Succession Management: 9 Steps For Future Success
Succession management enables organizations to place the right people with the right skills in the right positions at the right time. But why is succession management so essential, and how can you create a succession management plan that works?
What is succession management?
Succession management is a systematic approach to identifying, selecting, and developing key employees and talented new hires to assume critical roles and prepare the organization for the future. This practice ensures that skilled and engaged people fill key leadership roles.
As business conditions become increasingly challenging, skilled leaders must tackle them and continue to drive the organization forward. However, the role of leadership often leaves employees feeling ill-equipped in their skills and qualities to take on the position. That’s hence succession management tools and planning have become a core focus for many businesses.
Succession management is ultimately the responsibility of the CEO and board of directors but HR will assist in and facilitate the process.
Why is succession management important?
Success management is vital for organizations for several reasons.
Strong leadership is a competitive advantage
Strong leaders will tackle challenges, navigate obstacles that arise in the future, and get ahead of the competition. They have the specific competencies to identify and respond to the future needs of their organization.
Build critical skills for success
Investing in and nurturing talent within your organization helps ensure your leadership team members have the critical skills required to successfully lead and grow the business.
Reach business objectives with the right talent
When you know your key goals and objectives, you can strategically hire and develop the right people with the right skills to help you achieve these goals in the most efficient way.
Having the right people in the right position improves lead times and decision making
Delays can arise in projects and goals if senior leaders unexpectedly become sick or die or leave for one of your competitors. Then, you have no one in place who is qualified to take on that role. So having the right people standing by to take over is vital to avoid delays.
Reduce turnover by filling positions internally
Internal candidates are more likely to succeed and remain in your organization than external hires. In fact, a study found that external hires are 61% more likely to be laid off or fired. They’re also 21% more likely to leave their job than internal hires. Overall, investing in employee career development and succession management programs help you improve employee retention.
Furthermore, external hires often get paid more and perform worse in performance reviews.
A successful succession management model ensures a smooth transition in times of leadership changes and enables organizations to transfer knowledge from one generation of leaders to the next.
CASE STUDY: McDonald’s Corporation
In 2005, Jim Skinner took on the CEO role in the organization after two former CEOs died within 24 months.
During his seven years in the company, he spent time mentoring his successor, Chief Operating Officer Don Thompson. He was also famous for asking managers to give him the names of two people who could succeed them if they were to leave or take a promotion.
He told Fortune, “I basically felt the responsibility to the board of directors to be sure I provided them with someone who could run the company when I’m gone. Until I was capable of doing that, I would not have left.”
Skinner retired in 2012 confident that Thompson was ready to take over.
9 steps to create a succession management plan
The key to succession management is to have a solid succession management plan in place and to follow and adjust it along the way.
Here are 9 simple steps to help you create yours today.
1. Consider your organizational strategy
Having an organizational strategy in place will form the foundation of your succession management plan.
Consider where the business aims to grow over the next ten years. For example, what is the overall vision for the future? Will you be entering new markets? Who will your competitors be if your strategy or focus changes? What does your current structure look like, and will this be changing in the coming years?
Business acumen is a key competency in understanding your organization’s goals and vision. It allows you to create processes and policies that support and align with this. When you know how best to serve and grow your organization, you can then tailor day-to-day activities and policies to this, ultimately leading to an increase in profits.
2. Get support from the top
As discussed, HR professionals play a significant role in assisting in and facilitating a succession management strategy. However, it’s imperative that you seek support from business leaders to ensure that you implement your plan successfully and it creates the desired results.
HR leaders can then align their talent development and management activities with more strategic plans that come from the top.
3. Determine the key positions
Armed with a clear strategy and the support of key business leaders, the next step is to determine the positions you want to ensure are consistently filled by qualified and capable people in your succession pipeline.
A great benchmark is to get clear on the top 5 to 10 critical positions. Remember, not all leadership roles will be essential to your succession management plan. It’s your job to determine which are most pivotal and prioritize those accordingly.
4. Select succession candidates
Now that you’re clear on your key roles, you need to determine the employees in your organization who can potentially fill these roles in the near future.
The best approach is to focus on the employees with the greatest leadership potential. These may be your high-will, high-skill employees or the stars from your 9 box grid. You can base your decisions on valuable data such as employee performance metrics. The benefit of this approach is that you’re focusing all your efforts on people who have the highest potential and the greatest chance of succeeding.
Focus on the high potentials who demonstrate foundational skills to succeed in those higher positions. Discuss these opportunities with them before making your succession choices official. Make it clear to candidates on board that there are no guarantees and all roles and circumstances are subject to change.
It’s essential to be mindful that the person next in line for a position may not be the most suitable for it. Equally, they may not even be interested in progressing to the role you have in mind for them.
All in all, keep your succession management plan limited to the key roles and employees with the biggest potential. Then you can be sure you’re investing your resources and efforts where it is really worthwhile. It also helps you manage employee expectations and prevent disappointment and frustration in employees who expected to be promoted but weren’t because there were only a couple of spots available.
5. Build a strong talent pipeline
Building your succession pipeline can be time-consuming and also present many challenges along the way. So much so that 74% of public companies and 52% of private companies state that maintaining a strong talent pipeline is the most challenging aspect of succession planning.
However, ignoring your pipeline altogether can be a costly mistake and leave the organization in a vulnerable position. So even if there are no current openings today, it’s crucial to start building your pipeline today. That way, you’ve got a constant pool of successful candidates for the next generation of leaders to tap into.
Analyzing your existing leaders and pinpointing skill gaps, and keeping in mind the organization’s future vision can help you make effective development plans that truly prepare people for these future roles and set the business up for success.
6. Focus on the continuous development of future leaders
With your roles and candidates in mind, work on creating professional development plans to prepare your employees to assume these future leadership positions.
However, just having leadership development plans in place is not enough. It’s vital that these are adhered to and continuously monitored and improved as goals and strategies evolve within the organization. An isolated training session or learning initiative will not suffice. Organizations collectively spend $370 billion per year on leadership development. Yet, 74% of executives alarmingly report not being adequately prepared for the senior leadership challenges they face.
Actively engage your employees in the process and encourage them to set their own development goals. Monitor their progress with regular performance assessments. Invest in them developing leadership skills by offering them mentoring and leadership coaching. Also, help them gain experience, build confidence in various roles, and test how they cope with new responsibilities and adapt to new environments.
For each candidate, set out key goals and competencies needed to fulfill the future role. Set out realistic timelines for these to be achieved. Clear expectations are vital here.
When done consistently, this will ensure your people are highly skilled and qualified and feel confident in tackling all challenges presented in future senior management roles.
7. Regularly monitor and assess your leadership bench strength
Regularly assessing and evaluating the progress your potential successors are making ensures that your leadership pipeline remains strong at all times.
For example, if a specific candidate shows little to no improvement over time despite regular training and mentoring, it may be time to revise your plan for this employee. Without monitoring and assessing, you would be unable to make this informed decision. You may promote someone into a role that they are not a good fit for and pass up on another candidate who is an ideal match.
Analyzing how strong your leadership bench currently is also offers you a better grasp of where to focus on in the future to improve your talent pool.
8. Invest in software to help you
The larger an organization is, the more challenging it becomes to adequately manage talent and a succession management plan using paper files or spreadsheets. If you haven’t yet invested in an HR software system to assist you, now is the time to do so.
Today, most HR systems will enable you to manage various tasks, including recruiting, onboarding, training and development, and performance management.
These systems can create reports to help you easily identify talent gaps, make comparisons between employees, and simplify the succession management process.
Some popular succession planning tools include:
- SAP SuccessFactors
- Oracle Taleo
- Silkroad Wingspan
9. Make succession management a part of your recruitment planning
While it makes sense to focus on your current employees, don’t forget to build succession management into your hiring strategy.
Now that you’ve identified the critical roles you want to fill in your organization, along with any talent gaps, you have a clearer idea of the type of candidates you need to hire.
Let’s say you know that the organization will explore new markets and expand overseas within the next five years. This means you’re ideally looking for candidates who would be happy moving overseas or regularly traveling.
Integrating your succession management plan into your recruitment process will ensure your talent pipeline remains strong and aligned with the organization’s future.
A strong succession management plan is a must for future success
It’s true what they say, if you fail to prepare, then prepare to fail. Knowing where you want to grow as a business is key in helping you create a winning succession management plan that sets your organization up for success. Once you’ve got a plan, be sure to implement it and continually monitor and adjust your strategy accordingly. This will help you develop tomorrow’s leaders and maintain your competitive edge in an ever-changing market.