What Is Succession Planning and Why Is it Important for your Business?

All business leaders need long term plans to make sure they have the right people in important decision-making positions. They need to be able to think ahead so that when managers leave or move on, there are people with the right knowledge and skills who can step up and keep the organization on track. It is no longer the case that top-down promotions will fulfil succession planning needs by default.

Businesses need to simultaneously keep an eye on developing skills needs – they need to look out for skills that they may not currently have, but will need, as well as areas that are becoming less important so they can consider retraining and upskilling as appropriate. With this in mind, modern succession planning is not just about managerial roles; it seeks to also take a broad view right across the organization so that the right people are always in the right roles.

Succession planning is an important part of any firm’s retention and talent management policy. Internal opportunities for development, promotion and new responsibilities are likely to make individuals feel valued and supported. In turn, businesses can keep loyal, engaged and knowledgeable staff on board to boost productivity and reduce costs.

The succession planning landscape

Recent research revealed that many firms are not doing enough when it comes to succession planning. A study from the Stanford Graduate School of Business revealed that only a quarter of firms surveyed could confidently say they have an adequate pool of candidates who could potentially succeed the existing CEO. A third disagreed and the remainder are unsure where they currently stand.

In addition, the survey revealed insights into the way companies view succession planning – with many viewing it in terms of reducing risk, rather than perhaps contemplating more positive aspects such as the way it could improve customer service or boost profits.

An interesting finding of the research was that only 46% of respondents said their board members are involved in succession planning for key strategic and senior roles. One of the report’s researchers notes: “The board of directors does not have sufficient insight into the skills and capabilities of the senior management team and is not prepared to determine which executives are most qualified to replace an outgoing CEO or C-suite member when a succession event occurs”.

Internal vs. external

An effective succession planning strategy will strike a careful balance between developing internal staff and bringing new people into the business. Whilst promotion and upskilling existing staff is crucial, new recruits at all levels are crucial too – they bring new ideas and fresh approaches from their experience in other companies and even other sectors.

Many businesses focus almost solely on internal or external people but experts agree that getting the right mix is a key to success.

Developing talent

Growing talent within the business can be highly beneficial, especially in industries and firms where knowledge is very specific or specialized. In addition, leaders developed within a business understand it inside-out and are likely to be highly engaged and motivated.

As part of an overall talent management and succession planning strategy, all businesses should have a plan for identifying, nurturing and promoting internal talent. Developing this internal talent is not always simply about promotion though – it can be more practical, and more advantageous, to provide lateral moves and experience as well.

Sideways moves can help people get a better understanding of the organization and upskill. It also creates more opportunities, since upward moves do not always become available. Secondments can also be an ideal way to gain some of these advantages without a permanent restructure being required.

Identifying talent

There are a number of issues to consider in identifying talent for development within an organization and these tend to be a mixture of formal and informal methods.

Some businesses develop official frameworks to measure technical and professional capabilities within the company. This can help them pinpoint staff that are ready to move on and lead and those that need further support to meet the needs of the organization.

However, it is unlikely that these frameworks can be the only method used, as a range of other ‘softer’ and more future-focused factors should also be considered.

Top tips for effective succession planning

• Make sure any talent management and succession planning strategy is linked to the overall short-term and long-term business plan
• Let HR lead the program but get buy-in from the senior leadership team on succession planning and its importance. They need to understand not just the importance of best people, which should be a given, but also the risk of failing to strategically plan ahead
• Think laterally and consider how the organization and its employees can benefit from people making a sideways move in terms of skills, as well as them moving up and getting promoted
• Look beyond current performance when assessing where the talent in the organization lies. Think about individuals’ talents and goals, rather than solely what they’re achieving now. After all, they could be underemployed
• Involve staff in succession planning discussions and be open – it’s an ideal way to keep staff engaged and motivated, so make sure they know about it
• Have a clearly defined succession planning process and make sure people know what their specific role within that process is
• Keep your eyes peeled as to what other organizations are doing and how they’re developing staff. See what you can learn from other businesses and sectors
• As the ageing society continues and workplace environments change faster than ever, succession planning is going to become even more important, so it’s essential for organizations to act now to prepare for the future.

Want to learn more?

Webanywhere work with open source solutions such as Totara LMS to deliver Workplace Learning, Talent Management and Succession Planning. Visit the Totara LMS page to learn more or contact us for a no-obligations discussion of your requirements. You can call us on +1 866-713-0496 to speak with one of our corporate e-learning experts.