Glossary of Human Resources Management and Employee Benefit Terms
A succession plan is a plan that focuses on identifying and developing employees in order to help them advance within an organization. Succession planning is important because, as an organization grows, it’s more cost effective to develop current employees for key positions rather than hire new people. Giving employees a clear path forward in their careers via a succession plan can also boost engagement and retention.
Unfortunately, many organizations don’t prioritize succession planning, choosing to focus on how to grow their business rather than their people. Among organizations that do have some sort of succession plan, 54 percent take an informal or mostly informal approach, and the majority don’t believe their succession plan is effective.
At its core, an effective succession plan should help an organization choose and develop the right people for leadership positions. Doing this well could be a huge boon when you consider that 82 percent of the time, companies fail to choose people with the right skill sets to fill manager roles. Managers can make or break a team’s productivity, performance, engagement, and more, so choosing the right leader is vital for long-term success. Besides filling leadership positions with great people, organizations can also gain a variety of other benefits when they take the time to develop a formal, thoughtful succession plan, such as:
Lower hiring costs
Stronger internal hires
Shorter vacancies for key positions
Better career development
Increased employee engagement
While succession planning may look a little different in each organization, most succession plans should include the following:
Defined goal(s): Your organization should define what the end goal of the succession plan is, whether that’s to help employees increase their expertise, learn managerial skills, or something else.
Tasks or requirements: This is essentially a list of requirements for what is needed in order to reach the end goal of the succession plan.
Timeline: Knowing how much time employee development may take will help your organization align the succession plan with when you need people to step into new roles.
Budget: Define how much money or what resources you will dedicate to succession planning, as that will shape every other element of your organization’s plan.
Strategy: Finally, define how you plan to introduce, execute, and measure the results of a succession plan.
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