Putting a plan in place requires a great deal of organization and thought. This goes for pretty much any plan, but especially for an organization's business succession plan. So what is a succession plan?
Succession planning is a process for identifying and developing new leaders who can replace old leaders when they leave, retire or die. In dictatorships, it aims for continuity of leadership, preventing a chaotic power struggle by preventing a power vacuum.
That's the technical definition. Essentially it means that companies are training and investing in the employees that they have so that they are ready to take over vital positions.
Many companies avoid succession planning altogether, fearing it will be a difficult and expensive process while other companies consider the process completed after deciding on who their next CEO will be.
Creating a proper succession plan, however, does not have to be painfully unpleasant. In fact, it should be a set process that’s revisited often by company leaders, edited accordingly to align with your company’s direction, and carefully planned to provide guidelines for employees and potential employees. Succession planning should not just be a plan for the replacement of just one high-level employee but rather a framework for developing leaders within your company and moving them into the right positions that will provide the right results for your company. A proper succession plan will move your company forward without a hitch.
Why Succession Planning?
At its heart, succession planning is an important way to identify employees who have the current skills--or the potential to develop skills--that can help them move up in an organization, or on to other positions.
For example, if a company has a cashier who has been working for a couple of years, fits the company culture, does his job very well, and has growth potential, it would be a good idea to invest in training and promoting him to a managerial position. While hiring someone with more managerial experience from the outside might seem quicker and more beneficial, you run the risk that the outside hire will have a different set of techniques, beliefs and a way of doing things that don't work well with your company culture. You will also be paying them a higher salary during the time they familiarize themselves with your company and there is no guarantee that their performance will be worth that extra cost.
Succession planning will allow you to keep the good talent that you already have and find ways to improve their skills in such a way that they will stay with the company for the long-term and continue to perform in a way that you would expect. According to Matthew Elmore, Co-Owner of Era Marketing,
“A lot of people have the mindset that in order to move up, they have to do well at their current job until they can find a new, better job at another company. It's in their employer's best interest to create the opportunity within that same company.”
“Your employees are assets. You can let them stagnate and become depreciating assets, or you can help them become better and more valuable.”
Some other advantages of succession planning include:
Provides a better understanding of the talent pipeline and highlights areas for development.
Lowers hiring risks for key positions by keeps hiring reserved for entry-level positions.
Ensures critical positions have people who are ready to fulfill them on different timelines.
Prepare employees for managerial positions by giving proper training and leadership opportunities.
Manages the risk of human capital by applying changes proactively rather than reactively.
It gives a competitive advantage as company leaders focus strategically on the future rather than only the next few quarters.
Creating your plan:
It seems logical that companies would want to train and develop their employees to take on more leadership roles, promoting a "hire from within" culture. Putting people on a path is crucial to an employee's success, but even more, your company's!
Not sure how to create your plan? Have no fear! We've come up with the 4 crucial "must-haves" in your plan:
1. Understand Strategy & Structure.
In order for succession planning to be effective, you should know what your organization's goals and interests are. Where do you want your company to be in the future? What strategy and organizational structure do you need in place to achieve those goals? Cara Wade, Senior VP and executive consultant of Leadership Worth Following, gives this advice:
Review current processes and practices. Conduct leadership and board interviews on organizational strategy and structure: current thoughts/feelings on succession; existing organizational situation, including internal and external challenges; To ensure long-term sustainability, envision what will be needed 5-10+ years out - in terms of talent, strategy, and structure - rather than only trying to replicate the current personnel and infrastructure.
Armed with this information, identify your talent needs that fit the structure and strategy for your organization both present and future. Refer back to this information and update it as necessary.
2. Evaluate Employee Skills
Start succession planning with an honest evaluation of your employees' skillset and unique strengths. This evaluation should include all hard/technical skills the employees say they have as well as soft/behavioral skills that you notice in your workers.
Get into the habit of evaluating your candidates and employees for the skills you know are needed to move along their career pathway. Having this list of skills will be helpful in helping them find a more personalized role in the company.Assign your employees to specific responsibilities and tasks that utilize their skillsets. Goals that benefit the company but also make employees stretch can be set based on the skills evaluation you made. Establish specific measurements on how you will evaluate their efforts going forward. (i.e. Minimum KPIs that need to be hit, deadlines that will be in place, etc.)
3. Training and Development
Decide which milestones or goals should be created for each employee. What skills do they need to learn to be more effective? What tasks or projects can they accomplish to develop these skills? Does your organization have the proper tools and programs to develop these internal training programs?
Training and development should be a highly personalized experience that is directly related to the career path of each individual employee. Gather their feedback to better know what their motivations and goals are. Determine what specific knowledge and training need to be provided to help them achieve their personal aspirations.This process will not only help you get more out of your employee, but it will satisfy their thirst for career development and show them you are invested in their career.
4. Provide Recognition and Advancement Opportunities
As your employees gain skills and hit their goals, make sure to recognize their achievements and contribution to the company. Recognition can come in many forms whether it be a promotion, pay raise, or other perks and benefits. Being transparent about the rewards available to them will let them see the long-term benefits of staying with the company and following their succession plan. As you identify your top performers, offer mentoring and training that help them develop leadership skills and refine existing ones. Slowly expand their role so that they can gain experience from having more managerial responsibilities and opportunities. Remember that good leaders not only need technical acumen, but also strong soft skills including standout verbal/written communication abilities as well as tact and diplomacy.
Other Helpful Tips
If you want to know more in detail, or more benefits check out our succession planning blog posts here. Putting together a succession plan doesn't have to be complicated. In fact, keeping a succession plan simple will help ensure that reviewing and updating it becomes a routine process. Some tips when creating your plan:
Be proactive with your succession plan: It can take some time to find and prepare a promising candidate for a leadership role. Even if you don’t think you’ll need a replacement in the near future, prepping someone to assume an important role creates an invaluable safety net.
Get Hiring Executives and Upper Management Involved: There is a huge disconnect in the industry and it begins with a lack of communication of what the hiring needs are. The best way to implement succession planning and pathways is by getting the C-Suite and hiring managers all on the same page. This way as future hires or promotions are based on the same strategy and unity is maintained to help the company reach success.
Revisit and revise: A successful succession plan is one that is flexible and can be revised to accommodate potential changes in funding, business direction or personal circumstances. Revisit any written plan on a regular basis to ensure it accurately reflects the present state of the business, distinctly outlines roles and responsibilities and adjusts transition timelines and deadlines as required.
Murray Seward, CEO of Outback Team Building & Training, recently executed his company's succession process when the founder and primary shareholder retired. He shares his experience and advice saying:
The process takes much longer than we’d expected. Start early to get the process going, and be sure to agree upon legal and accounting representation early on. It’s critical to take emotion out of the process. Valuation should be based on an agreed-upon formula, not emotional attachment.
Take the guesswork and emotion out of the process by planning early and by considering candidate performance. Developing a succession plan can be a huge undertaking — but one that doesn’t have to be a stressful one.
Here is an example of succession planning done right :
McCormick & Co.: In 2008, spice and flavorings giant McCormick & Co. transitioned their CEO position from Robert Lawless to his successor Alan Wilson using a succession model praised by Bloomberg for being thoughtful, comprehensive, and well-executed. Lawless prevented being rapidly forced out by his successor by establishing a transparent timeline of five years, planning his transition to a non-executive chairman of the board role.
After years of monitoring the progress of the candidates and meeting with them, the board and Lawless settled on Wilson. Lawless says Wilson’s fit with the company culture was what made him stand out in the end because it was so important for a McCormick CEO to provide leadership, but also to be people-oriented and understand front-line issues.
The McCormick succession model continues to function well, as seen during the transition from the CEO position to Lawrence E. Kurzius, another internally developed executive.
Evaluating your candidates from the first point of contact will allow you to hire the most qualified candidates for your company. Evaluating their skills and then setting up the proper training to get them to the next level will help you keep employees and reduce turnover rates. Providing advancement and promotion opportunities will increase their loyalty and provide you with strong leadership.
Finally, bridging the communication gap between the needs of the individual departments and the hiring needs of the company will help you find and hire the candidates that are most suited to each role. There’s just no way around it: Succession planning must be a priority for company leaders. How’s yours looking?