Key Steps In Navigating The Succession Planning Process
By: John Feldmann - January 24, 2019
Most successful businesses are aware of the importance of succession planning — the process of identifying influential positions within an organization, then training existing employees or new candidates to ensure those roles do not go unfilled. A succession plan typically focuses on high-level positions that, if left open, would adversely affect the company’s profitability and success. Taking into consideration the number of choices, opportunities and even misfortunes that can affect one’s career, it becomes essential to prepare for a leader’s sudden or unexpected departure with a proper succession plan.
While management may make the mistake of deprioritizing succession planning in favor of other important tasks, failure to do so could severely jeopardize a company’s future should a leader depart. However, putting a successful plan into action may involve more work than simply cross-training employees on multiple roles. Here are a few steps executive leadership should consider when developing future plans.
Identify Critical Positions
The first step in every succession plan is to identify the roles that are fundamental to a business’ success. If these positions are left unfilled, it could negatively impact the company’s growth. Typically, a succession plan will mirror a company’s hierarchy, as higher-ranking positions are more vital to an organization’s success than those who command less responsibility. Once management prioritizes the most critical roles in terms of how severely their vacancy would affect the company, they can form their succession plan accordingly.
Make Sure Leadership Is On Board
Many leaders don’t want to think about a time when they will no longer be needed at the company, much less help identify or train their replacements. However, succession planning involves more than just HR paperwork. A leader’s successor must be aware of the company’s or department’s short- and long-term performance goals and be able to pick up where the previous leader left off. Learning these details after the leader’s departure defeats the purpose of a succession plan. Learning from the leader directly requires his or her buy-in to the planning process.
Determine If Successors Should Be Internal Or External
There are numerous advantages to naming an existing employee as a successor (saving on recruiting and onboarding costs, time to productivity, employee loyalty, etc.). However, if there are not any qualified employees, a replacement has to be found externally. This will change the direction of the succession plan, as instead of training a current employee to transition into a leader’s role, the focus will shift to developing a process by which a new hire can become a functioning leader as quickly and smoothly as possible. The plan may include developing process charts, training materials and detailed lists of goals and responsibilities, and training employees in supportive roles on functions of the leader’s role so they can communicate them to the successor to expedite his or her ramp-up.
Share the Plan with Potential Successors
Provided that a high-potential employee has been identified internally as a suitable successor for a leadership role, management should meet with him or her to gauge interest, then discuss training or mentoring plans. This should include establishing a timetable for the training process and setting expectations for the position’s duties. Failure to share plans for succession with skilled and knowledgeable employees could result in their pursuing other opportunities, simply because plans for advancement were not discussed. Conversely, proper succession planning can boost retention efforts by offering worthy employees opportunities for promotion.
Succession planning is not simply another box to be checked on management’s to-do list, but rather a strategic investment in a company’s future. Few leaders will remain with an organization until its demise. Therefore, companies must prepare for long-term success after leaders retire or move on to the next step in their career. In order to achieve this, it’s essential that management develop a succession plan for all positions integral to the company’s operations as the business continues to evolve.
** Disclaimer Required by IRS Circular 230** Unless otherwise expressly approved in advance by the undersigned, any discussion of federal tax matters herein is not intended and cannot be used 1) to avoid penalties under the Federal tax laws, or 2) to promote, market or recommend to another party any transaction or tax-related matter addressed.