What is succession planning?Succession planning is a process of developing talent to replace executive, leadership or other key employees when they transition to another role, leave the company, are fired, retire or die. It is relevant to all companies, from the largest to the smallest, in both the for-profit and not-for-profit sectors. Show
The planning process is meant to create a talent pipeline of successors that will keep the organization running with little to no interruption when inevitable staff changes occur. Effective succession planning works by assessing staffing needs that may arise as well as creating long-term goals and strategies to manage those gaps, including through leadership development. HR departments, sometimes referred to as the human resources management (HRM) department, are typically a key driver in succession planning, although support from top leadership and other stakeholders is critical to success. Succession planning is also sometimes referred to as replacement planning. Succession planning ensures that a business can continue running smoothly after an important role becomes vacant. An organization may want a succession plan to retain internal company knowledge, identify skill gap needs for training and to invest in employees. The process helps identify employees with the right skill sets and talent that can fill the vacant position. HRM departments normally play an important role in succession planning.In the event that a higher position suddenly becomes vacant, like a CEO, a succession plan ensures that there is already a method in place to replace that role. It gives an organization time to prepare candidates with high potential to fill that role. During this time, potential candidates are evaluated, strengths and knowledge gaps are identified, then the candidate receives training in needed areas. Succession plans should also fit into larger strategic visions. Used narrowly, succession planning refers to replacing the CEO or executive director. When used in a more expanded sense, the term can refer to board members, key leaders or the C-suite. When used only in the sense of replacement plans for the top leader or leaders, succession planning has specifics that may not apply when used more generally. For example, if referring to the CEO, the board of directors must be involved, whereas this will be less likely when discussing role replacements farther down the corporate ladder. Still, while the top executive is a key factor in a company's performance, taking a wider lens to the concept of succession planning is increasingly seen as critical, particularly in the current challenges facing talent management in companies today. When an employee leaves, there is a ripple effect. It may be most evident when the key leader leaves, but the hole created when an employee leaves his or her position can be profound, even at lower levels. Replacing employees can be a difficult task, especially in industries with noted talent shortages and skills gaps. It can be a lengthy process to get a replacement employee to full productivity. A lack of planning can especially sink smaller and family businesses, which don't have the sheer candidate numbers to choose from.
What are the benefits of succession planning?The need for succession planning relates closely to its benefits. Some benefits include the following:
How does the succession planning process work?Depending on the size of the organization and its goals, the strategic planning for the succession planning process can vary wildly. However, fundamentals include the following:
Best practices for succession planningSome best practices to follow when enacting succession planning include these:
Different uses of the term succession planningIt's important to note that succession planning is often used narrowly in reference to the CEO or executive director, or slightly more expanded to include board members, key leaders or the C-suite. However, extending the concept of succession planning to a broader range of employees is also gaining widespread traction, especially through the use of HR software, generally, or talent management software, specifically. Succession planning may also be used to indicate the passing of company ownership onto employees. Real-world succession planning exampleAs an example, for several years before Steve Jobs stepped down as CEO of Apple in 2011, he had groomed successor Tim Cook to take the top leadership role. This included Cook working a wide range of operational roles and directly with Jobs for CEO-specific experience. Cook also stepped in to lead day-to-day operations twice when Jobs was on sick leave. In addition to a succession plan for the top leadership role, Jobs also founded Apple University in 2008 as a way to provide a leadership curriculum based on Jobs' experiences and business savvy. Learn more about different key aspects of a succession planning strategy. This was last updated in November 2021 Continue Reading About succession planning
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