Whether your CEO suddenly becomes ill or an essential specialist hands in their notice, succession planning will enable your company to rapidly respond. But that’s not all succession planning will help your business do. As we explain in this six-step guide.
What is succession planning? And why is it vital for your business?
Succession planning helps businesses identify and grow a pipeline of internal talent to fill leadership and business-critical positions. With a pool of high-potential employees already earmarked, organisations can quickly find the right people to fill short and long-term positions. Ensuring businesses can respond effectively to a range of eventualities, including:
- Filling a position temporarily or permanently should someone resign or retire.
- Making sure emergency caretakers are available to fill roles if someone is incapacitated or passes away.
- Enabling the rapid identification of the right talent to take on important projects or support new business opportunities.
Traditionally, succession planning focused on ensuring backup for the most senior organisational roles. Structured career paths, often with moves or secondments around the business, were used to prepare people to step up.
However, in response to flatter organisational structures, ongoing skills shortages and competition for talent, succession planning has evolved. Today, it’s used to ensure a strong bench of talent for a broader range of jobs. Including single points of failure and specialist roles that are critical to the business.
In comparison to the traditional approach, modern succession planning:
- Uses a broader, more strategic system that unlocks potential within individuals and teams as well as leaders and organisations.
- Is typically carried out more openly with a focus on diversity.
- Is more closely linked to wider talent management practices.
There are a range of benefits to contemporary succession planning strategies. Including:
- Reducing business risk by protecting organisations from sudden, unexpected change.
- Identifying vulnerabilities and highlighting skills gaps.
- Promoting training and development opportunities.
- Transferring knowledge.
- Retaining talent and decreasing turnover costs.
All of which makes succession planning a valuable process to invest time and resources into.
Who should be responsible for succession planning?
Effective succession planning strategies are delivered by HR, Learning and Development and business leaders working closely together towards a clearly defined end goal. Because succession planning is future-focused, it must align with the business’ vision and strategic goals. Then the succession plan should be used to inform a range of wider HR strategies - including workforce planning, learning and development and reward.
Business leaders who are responsible for succession planning need to:
- Be knowledgeable about the business’ operating context and how it’s likely to change.
- Have a solid understanding of the business’ strategy and the capabilities that will be needed.
- Have a good understanding of the talent context for current and upcoming roles.
- Be able to focus on the organisation’s future and current skills needs.
- Be aware of potential social changes that could impact future skills and the numbers of people with these skills.
HR plays a vital role in supporting the succession planning process by:
- Designing and managing assessments.
- Providing employee data.
- Developing and maintaining relevant software and databases.
- Offering advice around assessing individuals.
- Supporting individuals’ development needs.
With your team assembled, here’s what you need to do next.
Step 1 - Define your current and desired end state
Start by clarifying where you are now - including your skills, capabilities and development gaps - and where you want to get to. What does this look like in real life? Let’s explore a couple of examples:
- In the highly regulated financial services sector, firms will likely already have people with solid organisational and managerial behaviours. But if a business plans to lead the online banking space, it will need visionary leaders who can adapt to change and drive transformation.
- A manufacturing firm sees the potential to drive greater efficiencies through virtual and augmented reality (VR and AR). Their existing engineers have specialist knowledge of the business’ production methods. But they’re missing the leadership behaviours needed to meet the firm’s growth goals.
This kind of strategic business insight is the bedrock on which the next step of the succession planning process can be built.
Step 2 - Develop a talent framework
Modern talent frameworks are a defined set of competencies or behaviours that have been identified as being important to an organisation’s success. Setting the bar for what good looks like in an organisation, both now and in the future. They typically cover competencies like thinking and problem solving, delivering, managing change and inspiring and engaging colleagues.
Aligned with your business strategy, this framework:
- Sets the standard for performance excellence.
- Informs your talent management strategy which may need to be realigned to improve performance in line with your business goals.
- Makes it possible to take a data-driven approach to talent management.
The framework provides a common language and way of describing talent and potential and a defined range of shared expectations. Which ensures everyone is laser-focused on delivering the right outcomes with the following steps.
Step 3 - Identify critical and vulnerable positions, key groups and skill sets
At this stage of the process you spotlight key roles - typically always the CEO and executive leadership team if you’re carrying out an organisational review - as well as other vulnerable positions. This could include the next level of management and specialists your organisation could not function without. You might also consider developing back-up talent for roles which represent single points of failure.
Alternatively, you may decide to identify groups of jobs by role, function or level so you can develop generic skills among a number of potential successors. This approach creates pools of talent with multiple individuals skilled to adapt to a variety of roles. Providing greater agility within your organisation.
Succession planning doesn’t only have to be about experienced employees. Graduate intakes can also be assessed for people with high potential. Helping to build long-term capability for specific business areas or across your entire business.
Step 4 - Objectively identify your talent
Now you’ve got a pool of potentials, you need to identify candidates for development. Generally, those identified as high potential receive the most investment in their development. But it is more and more common for those that are not identified as high potential to receive some development, recognizing they are still an important part of the organisation. The strategically aligned talent framework you developed in step two is key to enabling the design and delivery of your assessment approach.
Assessment Centres and/or Development Centres are commonly used to evaluate employees’ current skills, experience and competencies as well as future leadership potential. They can be carried out in-person or remotely.
These in-depth evaluations usually last between half a day to two days, during which time individuals are evaluated using a range of techniques including:
- Psychometric assessments and behavioural exercises.
- Tasks aligned to role expectations including interviews, role plays and decision making exercises.
- Individual and group business simulation activities.
- Presentations and group exercises.
- Self-reflection and personal SWOT analysis.
Developing quantitative metrics to assess individuals’ performance removes the potential for bias and makes it easier to compare participants.
Creating digital dashboards with on-demand talent information can also be beneficial. They connect assessment centre and performance data and highlight key information like talent pipelines, group trends and long-term competency development. With this holistic overview of talent, businesses can use the information to inform resourcing strategies and training and development needs.
Alongside hard data, understanding individuals’ unique talents, behaviours, strengths and perspectives is also an important part of the assessment process. The best succession planning programmes aren’t about finding carbon copies of existing employees, but identifying people’s capability to deliver the business’ future goals. Sometimes, this means finding people who think and behave differently to help take the business in a new direction.
Step 5 - Nominate and develop your high potentials
With your potential successors identified, it’s time to develop them. Not with a string of promotions as in the past but with less structured career pathways which are often planned and directed by the individual. This could mean people:
- Move sideways into new roles as well as up.
- Get involved with cross-functional projects.
- Gain international experience - this is vital in global companies.
- Access learning and development opportunities.
- Take up in-person or remote support from a mentor or coach to build strengths and develop agility and resilience.
With all activities aligned to the business’ strategy and talent framework, nobody is developed for development’s sake.
For executive populations, cohort-based executive development programmes that integrate specific learning - like group learning, executive and peer coaching, action learning activities and personal development and self-awareness - have become popular. Not only do they rapidly align leaders with the business’ goals but they build a culture of accountability and accelerate organisational transformation.
Did you know? While coaching is still primarily the reserve of senior leaders, there’s a move towards democratising coaching by offering it to other employees too.
Step 6 - Think beyond development
The most powerful succession plans go beyond talent identification and development and consider aspects like:
Optimal succession planning empowers employees to give their best performance with clearly defined assessment approaches that are transparent, consistent and fair.
As businesses seek to diversify their leadership, succession planning needs to adapt. Ensuring your processes don’t disadvantage certain groups is essential if you want your talent pipeline to be more representative of your wider organisation.
To get the best return, you’ll need to provide development opportunities and make space and time for people to pursue them. This may require different approaches for different people.
As your business develops key individuals, you’ll want to retain them by increasing their compensation in line with their value to your organisation and the market.
With your business charting its own unique course, your succession planning programme should be as distinctive as your company and its future goals. By following the steps outlined above, you’ll create a succession plan that works for you. One that will identify and develop the talent you need to de-risk your business and ensure your organisation achieves its full potential.
For support with your succession planning project, get in touch with Morgan Philips Talent Consulting today.