Succession planning is a crucial component of strategic management, especially for corporations preparing for long-term growth and sustainability. Effective succession planning ensures your business operations continue smoothly even when key personnel leave, retire, or pass away.
In this guide, we outline eight essential steps to create a strong succession planning strategy for 2024 and beyond.
What Is Succession Planning?
Succession in a corporation refers to preparing for and managing the transition of key leadership within the organization. The process involves identifying and developing internal talent to fill important positions when they become vacant due to retirement, resignation, or other reasons.
Succession planning aims to ensure your corporation maintains operational continuity and stability, even in the face of leadership changes. Corporations without a succession plan will face challenges if something unexpected occurs, and adequate planning allows for seamless operations when changes occur.
Now that you know what succession planning is and why it’s important, let’s discuss the eight steps you should take to develop an effective succession plan of your own.
1. Assess Current and Future Business Needs
Before fully diving into succession planning, evaluate your corporation’s current and future needs.
Understanding your business’s strategic goals, critical roles, and key positions will help you identify which areas require attention:
Critical Roles: Identify positions crucial to your business operations, such as C-suite executives, senior leadership, and other high-impact roles.
Future Roles: Try to predict upcoming vacancies due to retirements, expansions, or organizational changes.
Competencies and Skill Sets: Determine the core competencies and skill sets necessary for these roles.
Every role, skill set, and competency needs an official description. Detailed lists of duties and expectations are necessary for the continued operation of your corporation and to ensure that the people assigned to new roles understand the shifts in their responsibilities.
However, writing detailed descriptions of critical roles, future roles, and competencies is a must for more than just succession planning. You need this information to keep your corporation organized, productive, and functioning under everyday circumstances.
2. Identify High-Potential Employees
Pinpoint high-potential employees who can fill leadership roles and other key positions in the future.
Internal talent is often the best source for potential successors due to their familiarity with company culture and operations. Develop a clear understanding of their potential through performance management and regular assessments.
Look for candidates with high potential or employees who can grow and excel in more challenging roles. Consider the core competencies and essential attributes required for leadership roles and create development opportunities for high-performing members of your organization to prepare for future needs.
3. Develop a Succession Planning Strategy
A well-defined succession planning strategy helps ensure business continuity. When developing this strategy, a three-pronged list of considerations should be made:
Use Succession Planning Templates
Use a succession planning template to develop a structured plan that outlines the steps and timelines for transitioning leadership. Numerous templates are available online to suit organizations with different needs. Choose a template that best mirrors your organization’s succession goals.
Build a Succession Planning Toolkit
Equip yourself with tools to assess and develop potential successors. Performance evaluations, talent development workshops, educational initiatives, and internal data can all prove useful for talent and HR managers alike.
Additionally, when one person moves up or moves on at your organization, everyone on the team should be prepared to ease themselves into cascading new roles.
Build Your Talent Pool
Cultivate a talent pool of internal candidates who are ready for advancement. Assuring these candidates are ready for additional duties is a shared responsibility.
Internal candidates must demonstrate the ambition to make vertical moves within your corporation. Your business is responsible for talent management — identifying talent, nurturing it, and providing growth opportunities for it.
Align your succession planning strategy with your overall business strategy to ensure it supports your long-term goals and competitiveness.
4. Create Development Plans and Programs
Design development plans and programs tailored to the needs of potential successors.
Offer opportunities to members of your organization who demonstrate a desire to improve their competencies, such as:
Leadership Development: Implement programs to cultivate leadership skills and prepare employees for future roles.
Career Development: Offer career paths and growth opportunities that align with employees’ aspirations and business needs.
Mentoring and Professional Development: Establish mentorships and provide development opportunities to nurture future leaders.
Mentoring is one of the most important development programs your organization can implement. It’s the closest thing to on-the-job training candidates can receive before moving up the ladder. The opportunity to shadow someone above them in the hierarchy will provide a realistic view of what to expect if they move up.
Most importantly, it allows candidates to assess their comfort level when assuming new responsibilities.
When the time comes, they will know what they’re stepping into. They should also be able to decline succession if they don’t feel suited for the position, which may prevent unexpected departures.
If they believe they’re ready for their new responsibilities, they’ll easily be able to assume the role you’ve offered them.
5. Engage Stakeholders and Team Members
Engaging stakeholders and team members is vital to successful succession planning. Many voices hold significant value in the succession process, so everyone must agree on the next steps in a succession event.
Include senior leaders and key stakeholders in the succession planning process to gain their insight and support. Communicate the succession plan and its benefits to team members to foster a sense of inclusion and commitment.
Transparency in succession planning helps build trust and ensures everyone understands the plan and its impact on the organization. Succession is your organization’s future, and a successful future requires unity.
6. Develop Action Plans for Critical Positions
Create detailed action plans to address vacancies in critical positions. Action plans and bench strength go hand in hand and are equally essential components of your readiness.
Draw Up Action Plans
Outline the steps to fill key roles, including interim solutions and long-term strategies. The goal is to make the transition as seamless as possible, but things won’t always work out. It helps to have a plan to keep things steady in the meantime.
Evaluate Bench Strength
Assess and enhance bench strength to ensure capable candidates are ready to step into critical positions. If you feel most internal candidates lack the necessary competencies, it’s time to implement stronger training initiatives. It’s never too early to prepare your team for greater success.
Action plans should be dynamic and adaptable to changes in your business environment and workforce, and bench-strengthening measures should be utilized around the clock.
7 . Monitor and Evaluate Succession Planning Metrics
Monitor and evaluate the effectiveness of your succession planning efforts. Checking in ensures significant developments don’t slip through the cracks. Additionally, rising stars within an organization can change, and training needs may shift and evolve with a corporation’s goals.
Prioritize Employee Retention
Measure how well your succession planning strategy retains top talent. Top performers committed to your organization often want to assume greater responsibility. Employee relations can make or break a company — if they feel undervalued, they may be drawn elsewhere.
Development Progress
Assess the progress of potential successors in their development plans. Do you feel your training initiatives and preparedness programs adequately serve their purposes? Is your top talent performing better now than they were six months ago? Make sure your plan is demonstrably effective.
Succession Performance Management
Evaluate the performance of successors in their new roles. Did you anticipate your organization’s needs correctly? Are you using the right markers to identify and elevate top talent? Would you have done things differently if given another chance?
If your succession plan isn’t functioning as you initially envisioned it, you may need to change the priorities and metrics that defined your original strategy. It may be time to modernize your performance review process.
Using metrics helps identify areas for improvement and ensures your succession planning efforts are aligned with business goals. There’s always room for improvement.
8. Update Succession Plans Regularly
Succession planning is an ongoing process. Regular updates are necessary as your organization grows, evolves, and welcomes new talent.
Your plan should reflect changes in business strategy, market conditions, and workforce dynamics. Include new leadership roles and emerging competencies as your business evolves. Update your competency models and continuously assess and update your talent pool to confirm it aligns with your business needs.
Regular updates make sure your succession plans remain relevant and effective in addressing future challenges. Although there’s no set schedule for updating succession plans, reviewing and updating them quarterly when they’re new and bi-annually when they’re older can help you stay prepared.
Succession Planning Is an Ongoing Process
Succession planning is crucial for keeping your corporation resilient and adaptable in the face of leadership changes and evolving needs. Following these eight steps, you can create a comprehensive succession planning strategy that prepares your organization for future success.
Remember to review and update your plans regularly, engage key stakeholders, and invest in the development of your high-potential employees. With effective succession planning, you can secure the future of your business and maintain a strong, capable leadership team.
Some states have highly specific compliance requirements that may impact your succession planning efforts. Mosey’s compliance management system is designed to help corporations track and meet state and local business requirements. Schedule a demo with Mosey to learn how we can optimize compliance for you.
Read more from Mosey:
- What Is Alabama’s Initial Business Privilege Tax Return and When Is It Due?
- 2024 Updates to Oregon Paid Family Leave and OFLA
- California’s Workplace Violence Prevention Plan: Employer Guide 2024
- Bereavement Leave: Employer’s Guide for Bereavement Policy 2024
- Colorado SecureSavings Program: How It Works and Who Qualifies
- EIN Verification Letter: What Is It, How To Get One, and Copies
