Succession planning is an often overlooked yet critical component of an organization's long-term business strategy. HR leaders should work with others to create a succession plan that will help ensure a seamless transition when employees quit or retire from the company.
A succession plan identifies employees with upward mobility potential and accelerates their professional development by enrolling them in skills training or exposing them to new challenges. Succession planning eliminates some potential problems before they affect day-to-day operations, as it reveals any potential gaps in employees' skills. It also helps senior management evaluate the leadership potential within their workforce and identify the optimal candidate for each opening.
Learn more about succession planning and some of the benefits it can offer companies.
What is succession planning?
Succession planning involves identifying the critical positions within an organization, then developing the professional skills of employees who possess the potential to succeed in those jobs.
HR staff once relied on manager feedback to understand employees' skill sets, but they now use data analytics to identify high-performing, high-potential employees. Various succession planning software tools use AI and psychometric data to highlight employees who are most likely to succeed in more advanced roles.
The first step in the process of developing a succession plan is to identify the most critical positions in the organization. These may include jobs currently held by individuals close to retirement age and those with specific skill sets. HR leaders should consider the effect on business operations if that person left suddenly.
HR leaders should then list the skills and knowledge that each position requires, then identify likely successors for each role and create a plan to prepare them for the job.
The benefits of succession planning
Succession planning can help companies in various ways. Here are several.
1. Minimizes company disruption and ensures continuity
Succession planning reduces disruption when a key employee leaves. Successors are already prepared to assume their new roles if HR leaders have already worked with others to create a succession plan. Company leaders without a succession plan might be forced to make hasty hiring decisions and go outside the company to hire talent.
Business continuity is a major concern for business leaders, and unforeseen circumstances such as illness or sudden departures can lead to serious operational problems. Identifying and training a successor for every critical role can help ensure seamless continuity.
2. Improves learning and development
Succession planning promotes continuous learning and professional development.
Employees who are given support and resources for advancing in their careers often possess greater job satisfaction, which results in lower turnover and an improved employer brand.
3. Helps retain institutional knowledge
Companies that retain high-performing employees also retain the employees' institutional knowledge.
Succession planning ensures that critical information is not lost when key employees leave. When current employees move to a higher position, they pass down what they've learned to newer workers.
4. Reduces recruitment costs
Succession planning reduces -- if not eliminates -- recruitment costs.
Sourcing candidates from outside an organization is time-consuming and can be quite expensive, especially when hiring senior executives. Internal job candidates are able to hit the ground running since they are already familiar with the company culture and business operations. With proper succession planning, internal candidates are ready to assume the role as soon as the need arises because they already received training for it.