Succession Planning Guide: Choosing Your Future Leaders

Published December 27, 2021
two employees having a succession meeting

Succession planning is defined as the process of identifying and preparing internal candidates for leadership roles. It involves working proactively to ensure that high potential employees who are interested in advancing are prepared to step up into leadership roles that become available within the organization.

What Is Succession Planning in HR?

From an HR perspective, succession planning involves taking steps to ensure that the company does not necessarily have to look outside the organization to fill leadership roles when a current leader leaves or a new role is created. Succession planning is a talent development strategy designed to help make sure that an organization has the right people positioned to transition into higher-level roles as the need arises.

Why Is Succession Planning Important?

Succession planning is an important aspect of a company's staffing and employee development plans. It also has a significant impact on employee retention and engagement, as well as the overall company culture.

  • Staffing - Leadership vacancies are inevitable. Even among the strongest teams, leaders will sometimes choose to leave for other jobs or to retire. Succession planning helps ensure that there aren't extended vacancies on the leadership team when this happens. Rather than having to scramble to recruit external candidates to fill these key roles, companies that have done a good job with succession planning are likely to have internal candidates who can smoothly transition to these roles.
  • Talent development - As high potential employees go through training and other talent development experiences designed to prepare them for advancement, they will develop skills that will help them perform even better in their current roles. They'll become better and more productive team members than they already are. They'll also be able to position themselves as informal leaders, which will help with transition if they get promoted in the future.
  • Employee retention - Top employees want to work for companies where they have opportunities to grow and develop, so succession planning can directly impact employee retention. Ambitious employees who want to move into leadership roles are more likely to stay with your company if they know they are being prepared to advance to this type of job. Otherwise, high potential employees are likely to leave in search of opportunities where they feel they have a better chance of being promoted.
  • Employee engagement - When a company invests in developing internal talent, such as with a succession plan, this sends a message that the organization values and invests in the people who work there. Feeling valued by one's employer is a key factor in employee engagement. As a result, succession planning can help boost overall employee engagement, even among those who don't want to move into a leadership role.
  • Company culture - The leaders of a company have a significant impact on its overall culture. When a leader is promoted from within, the decision-makers can be confident that the person promoted is comfortable with and will properly represent the organization's culture. That is not the case when a high-level leader is brought in from outside. You can verify an external candidate's skills and background, but you can't know for sure how they'll impact the organization's culture.

Key Stages: Developing a Succession Planning Program

Succession planning should be an integral component of the organization's approach to human resources management. It is related to the organization's staffing plan, as well as its performance evaluation and talent development processes. Take a strategic approach to developing your succession planning program by following the steps below.

Seek Leadership Buy-in

As with any organizational initiative, it's important for the leadership team to buy-in to the importance of succession planning. High-level leaders need to realize that helping to identify and develop the next generation of leaders is part of their job. It's important for HR leaders or those who run businesses to take the time to help them understand the importance of succession planning to the organization and its employees, as well as to them. Beyond the key reasons listed in the section above, be sure to encourage members of the leadership team to recognize that succession planning is also about clearing the way for their own advancement. After all, before a department director can move to a vice president role, there has to be someone ready to step into the director job.

Conduct a Needs Assessment

Succession planning has to begin with a needs assessment focused on leadership staffing. It involves taking a long look at your current leadership team and making sure that you are working on preparing internal team members to step up to fill these roles if they become vacant. Key questions to consider include:

  • What are our current and short-term leadership staffing needs?
  • What do we realistically expect our long-term leadership staffing needs to be?
  • Who do we have who could step up to each of these roles? How long would it take them to be ready?
  • What steps do we need to take in order to have internal candidates ready to move up when the need arises?

Use this simple succession planning template as a tool to help you start mapping out your company's succession planning needs as you decide on the answers to these questions.

Establish Leadership Development Program

succession mentoring training

A solid leadership development program is key to any successful succession planning effort. These programs generally involve a management development curriculum, mentoring by a high-level leader, and opportunities to lead special projects or cross-departmental teams. The key to developing a program that works for your company is to look closely at what it takes to succeed in a leadership job with your company and use that information to develop your program.

  • The leadership development program should provide employees with leadership-focused training and development opportunities that will help them develop the skills and behaviors they will need to succeed at a higher level.
  • Be sure to establish clear criteria for employees to complete the program. Also establish guidelines to remain active in the program, such as successfully completing a certain number of courses or approved activities every quarter.
  • It's also important to ensure that participants know that participating in the program isn't a guarantee of promotion, but rather a way of helping them to prepare to be considered for positions that may become available in the future.

Determine Selection Process

Decide how employees will be chosen to participate in the succession planning process. Some companies have a structured procedure, while others are more flexible. To be as inclusive as possible, it's a good idea to allow for multiple ways that employees can be considered for selection to participate in the leadership development program.

  • Selection for succession planning can be incorporated into the performance appraisal process, with managers being encouraged to recommend or nominate top-performing employees who exhibit positive performance and leadership traits.
  • It's also a good idea to allow employees to directly apply to participate in succession planning efforts. Consider adding a form to the intranet that employees can use to request consideration for participation in the leadership development program.
  • You could also establish criteria that automatically qualify employees to be invited into the program, such as evaluation and customer satisfaction scores above a certain level, paired with completion of certain prerequisite classes or milestones.
  • Any approach to spotting high potential employees and helping them grow could be an appropriate way to select employees to participate in your organization's succession planning efforts.

Evaluate and Adapt as Needed

As with any program, it's important to evaluate the effectiveness of your succession planning efforts. Periodically survey those who are participating in the program, including the employees and the current leaders who are participating as mentors. Their feedback is key to knowing if the program is effective as-is, or if adjustments are needed. If the employees in the program are leading committees or project teams, also solicit feedback from the members to gain insights about how they come across as leaders in real-world scenarios. Make changes as needed based on the feedback you receive.

Preparing Future Leaders Today

Succession planning is the best approach to being prepared to maintain continuity in your organization's leadership team. While it may sometimes be in the organization's best interest to bring in leaders from outside the company, if your company has a solid succession plan you'll have a great pool of internal candidates to consider.

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Succession Planning Guide: Choosing Your Future Leaders