What Is Succession Planning—and Why Is It Important?
So, your organization is growing. That’s great! But does your organization have a growth plan? Or what about a succession plan? If you said “yes” to a growth plan, but “no” to a succession plan, that could be a problem.
While a growth plan prepares your organization for the road ahead, it doesn’t help your employees grow with the organization. In other words, having a growth plan without a succession plan is like building a skyscraper and forgetting to add the elevator.
But what is a succession plan? And why is it so important to have one? Read on to uncover the answers to these all-important questions.
What Is Succession Planning?
By definition, succession planning is a strategy companies use to pass leadership roles down to other employees. An effective succession plan should equip the identified successors with the skills and knowledge they need to fulfill their future roles.
What’s the Difference Between a Succession Plan and a Growth Plan?
A growth plan outlines how an organization expects to grow, then identifies upcoming needs to support that growth. A typical growth plan might include:
- An overall business goal
- A list of components needed to reach the goal
- A timeline with checkpoints or stages of development
- An initial budget
- An outline of the marketing strategy
- Infrastructure, hiring, and other essential needs.
On the other hand, a succession plan focuses on what you need to provide employees for them to advance within your organization. And while many organizations have growth plans, 65% do not have a formal succession plan in place.
In other words, while they’ve planned out their upcoming organizational needs, often including new management roles, they have no consistent strategy to identify strong internal candidates and help those employees fill the roles in that growth plan.
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The 9 Most Important Benefits of Succession Planning
Considering the scarcity of succession plans, you may think it’s better to hire from outside; but in fact, research suggests that internal hires notably outperform external hires during their first few years on the job.
Knowing this, many organizations prefer to promote from within, and some even make it part of their company culture. These organizations and their employees benefit greatly from succession planning.
6 Benefits of Succession Planning for Organizations
Succession planning is a great idea for any organization, regardless of its hiring philosophy. Here are some of the key benefits of having an effective succession plan in place:
- Save money: A succession plan sources candidates from inside your organization. This means you’ll spend less money on recruiting, not to mention onboarding and training.
- Stronger internal hires: According to Gallup research, 82% of managers are chosen for their performance, not their managerial skills. Because a good succession plan allows you to gauge aptitude and enthusiasm for internal recruitment, it acts as a prefilter for employees you’ve marked for advancement.
- No lengthy vacancies: It’s impossible to predict when a great candidate will arrive to fill an opening, and a long delay can throw a huge wrench into your organization’s expansion strategy. However, by preparing employees in advance to step into new roles as soon as they open, you can eliminate that big question mark in your growth plan.
- Creating a foundation for career development: Learning and development is a big priority for young candidates. So, having a succession plan in place is a clear indicator that you are willing to invest in your workforce and guide them forward.
- Increased employee engagement: A succession plan shows you value your employees, provides recognition and rewards for high performers, and gives them a clear goal to work towards beyond business objectives. In short, it’s an engagement goldmine.
- Minimal downtime, maximum performance potential: A succession plan that includes cross-disciplinary training and skill development can expand your workforce’s existing capabilities. This makes your organization more versatile, more productive, and less vulnerable to absences and bandwidth bottlenecks.
3 Benefits of Succession Planning for Employees
What’s good for an organization isn’t always good for its people, but succession plans are great for both employers and employees alike. Employee development is an essential component of any effective succession plan. In fact, without a strong development aspect to prepare employees for career advancement, a succession plan doesn’t work. With a succession plan in place, it can be a win-win for both parties.
Here’s how your employees can benefit from a well-designed succession plan:
- They’ll feel valued: The fact that someone is willing to invest time, effort, and money into their development makes employees feel like they’re valued for their potential, not just their current performance.
- They’ll gain a sense of purpose: Some organizations serve a noble cause, while others create a sense of ownership with profit sharing or stock options. For those who can’t do either, a succession plan provides a clear path to advancement and fights the feeling of aimlessness that creates disengagement and turnover.
- They’ll feel more prepared: Whether it’s to lead a big project or take on a management role, stepping into the spotlight can be scary. A succession plan helps put employees at ease by creating space and time to ask questions and make mistakes before things get real.
What Is the Role of Recruiting in Succession Planning?
An effective succession strategy should be closely linked to your recruitment strategy. A succession plan will help you develop a more long-term perspective when hiring and recruiting. Rather than simply looking for a good candidate to fill a job for a current opening j, you will invest in hires that can fill present needs and support the future growth of your organization.
Through proper planning, you can forecast openings and then recruit superior employees with the intent to develop their skills, knowledge, and abilities to prepare them for advancement. Candidates are looking for opportunities for career growth with a clear path for upward mobility. The fact that your organization has a culture of promoting from within and a succession plan to make it happen can therefore make you more appealing to top talent.
How to Design and Implement a Succession Plan
A succession plan is essentially a growth plan for employees. It includes similar elements to a growth plan but it should be more focused on employee development. A complete succession plan should have:
1. Define Overall Employee Development Goals
You might be looking for employees to develop into managers, to become competent in cross-disciplinary roles, or to expand their own skills and become experts in an area the organization has plans to enter. Or you might have a plan that can achieve different goals depending on the need.
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2. Align Around a List of Requirements
This could be anything from minor tasks and books to read to course completions and successful leadership of projects. In essence, this is everything an employee needs to do in order for the organization to consider them ready for their new role.
3. Create a Timeline for Succession
In order to match an employee’s development plan to your organization’s growth plan, you need to know when to begin. A timeline tells you how much time development will take and offers a way to grade the employee’s progress as well.
4. Get Approval for Budget
From buying books and software to estimating the hours your succession plan will take from an employee’s workweek, it’s essential that your budget falls within what your organization can handle as it works towards its overall business goals.
5. Craft a Strategy for Implementing Your Succession Plan
The “how” of your succession plan should outline the methods you intend to use to introduce, conduct, and measure the process. That could mean any or all of the following:
- A reading list of books or online courses
- A mentoring or shadowing program
- Accepted classes or institutions
- Internal training materials
- A defined trial period or series of evaluation tasks
Your strategy should also outline how you intend to measure and track how employees are performing at each stage. This could involve a simple checklist, a test or graded project, some sort of peer/manager review, or a combination of all three.
Next Steps: Invest in the Future With Succession Planning
We’re taught from a very young age that it’s a good idea to plan for the important things in life, and doing so often comes down to money. When it comes to business, many organizations are so wary of their finances that they become hyper-focused on planning how to spend wisely as they grow.
To that end, it’s much easier to calculate how many desks you’ll need next year than it is to quantify the return on investing in the people sitting behind them. But more than any product, it’s the people who bring value to an organization—and that makes employees the wisest possible investment.
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