While working at one of my first jobs out of college, my manager told me that my professional growth “wasn’t a priority.” I knew I wasn’t in a leadership role that required succession planning, but I was still surprised by what my manager said. I left the company because there were no opportunities for career development.
This situation may seem very serious, but it just goes to show how crucial it is to have a plan for what will happen when you can’t continue running your business. Management roles that are higher up in an organization are more important because it would be more disruptive if they were not filled. This is not just something that should be done for people in upper management.
Succession planning is a way to make sure that your company can keep running smoothly even when leaders resign or are promoted. The way you treat your employees can strongly affect their mood and can help them to be prepared to face future business problems.
You don’t want to wait until you need a replacement. When you’re in a hurry, you might choose the wrong person. What are the ins and outs of succession planning?
What Is Succession Planning?
Succession planning is the process of identifying new leaders and developing them to take over the role of the incumbent.
For businesses to succeed, they need to avoid times of crisis and lack of leadership.
Succession planning can help you be prepared for a situation where you need to replace someone. This could be either because you plan for it or because it is an emergency. There are several reasons why someone might leave their job, such as retirement, a new opportunity, or death.
Making sure there is a plan in place for succession is important to maintain uninterrupted business operations. A process that is reliable and effective will help you identify individuals who could be qualified to fill leadership positions.
In the best case, you will know in advance when someone is leaving. A succession plan is a set of instructions for what to do if the person in charge dies or can no longer do their job.
The order of succession is often used to resolve conflicts in a monarchy. A model that is understood by many and allows the person who is next in line for the position to have it. This model is also common with family-run businesses that pass the business down to their children or next of kin.
Business Succession Planning
Succession planning in business is important for finding people to take on more difficult positions. When an important employee leaves, they leave behind a void that can disrupt the company.
It is important for all businesses, no matter their size, to have a succession plan to ensure a smooth transition.
Succession planning for executive talent is a common practice among large companies, such as Pepsi, Microsoft, and General Electric.
It is typically the CEO and board of directors of large corporations who oversee succession plans. The company will evaluate employees to identify which ones have leadership qualities and provide training for those who are candidates for leadership positions.
Often, when looking for someone to take over a position, the succession plan will look internally. However, some companies may look to hire employees from outside of the company, and may even use headhunters to find potential candidates.
Small companies may not need a large or comprehensive succession plan like bigger businesses. There will be a need to identify someone who can take over in an emergency.
You should train your potential successors so they are ready to take your place if something happens to you.
Types of Succession Plans
There are two types of succession plans: 1) those that should be considered, and 2) those that should not be considered. If your business has an emergency fund, it can fall back on that money to cover expenses.
Long-Term Succession Plan
You should first consider your long-term succession plan. This is the plan that you will flexible follow for key positions.
A succession plan like this can be regularly reviewed and updated as the company expands. An succession plan for large companies details who would fill key positions in the company if an employee in that position left.
Emergency Succession Plan
An emergency backup plan can also be created, to be used if needed.
This type of plan involves more short-term measures but is designed to keep operations running smoothly.
Other senior members of staff could take on extra responsibilities while a replacement is sought.
Benefits of Succession Planning
An alarming number of small to medium businesses do not have a plan in place for who will take over the company when the current owner(s) retire or die. Some of them have only informal plans.
If something unexpected happens, like someone dying, it could be bad for your business. It is beneficial to have a written succession plan that is developed and easily accessible.
Here are some of the benefits for businesses of any size to create a succession plan:
Candidates Ready to Start
An upcoming promotion, retirement, or departure presents an opportunity to develop the next generation of leaders.
Your succession plan has ensured that the replacement will already have the skills required for the role.
Encourages Managers to Develop Junior Employees
Your succession plan can help your managers to identify and invest in developing lower-level employees.
The plan helps managers to identify clear progression routes for junior staff so that they can access appropriate training and information.
Managers will be able to train their replacements in advance of their promotion.
It Leads to Higher Job Satisfaction
According to a recent study, employees are more satisfied with their jobs when their company has a succession plan in place. The reason for this is that it provides a path for advancement and decreases job insecurity.
A succession plan can help employees understand what is required for them to be promoted. A mission statement can help an employee figure out what their goals should be at work, and help them feel like they have a sense of direction while working.
Helps to Track Progress
Succession planning can help managers to track employee progress through performance reviews by providing a system for monitoring and measuring employee progress. This can help to identify potential areas of improvement and identify potential high performers who may be ready for promotion.
An organization can also promote from within by providing training and development opportunities to employees so they are equipped to take on new roles.
Keeps Shareholders Confident
Shareholders may feel uneasy when a high-ranking executive leaves the organization.
Some shareholders may want to sell their shares. A well-executed succession plan can help maintain investor confidence and support.
The positions of CEO and CFO may have been chosen by the board as successors. The shareholders will be confident in the company and the new executive if this happens.
Cultivate and Maintain Company Loyalty
If your company has a culture of promoting employees from within, it can lead to increased loyalty from those employees.
Hiring talented employees who will stick around for the long haul can be a big advantage for your company. This gives them a strong understanding of businesses, morals, and expectations.
Employees will stay with a company for a longer period of time if there is potential for them to advance within the company.
Succession Planning Process
Instead of an informal plan for succession, it’s a good idea to make a comprehensive document that outlines how succession should work. This document should include information on who should take over the business in the event of the death or retirement of the current owner, as well as a plan for how the transition should take place.
Small and family businesses may only need a limited plan.
A comprehensive document detailing different leadership positions may be needed by larger corporations, starting from the hiring process.
The key components of your succession plan will not change, and that is what we will examine now.
The document can be revised and amended as necessary.
Make a plan for your plan.
The first step in creating a succession plan is to define the goals of the plan and ensure that everyone who is involved is aware of these goals. For some companies, this means outlining strategic priorities to the board. Some people will need to meet with senior leaders to figure out what they want in a successor.
You’ll be ready to move on to the next step once you:
- Define the roles, skills, core competencies, and experience required for a successor.
- Gather information and feedback on the above from your team or experts within your network.
- Forecast your company’s needs. Consider turnover trends, retirement dates, compensation strategies, and management training.
- Update your job descriptions and any leadership models to reflect the information you’ve gathered. You want to be clear about your expectations before looking for candidates.
Identify potential candidates.
You can now look for candidates that fit the succession profiles and job descriptions you have created. Although there are many different ways to collect data, the two most common approaches are surveys and experiments. The two most common ways to collect data are surveys and experiments. The HR team can be helpful in providing the tools needed to engage candidates and facilitate the process.
To identify candidates, you can:
- Look for leaders who develop others, follow through on projects, take action to support the company vision, and have strong leadership skills.
- Get insight into each candidate’s goals, disposition, and potential by holding interviews, creating surveys, and setting up focus groups.
- Ask people for ideas on how to improve succession and leadership to get buy-in and discover who’s engaged with the process.
The debate over whether or not to inform employees that they are succession candidates is ongoing. Keeping employees in the loop about their potential within the company will not only motivate them, but also prevent them from wondering about their future with the company. If a great candidate thinks they can find a better opportunity elsewhere, they may leave their current job.
Instead of communicating your positions, people, and planning, communicate your intentions about them. Be clear about what you expect from the people involved in the project.
Set up professional development efforts.
Most companies have programs in place for new employee orientation (onboarding) and training. Development refers to creating opportunities for people to get experience beyond their current roles and skillset. This is especially important for team members who can get caught in a narrow area of expertise.
To develop your employees, first identify which candidates you want to invest in. Then, determine the specific skills and knowledge they need to improve and grow in their careers. This often involves creating a plan for the employee’s development, continuous feedback, mentoring or coaching, formal training, and open conversations between the employee and their manager.
Do a trial run.
As potential successors accelerate their growth, they’ll become more qualified for leadership roles. This is the ideal time to start giving employees test runs of various aspects of a position to see what they know and expose them to different aspects of the job. When you put candidates in real-world situations, they can see what good leadership looks like and get an understanding of the company’s goals.
There are many ways to get candidates interested and excited about a role, just choose the method that works best for the position.
- Job shadow a senior leader to learn about their day-to-day tasks
- Take on responsibilities when their manager is away
- Invite them to sit in on higher-level meetings
- Bring them into discussions on strategy, execution, or company forecasting
- Involve them in the hiring process for junior candidates
- Give them more responsibility on projects or involve them in cross-functional work
Adjust your hiring strategy.
The time will come when you will offer a position to a potential candidate. And you’ll need someone else to fill their role. The successor can use their newly acquired leadership skills to help with the interviewing and training process of the person who will be taking their position. This can be an employee a few levels down in the company or a new hire.
It is important to adjust your hiring strategy to account for the roles of the person who will be taking over. Your plan will go more smoothly if you have their team on board, otherwise their team will be scrambling to fill the gap.
Implement the plan.
Succession planning is a complex process made up of both short-term and long-term goals. You will need to transition at some point. Make an announcement and celebrate the succession. This text demonstrates that your company is proud of its leadership and has a career development plan for all employees.
Sometimes, a more gradual transition is needed. Family businesses often have difficulty with succession planning because of the relationships between family members, the emotions involved, and the shared history of the family. A succession plan is very important to keep the company successful.
Employee Succession Planning
All employees across a company are included in succession planning. You can identify high-potential employees at all levels by viewing succession plans for senior leaders this way. After identifying potential leaders within your company, you can work on developing their leadership skills so they are prepared to take on more responsibilities when a position becomes available.
When searching for potential candidates to promote, look for those employees who express an interest in acquiring new skills, cope well with change, can adapt to new leadership and different work environments, and excel in managing various types of tasks. Everyone who could take over the job should be motivated and involved in the process because they would have an opportunity to increase their skills and take on more roles that are both demanding and rewarding.
When you identify a potential growth opportunity for an employee, they will also be able to see it. The next time there is a key leader stepping down or a new director position, you will know who to recruit for the role.
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