The lesson is that No. 1, this management has to be at the highest class possible. No. 2, they have to have a succession plan. - Al-Waleed bin Talal
Great organizations plan ahead as part of best practices. This is because the future is inevitable, and failure to plan is a sure way to fail.
Part of this planning is creating a succession plan that ensures that there are potential candidates when vacancies arise to ensure a smooth transition.
Creating a succession plan is vital as there are bound to be promotions, resignations, firings, or deaths in a company's lifetime.
The great resignations swept across American corporates starting in 2021 offer a great example. What began with junior employees quitting extended to CEOs throwing many organizations into a spin.
If there is a lesson that organizations can learn from this is to make succession planning a core element of their leadership development plan.
Succession planning is identifying and developing people (usually talented employees) to fill key positions when a vacancy arises later. Succession planning creates a leadership pipeline ensuring smooth leadership transitions.
It is essentially a way to ensure that there is a plan for who will step into leadership roles as current leaders retire, move on to other opportunities, or are otherwise unable to continue in their positions.
Succession planning helps ensure a smooth transition and continuity of leadership, which can be especially important for the business's ongoing success.
Succession planning can either be emergency or done in the long term.
An emergency succession plan is done when a vacancy arises that needs to be filled in the shortest time possible. For example, when a CEO role becomes vacant due to resignation. On the other hand, long-term succession planning takes place way ahead of time in anticipation of events such as retirements or mergers.
To create an effective succession plan, use the following succession planning template:
A good starting place to ask: Which position is vital for the success of this organization? Or which position can this organization not do without?
The significance of this position needs to be considered in terms of financial impact, regulatory requirements, public perception, workplace morale, etc.
Once you have identified these positions and the critical roles, they serve. You will be guided on the next step.
For example, for a CEO position, ideally, this position needs to be filled in the shortest time possible since this is where the fulcrum of the organization operates.
This answers the competency management question for the right candidate. There should be a baseline of competency.
For example, does a key position come with more responsibility? If yes, what does the perfect successor need to have for a smooth succession process?
Does the right candidate need to have both technical and business skills?
What are the key skills required for the critical role?
Evaluating candidates for leadership positions will reveal, among other things, if they have the right temperament to handle the stress of being a manager, knowledge gaps, etc.
As you evaluate this, ensure to include the organization's future needs.
Make a list of candidates that meet the set criteria and go further by first asking them if they are interested and, if yes, prepare a path for them to learn more about the key roles they could assume in the future.
This can be done for both internal and external candidates.
For prospective candidates, assess capabilities(performance management) through interviews, discuss career development plans, etc.
It is important to be objective and observe merits at this stage.
This way, you will sieve potential candidates and start cultivating the next generation of leaders.
This entails shaping the right candidates for the position through an individual development plan, coaching, and mentoring by senior management. Moreover, attention should also be on leadership coaching, managing expectations, etc.
Candidates at this stage should:
At the end of these development activities, the potential candidates should be ready to assume the challenging roles assigned.
The recruits assume their leadership position at this stage of the succession plan. This process should not happen overnight. For a successful succession plan, there needs to be a transition period.
This means that the occupier of the officer should acquaint the new office bearer with key roles and business secrets that might not be covered in the earlier stage. Also, the new recruit should manage up.
Setting a deadline for this step is important to avoid possible conflicts.
This measures if the succession planning process delivers in recruiting potential successors. For example, did the process deliver the right person?
Were there unexpected events that derailed the process?
What is the performance of internal hires compared to external hires?
what gaps exist in the succession plan?
Evaluating effectiveness assists in better talent management by creating a feedback mechanism and contingency plan that refines how you will recruit new leaders.
The following companies offer great examples of succession planning.
Apple faced a significant leadership transition when Steve Jobs, Apple's co-founder, and CEO, left his position in 2011. But because of their succession planning, the changeover went relatively smoothly. The company's Chief Operating Officer, Tim Cook, took over as the new CEO.
Given that Cook had been acting as the "de facto" CEO while Jobs was on medical leave, it appears that Apple had been preparing for this eventuality.
In his resignation letter, Steve Jobs recommended Tim cook for the position:
“As far as my successor goes, I strongly recommend that we execute our succession plan and name Tim Cook as CEO of Apple.”
Cook had been a key team member managing day-to-day operations for the business for more than ten years. He was already acquainted with the business's strategy, culture, and procedures, which made a move less difficult.
Apple's internal succession planning worked and delivered the following:
Microsoft is another tech giant with an enviable succession plan. Although, it has suffered bumps along the way, like the transition between Bill gates to Steve Steve Ballmer. The former successor, Satya Nadella, has restored the company's former glory.
Satya Nadella, a Microsoft employee since 1992, rose by showing exemplary leadership in key roles and was picked as one of the possible succession candidates by the board, including impressive personalities such as Alan Mulally, the former CEO of Fords motors.
When Microsoft's board chose an internal candidate for this key position, the company needed new thinking after the unsatisfactory leadership of Steve Ballmer. By settling on an insider away from the expectation of many, they achieved the following results:
Any firm can benefit from succession planning because it ensures a seamless transition when important leaders or workers go. The following are some advantages of succession planning:
Organizations can use succession planning to find and prepare internal candidates for important positions so they are prepared to step in when needed. Due to the lack of a drawn-out hiring procedure, this might save the business time and money.
When a key employee leaves, there may be an interruption while the organization looks for a replacement. Planning for succession ensures a strategy is in place for how the organization will continue, reducing this disturbance.
Organizations with succession plans are better equipped to deal with unforeseen departures and are less likely to be caught off guard by losing a key person. This might lessen the possibility that a key employee's departure will hurt the business.
When staff members know a plan is in place for their professional development, they are more likely to feel invested in and engaged in the organization. A culture of learning and development can be fostered by succession planning, which can boost employee engagement and retention.
Succession planning aids businesses in locating and nurturing internal talent, which fosters a more effective and efficient workplace and raises overall performance.
If the goal is to retain the workplace status quo, a succession planning process ensures this goal is attained. This gives sufficient training on workflow processes, learning culture, and protocols.
Investors are a jittery lot. They hate uncertainty, and when performance is good, the unfamiliar. When effective succession planning is in place, this can assure investors that new management will not rock the boat.
By prioritizing succession planning, an organization creates a competitive advantage that ensures its employees are primed for leadership positions. These leaders understand your business, company culture, and internal processes. This makes employees feel valued, boosting retention efforts and commitment.
A: Succession planning should involve a team of key stakeholders, including the organization's senior management(CEO, COO, etc.), promising employees, departmental heads, etc. A good place to start is by first identifying the goal of the succession plan and creating a succession planning template.
Succession planning should be reviewed and updated regularly -typically annually. This ensures that it is relevant. Moreover, the frequency of review and update can be adjusted based on changing business circumstances.
Key positions in an organization are personnel important for the smooth functioning of an organization. Examples of these positions include CEO, CFO, departmental heads, etc.
The principles of running a small business don't deviate from bigger companies, including succession planning. For small businesses, such as family-owned businesses, having succession plans in place future-proof the business. If your concern as a small business owner is the business's success beyond you, then you need to create one.
A succession plan can fail due to factors such as biases in recruiting process, lack of support from senior management, making assumptions, absence of a Leadership development plan, and having a cookie-cutter approach to your succession plan.