ a combination of these succession planning types or tailor them to suit your organisation’s specific needs and circumstances. The chosen approach should always align with your goals, values, and long-term vision.
The Succession Planning Process
The succession planning process is all about nailing that smooth transition of leadership. While the ins and outs might differ from one organisation to another, here's a general roadmap to guide you through it:
1) Identify Key Positions
First things first, figure out which leadership positions need succession planning. We're talking about those key players who keep your organisation running in tip-top shape. This may include top-level executives, department heads, or other key roles.
Remember, succession planning isn't limited to just top-level executives. It's about cultivating a pipeline of talent throughout your organisation. So, keep your eyes peeled for potential leaders at all levels.
2) Define Leadership Competencies
Pinpoint the skills, competencies, and traits that make a leader shine in each of those crucial roles you’ve identified. This will help you when it comes to evaluating potential successors by specifically telling you what to look out for.
3) Talent Check
Take a good look at your current talent pool. Who's got the potential to step up and take charge in the future? Think about performance, ambition, and whether they fit your organisation's vibe.
4) Nurture the Rising Talent
Now it’s time to take the candidates you’ve selected and turn them into fully-fledged leaders. Create development plans that provide training, mentoring, and exciting opportunities - all with the aim of bridging any skill or knowledge gaps. Do what you can to get them ready for the big leagues!
5) Keep Tabs on Progress
Don't just sit back and relax! Regularly assess how your successors are doing. Offer feedback, monitor their development, and tweak their plans if needed. It's all about fine-tuning that leadership potential.
6) Create Transition Plans
When the time comes to pass the torch, have a solid transition plan in place for each successor. Lay out the timeline, responsibilities, and support they'll need. Oh, and don't forget about knowledge transfer and mentorship between the outgoing and incoming leaders. This is one of the most important steps in the succession planning process, so don’t rush it!
7) Communicate and Involve Stakeholders
Time to let the whole world know. Or more specifically, your key stakeholders, including the board of directors, senior executives, and the potential successors themselves. Ensure transparency, keep everyone in the loop and address any concerns.
8) Showtime!
When a leadership role becomes vacant, it's showtime! Execute your carefully put-together succession plan. Support the incoming leader during the transition, so they hit the ground running.
9) Keep on Refining
You’re not done yet. This isn't a set-it-and-forget-it type deal. You’ll need to regularly review and refine your succession planning process. Adapt it to changing needs, tweak the succession pool, and make sure it stays on point.
Final Thoughts
Succession planning might seem like a distant concern, but trust me—it's never too early to start thinking about it. By investing in the development of future leaders within your organisation, you're safeguarding its long-term success and creating a legacy that extends beyond your own tenure.
So, grab a pen, start identifying those rising stars, and let the succession planning adventure begin. Your future self — and your business— will thank you for it!
At Michael Mauro, we offer a wide range of corporate leadership development programmes. We can provide your business with unrivalled support when it comes to future leader identification, HiPo (High Potential) programme design and, of course, succession planning.
Get in touch today to find out how we can make sure your talent pipeline is healthy and robust for the years ahead.
Written by Michael
Michael Mauro is the founder of a forward-thinking organisation specialising in leadership, HR and employee development. With over a decade of global experience, Michael has become a leading voice on topics such as culture, inclusion, wellbeing, and the future of leadership.
