Overview
This article examines succession planning, its research-backed benefits, and real-world examples, such as Apple and Johnson & Johnson. It outlines how to build fair and transparent policies, distinguish between succession and contingency planning, and develop talent pipelines. Practical steps show how succession planning boosts retention, engagement, and long-term organisational resilience.
Introduction
Succession planning is the process of identifying and developing employees to assume key roles and responsibilities within an organisation. Effective succession planning can help ensure a smooth transition when key employees leave the organisation, whether through retirement, promotion, or other reasons. Succession planning is a bit of an art if it’s carried out effectively. I’m an advocate of the principle of fairness, openness and transparency. Without these principles, succession planning can disincentivise employees.
What Research Shows
Research indicates that companies with effective succession plans are more likely to succeed than those without one, despite businesses not undertaking the planning. ATD’s Study found that only 35% of organisations have a formalised succession planning process in place.
Effective succession planning can help organisations retain key employees. According to Gartner, just 25% of employees are confident about their careers at their current organisation. By providing a clear path for advancement, organisations can increase career confidence, employee engagement and motivation.
The Case for Succession Planning
This essential leadership tool helps us develop effective ways to manage talent, as well as a means to fill critical and other key roles. In its purest form, it is to make sure that the organisation can continue to function with the right people, and with the right skills at the right time. Some spin-off benefits of succession planning can be bringing in new and fresh talent or motivating existing employees with a clear career path. Succession planning helps ensure that an organisation can continue to function effectively even when key employees leave. This can reduce the risk of disruption to the organisation, as well as the cost of finding and hiring replacement employees. Additionally, succession planning can help identify and develop new leaders within the organisation. This can help ensure the organisation continues to grow and evolve.
Research indicates that another significant benefit of succession planning is its ability to help retain key employees. When employees feel that there is a clear path to advancement within an organisation, they are more likely to be engaged and motivated to perform at their best. This can reduce turnover and help the organisation build a strong, stable workforce.
Finally, succession planning can also help organisations respond to changes in the marketplace or industry. By identifying and developing employees who have the skills and knowledge to adapt to new challenges, organisations can remain competitive and thrive even in uncertain times.
Successful Succession Planning
As we all know, sadly, in 2011, Steve Jobs, the CEO and co-founder of Apple, passed away after a long battle with pancreatic cancer. Although Jobs was seen as the driving force behind the company’s success, he had put in place a strong succession plan. The plan involved identifying and developing key employees who could take over his responsibilities. Tim Cook, who had been serving as Apple’s Chief Operating Officer, was named as the new CEO. Cook’s appointment was a smooth transition, and he has since been able to maintain the company’s success and even further grow it.
Johnson & Johnson has a history of successful succession planning. The company has a formal process in place to identify and develop future leaders. Many top executives have been promoted from within their organisations. Johnson & Johnson’s CHRO, Peter Fasolo, HRE’s 2022 HR Executive of the Year, was prepared to install a new CEO last year when Alex Gorsky announced he was leaving. His successor, Joaquin Duato, took over in 2022.
Developing A Succession Policy
How you shape your succession plan will be distinct for each business. Here are some factors to consider when shaping your succession plan.
Purpose
Be clear about why you want to introduce succession planning. Is it to recruit new and evolving talent? Is it to develop new leaders/managers/specialists in the future?
Communicate
Communicate openly about why you want to introduce succession planning with your current workforce. Spell out the possibilities and opportunities for your employees.
Develop clear criteria
Be clear about the criteria you are going to apply to any succession planning exercise. Communicate it widely. Ensure that the requirements promote inclusivity and fairness, with openness and transparency as core principles.
Be structured
Keep it structured. Ensure that you and everyone involved understand how it is going to work. They know what they can expect. Align other employee lifecycle events with the succession plan where needed.
Open-minded
Be open to attracting talent from everywhere. There may be someone in your current workforce who is not currently displaying the characteristics for a future job, but with an open invitation, they might take the opportunity.
Clear the path
If you decide that the future lies through a graduate scheme, try to make it accessible to existing workers. There is nothing more annoying than doing a great job and being told that you can’t compete because you need a degree.
Link with feedback
Tie your succession planning to your appraisal/feedback scheme. It’s essential to communicate succession planning avenues when thinking about career development.
Steps to Effective Succession Planning
Effective succession planning involves several key steps. First, it is important to identify the key roles and responsibilities within the organisation that are essential to its success. This can include positions at all levels, from entry-level roles to executive positions.
Once these key roles have been identified, the next step is to determine the employees who have the potential to fill these roles in the future. This can involve evaluating the skills, knowledge, and experience of current employees, as well as identifying any gaps that need to be filled through training or development.
Once potential successors have been identified, the next step is to develop and implement a plan for their development and growth. This can include providing training, coaching, and mentoring, as well as offering opportunities for job shadowing or cross-training. It may also involve identifying stretch assignments or other opportunities for employees to gain experience and build their skills.
Throughout the succession planning process, it is essential to communicate with employees about their potential for advancement and to provide them with regular feedback on their progress. This can help employees feel engaged and motivated, and can also help ensure that the organisation can retain top talent.
Contingency Planning
One of the biggest confusions I have seen when considering effective succession planning is when people are identified to step into a post in the case of an emergency. The practice of naming specific people to replace an incumbent is not succession planning. It is a contingency plan. Succession planning and contingency planning are two distinct concepts that organisations use to manage risk and ensure business continuity. Here are five main differences between the two:
Purpose
Succession planning focuses on identifying and developing internal talent to fill critical roles within an organisation over time, while contingency planning focuses on preparing for and responding to unexpected events or crises that could disrupt normal business operations.
Timeframe
Succession planning typically takes a longer-term view, focusing on developing talent and preparing for leadership transitions over the years. In contrast, contingency planning is typically focused on short-term responses to unexpected events.
Scope
Succession planning is typically more narrowly focused on specific roles and individuals within an organisation. In contrast, contingency planning is broader in scope and may cover a range of scenarios and potential risks.
Proactivity
Succession planning is generally a proactive process, focused on identifying and developing talent before it is needed. In contrast, contingency planning is reactive and designed to respond to unexpected events as they arise.
Outcome
The ultimate goal of succession planning is to ensure that an organisation has a pipeline of qualified talent ready to step into critical roles when needed. The goal of contingency planning is to minimise the impact of unexpected events on an organisation and ensure that it can continue to operate under challenging circumstances.
Even a contingency strategy like this can cause resentment if the person identified is not the right one. To use a contingency strategy properly, employees would not doubt that the person to step in, in the case of an emergency, was the right person. Someone with the right skills, and the process fits with the organisational ethos.
In Conclusion
In conclusion, effective succession planning is essential for the long-term success of any organisation. By identifying and developing key employees, organisations can ensure they have a strong and stable workforce. A company that is capable of adapting to new challenges and opportunities. Whether you are a small business owner or the CEO of a large corporation, taking the time to develop a succession plan can help ensure that your organisation continues to thrive for years to come.
