Is a lack of leadership succession planning a recipe for disaster? Or, is the talent management process something best dealt with at the time of need? Can a pre-emptive plan help organizations prepare for and act when a critical member exits the organization?
Leadership succession planning is a crucial part of business stability and growth. Companies that don’t maintain a leadership pipeline find themselves unprepared for organizational transitions. And the ripple effects can create unstable work environments, unmotivated employees, and a fall in productivity—or worse.
Can your company mitigate a sudden change in leadership roles? A 2017 small business survey found that three in five companies do not develop a talent pool of successors . This article looks at the steps to help you create an orderly plan for succession. But first, what are succession plans, and why do so many US companies lack them?
What Is Leaderhsip Succession Planning?
Succession planning is a conscious, future-focused strategic process where companies develop succession candidates. By maintaining a resilient leadership pipeline, you have capable individuals ready to replace those in high-priority roles when the time is right. That typically includes C-suite executives, management roles, and other key positions. So, succession risk management mitigates the threat of problems derived from hard-to-fill key role vacancies. Ensuring a vital person exiting the company does not throw your organization’s effectiveness into jeopardy.
|Don’t Leave Replacement Planning to Chance|
A 2021 paper published in the Harvard Business Review highlights replacing in-house executives and leaders with outside talent as one of the biggest mistakes in succession planning .
Why Companies Don’t Plan for Succession
There are several reasons behind a lack of succession planning. But the most common is that many leaders are new to succession planning and are unsure where to start. Other leaders think the time and effort to invest in their staff to prepare for succession issues would be better spent focusing on their product of their current roles. And sometimes, the person best qualified to succeed an existing member is uninterested in the role.
Here is what a 2019 survey by the Human Resources Social Network, HR.com, found .
Businesses of every size should prioritize succession planning, especially larger companies and organizations. Yet, succession often falls close to the bottom of the corporate priority pile. Research shows that only 35% of US firms have a formal plan to handle changes in leadership. Most other boards and CEOs consider the task strategically important but not urgent. Leading to other initiatives taking priority. That is until a linchpin employee or key executive leaves unexpectedly.
Does Your Organization Need a Leadership Succession Plan?
Despite the reluctance, succession planning makes perfect sense in most cases. For instance, people sometimes exit companies suddenly, and without notice. So, having a strategy in place to pass key leadership roles to others in the talent pipeline is vital for ensuring organization stability and to reduce a loss of service. Moreover, it ensures a smooth transition of power from top to bottom whenever there is a shift in the organization’s hierarchy.
Why Companies Need a Leadership Succession Plan
The so-called Great Resignation has impacted organization stability and leadership development; leaving gaps in promotion pipelines with great talent that is untrained and unable to move into vacant roles. But even before this phenomenon, many companies had inadequate or nonexistent leadership replacement plans.
If you don’t have a succession planning process, it’s time to start. Planning is not only there for retirement purposes or leaders taking new positions outside the company. Succession strategies can help you cover sudden leaves of absence, unexpected deaths, and other sudden challenges. Think of it as a leadership flowchart for the company, always ready to move your business into the prepared and capable hands of future leaders.
Why Leaderhsip Succession Planning Fails
Has your company implemented a succession plan, and is it successful? Whether it’s a vacation, sick day, or family emergency, you should know the effectiveness of your succession plan in real terms. If a linchpin member of your organization is out of pocket, how well does the organization adapt?
If someone is not able to easily step into fill that role for a few days, how well can you expect the organization to run if that person unexpectedly exits the company?
Common Missteps & Problems
One prime reason succession efforts fail is a lack of insight, overlooking the skills of key leadership prospect employees and reducing opportunities for them to realize their potential. Other causes of talent pool scarcity are a disconnect in leadership, lack of transparency, and unconscious bias.
Leadership within larger companies seems slow to adapt to changes with the new American workforce. That brings with it a set of other oversights, including:
- The organization’s plan is unstructured or continually neglected
- Maintains only a restrictive pool of rising talent
- Failure to consider employees outside the current leadership pipeline as potential candidates
- Lack of coaching and internal development programs to train talent for future leadership roles
There will be other reasons, and the only way to identify yours is to start planning.
|Employee Retention Crisis|
A US Bureau of Labor report shows that tens of millions of Americans continue to quit their jobs post-pandemic. Therefore, prioritizing employees’ well-being, recognizing their career goals, and investing in their future potential is a strategy worth pursuing to reduce turnover.
Visualize Your Leadership Pipeline
Before developing and maintaining a leadership pipeline, you need to understand its purpose and visualize its success. Having a clear vision helps guide you through the process of recognizing future leadership potential. Only then can you prepare the steps for your organization’s succession planning strategy.
Also, consider short-term and long-term plans. This dual approach protects your organization against unexpected emergencies while planning for expected future transitions like promotions and retirements.
Creating a Leadership Succession Planning Process
The best solution to common obstacles is to adapt your business model. Below are seven strategies that form the foundations of a guide to succession planning processes.
- Developing a learning culture, highlight incentives and rewards
- Share your vision for the company with teams you lead
- Encourage open communication in the workplace
- Don’t isolate; instead, share responsibilites
- Identify important leadership positions, both current and potential
- Assess the risk of skill and positional gaps as you develop your talent pool
- Recognize potential leaders to fill the above roles
This list should help you identify any missing areas from your previous planning processes.
Involve Your Key Stakeholders
Company stakeholders shouldn’t feel reactive to sudden or unexpected gaps in leadership positions. Involve stakeholders and have their insight help form the solution that is your succession planning. That means approval from the founder(s), funder(s), board, organization, etc., for creating a roadmap for your organization’s leaders of tomorrow.
Remember, your key employees should be part of a diverse talent pool. They are the leaders-in-waiting, ready to fill critical gaps in senior roles as they arise.
Align Goals & KPIs
Your succession planning KPIs help you identify, encourage, invest, and retain your organization’s future leaders at all levels. But ensure your KPIs align with your succession challenges and goals. If KPI targets become unattainable, potential leadership talent may lose interest. So, consider how you measure the success and progress of your succession candidates.
The table below gives examples of potential KPIs to track:
|EMPLOYMENT KPIs||COMPENSATION KPIs|
|Percentage of employees trained|
Institutional knowledge through training
Cost of new hires and training programs
Turnover rate of your highest performers
Average age of retirement
Salary competitiveness ratio
Employee productivity rate
Return on investment (ROI)
|EMPLOYEE EXPERIENCE KPIs||PERFORMANCE KPIs|
|Employees (%) trained in company culture|
Worker satisfaction index
Number of job satisfaction surveys
Vacation (%) days used
Employee net promoter score (eNPS)
Learning & development (L&D)
|Performance of new hires|
Rate of internal job hires
Rate of internal referral hires
Internal promotion rate
Candidates (%) who meet job criteria
Workforce (%) below performance standards
Tracking HR and human capital KPIs serve as benchmarking predictors of organizational success. The ones you measure depend on those most aligned with your company’s succession strategies.
3 Phases and 8 Steps of Leadership Succession Planning
The first step to putting a new succession plan in place is to choose a medium for its foundation. Next, you need to separate the plan into Assessment, Evaluation, and Development Plan phases. Developing custom forms and templates are ideal for this purpose and make changing and updating your plan simple. They typically contain text boxes, radio buttons, checkboxes, and other tools to gather critical data (see image).
Your form or org chart needs to include employee details, such as name, position or title, education, work experience, competencies, etc. Other information will include dates, answers to questions, short, medium, and long-term career goals, and additional notes. The idea is to set these forms out in ways that make sense to your company’s replacement planning strategies.
#1 Assessment Phase
- Step 1: Identify major company challenges for the next 1–3–5 years
- Step 2: Highlight critical risk positions to ensure business continuity
- Step 3: Ascertain critical success factors, e.g., skills, competencies, knowledge for roles
#2 Evaluation Phase
- Step 4: Shortlist high-potential persons to replace leadership roles
- Step 5: Decide on the growth skills and competencies needed for succession
- Step 6: Categorize skill and competency gaps
#3 Professional Development Phase
- Step 7: Document critical knowledge employees hold before they leave the organization
- Step 8: Maintain and develop your talent pool to address succession criteria
Implement & Evaluate Your Leadership Succession Plan
It’s time to implement your thought-out plan once you’re happy with the development phase. That could be coaching programs for professional development that strengthen your succession pipeline. Your focus and the actions you take depends on your overall strategy.
Also, continually evaluate progress and prepare to adapt the plan if it falls short in certain areas. Lastly, consider developing a system to monitor what works and what does not.
Corporate Programming for Leadership Development
EWF International offers corporate programming for customized leadership development. Our seminars and workshops on proven, actionable leadership growth help prepare junior talent for the new responsibilities of future roles. We help to improve EQ skills, business acumen, DEI efforts, and build trust in your organization by strengthening your internal talent pipelines.
Learn More About EWF Leadership Development Here
Identifying When and How to Adjust Your Plan
You can’t create a winning succession plan with a set it and forget it mindset. A successful plan requires periodic reviews and minor adjustments. There will always be changes in business operations and economic fluctuations. Few companies are static, as their focus and direction are forever shifting with the times. Updated plans reflect employee changes, market conditions, business trends, etc.
At a minimum, you will want to create annual review for your replacement plan. You should also make accommodations to revisit the plan in the wake of leadership change so you can adjust your plan accordingly.
Talent Management Tools
Consider cloud-based succession planning software if you are a sizable organization. Talent management systems help contain and review your talent pipelines, employee performance, and current state of readiness in one efficient ecosystem. Of course, all talent management systems offer something different. But many programs use scorecards and comparative ratings and track various talent metrics.
Leadership Succession Planning Best Practices
Succession planning best practices make a focus of recognizing and cross-training talented employees within the company. The idea is to help employees acquire the knowledge and skills needed to transition successfully into higher roles, thus creating a change-ready culture.
This acquisition of knowledge and skills is why it’s important to identify your organization’s highest value roles and work to document in your plan what makes the current employee so effective, to pass on that knowledge in preparation.
Summary of Replacement Planning Best Practices
Here’s a rundown of the best practices as outlined in this article:
- Visualize roles to include in your leadership pipeline
- Engage key stakeholders in the process
- Ground your plan’s goals with KPIs
- Incentivize leaders positioned to develop and coach others
- Use the three phases and eight steps to lay the foundation
- Implement your succession plan
- Review and adjust your plan at least annually
- Consider using technology to streamline the process
Closing Comments on Leadership Succession Planning
The most challenging parts of any succession plan are to start and keep momentum once completed. The solution is to have a plan, set a deadline, and follow through on reviews and adjustments. Knowing what you are doing—and why—is the foundation of any successful project. And the way to maintain momentum is to involve all those your replacement planning strategy will impact.
EWF International Emerging Leaders Program
Emerging Leaders Program by EWF International is a unique, curriculum-intensive course that supercharges learning the business acumen, knowledge, and skills women need to reach the next level of their careers. It’s the perfect program if you are in your early to mid-career seeking advancement. The course provides you with the critical skills and knowledge to position yourself for leadership advancement and promotion.
Learn More About Our Emerging Leaders Program