Toolkit: Modernize Succession Planning for Better Results
Succession planning is a key tool for organizations striving to remain competitive in an ever-changing market. With proper planning, leaders can identify a pipeline for key roles and support continuity during talent shifts.
Succession planning is a focused, future-oriented process for keeping talent in the organizational pipeline. It is a strategic practice of identifying the knowledge, skills, and abilities required to perform critical functions and then developing a plan to prepare individuals to potentially perform those functions. This is typically a 12-to-36-month process of preparation, not pre-selection, ensuring the seamless movement of talent and safeguarding organizational continuity.
Despite its importance, many organizations neglect this critical practice. In a SHRM survey, only 21% of HR professionals reported having a formal succession plan in place. More than half (56%) had no plan at all, most often because of a lack of time and resources. Succession planning bridges current talent and the future needs of the organization.
This toolkit will discuss the strategic business case for succession planning, factors to consider when designing a program, potential implementation obstacles, and the characteristics of effective programs.
The Business Case for Succession Planning
Organizations that engage in succession planning position themselves to adapt to change, retain critical knowledge, and foster a culture of growth. There are four strategic imperatives that make this practice clear and compelling.
Adapting to Demographic Changes and Talent Scarcity
Demographic shifts are creating intense competition for talent. As experienced workers retire, the available labor pool may lack the experience and core skills required for crucial positions. There simply aren’t enough skilled candidates to fill an ever-increasing number of high-skill jobs. Comprehensive succession planning provides a structured way to identify and cultivate internal talent, mitigating the risks of these external market pressures.
Identifying Skills Gaps and Training Needs
The process of articulating necessary skill sets and competencies for key positions provides the valuable benefit of identifying skills gaps within the existing workforce. This diagnostic function allows for targeted interventions, such as cognitive and behavioral training programs, to be developed and customized to the specific learning needs of the employee population.
Retaining Institutional Knowledge
In a knowledge-based economy, what employees know is often more important than what they do. Succession planning facilitates the transfer of tacit knowledge — the wisdom gained through experience — from one generation of workers to the next. This concurrent sharing process shortens the learning curve for successors and reduces the need for resource-intensive formal training programs.
Boosting Morale and Retention
A visible investment in human capital can be a powerful driver of employee engagement and morale. Succession planning can be structured to meet employees' needs for personal growth, achievement, and recognition. By providing clear pathways for development, organizations demonstrate a commitment to their people, which in turn fosters loyalty and retention. For younger workers in particular, opportunities for growth can impact engagement and retention. About a third of recent graduates surveyed intend to stay in their current job for four or more years, but twice as many would stay that long if given continual access to skill-building opportunities, according to research from SHRM and Handshake.
SHRM Resources
Pro Tip
With five generations in the workforce now, organizations have the opportunity to share the experience of older workers with younger cohorts, and vice versa.
Key Factors in Designing a Succession Program
A successful succession planning program, regardless of its scope, is enhanced by careful consideration of several core factors.
Scope of the Program
Succession planning can be approached by focusing on critical positions or by identifying high-potential individuals. A program that does both ensures the greatest likelihood of keeping the talent pipeline full. HR should prioritize key roles, which may not always be at the top of the hierarchy. Develop criteria for critical roles by reviewing the level of influence and identifying any significant responsibilities for conducting business operations.
Alignment with Organizational Strategy
To gain executive buy-in, the succession plan must be developed specifically for and aligned with the organization. It can be tempting to adapt another company’s plan, but doing so can make it difficult to fully own. Instead, spend time making your own road map. If bandwidth or resources are thin, start small with one leader and one role in order to demonstrate value.
Data-Driven Assessment
The best succession plans include a clear, data-backed assessment of the current leadership team's capabilities and performance over the past two years. This should be benchmarked against publicly available data for leaders in similar industries. HR plays a pivotal role in collecting and presenting this data to decision-makers, offering an objective view of bench strength and identifying any performance gaps in potential successors.
Robust Performance Management
A strong performance management process is critical to assessing talent. This process should provide metrics on leader performance today to help identify potential future performance. The process should identify who has performed at or above expectations and how their performance aligns with the organization's growth.
Use of Technology
In larger organizations, managing the data associated with succession planning can be a challenge. Initially, simple tools such as spreadsheets and project plans can suffice. As the program matures, a business case can be made for dedicated software that integrates with an existing HRIS to compile data and even suggest logical succession pathways.
SHRM Resources
Pro Tip
Transitioning to a data-driven performance management strategy can be met with resistance from employees, making gaining trust and utilizing change management procedures paramount.
Succession Planning Strategies for Long-Term Stability
In this episode of the All Things Work podcast, Bertha Robinson, executive coach and business consultant at coaching solutions firm Star One Professional Services, sits down with host Anne Sparaco. Robinson offers strategies for succession planning in an era of hybrid work and generational workforce shifts to help your organization get ahead of the next leadership transition.
Overcoming Potential Obstacles
A formal succession planning program can encounter resistance when it’s first implemented. Anticipating these obstacles is the first step in overcoming them.
Lack of Executive Buy-In
Gaining support from leadership is a common roadblock. HR can secure buy-in by presenting a data-driven case that is tightly aligned with organizational goals. Frame succession planning as an essential investment rather than a cost. Highlighting the risks of leadership vacancies and the benefits of a prepared internal pipeline can help leaders understand the strategic importance.
Manager and Leader Resistance
Some outgoing leaders may be uncomfortable planning for a successor, fearing an immediate transition. To combat this, HR must help leaders understand the long-term nature of the process. For managers hesitant to develop their best performers only to lose them to another department, it's crucial to foster a culture where retaining talent within the broader organization is a shared goal.
Weak Performance Management
A consistent practice of providing honest, timely, and documented performance feedback is a prerequisite for effective succession planning. If this practice is weak, it must be corrected as a business priority. Managers need to be educated on the necessity of honest feedback for employee development and risk management.
Resource and Time Constraints
The most common reason for not having a plan is a lack of time and resources. This represents the classic conflict between time spent and time invested. HR should frame succession planning as a strategic investment that saves significant time and cost compared to external recruiting, selection, and onboarding. Starting with a small, focused pilot program can demonstrate ROI and build momentum for a larger initiative.
Pro Tip
Make sure your learning and development program emphasizes more than tactical job skills. Seize the opportunity to build competencies that have a wide range of applications. These competencies include critical thinking, creative problem-solving, and strategic analytical ability.
Components of Great Programs
To ensure a succession planning program meets its objectives, several key components should be integrated into its design.
- Prepare Leaders to Participate: Cultivate high-level commitment. Leadership’s role extends beyond allocating time; it also involves actively shaping a culture that lowers barriers and encourages continuous learning.
- Use a Variety of Methodologies: A great program employs a mix of techniques, including mentoring, cross-training, job enlargement, job shadowing, skip-level meetings, and formal training to give rising talent visibility and new skills.
- Incorporate into Performance Management: An employee's interest and participation in succession planning should be part of the performance management process. Development plans are an ideal place to document and track progress toward these goals.
- Plan for Knowledge Transfer: A primary objective should be developing systems to identify and transfer critical knowledge to shorten learning curves for the next generation of leaders.
- Look Beyond the Obvious: Strong candidates are not always in traditional feeder positions. Look far and wide across the organization for employees with complementary skill sets. Sometimes, it’s also necessary to look externally to find the right leader for a role. The BEAM Framework is one tool to help. It builds on a foundation of legal compliance and inclusion and diversity (I&D) best practices to inform hiring and succession planning.
- Measure and Adjust: It is essential to measure outputs and performance throughout the process. HR must track progress and be ready to change course when needed.
Pro Tip
Impactful succession planning strategies should be revisited periodically and readjusted to ensure they still meet the shifting needs of an organization.
Finding Success in CEO Succession
In this episode of the People + Strategy podcast, Kevin Cox, president of LKC Advisory, discusses his experience with CEO succession planning. With an emphasis on situational awareness and risk management, Cox offers leaders advice on navigating leadership transitions for smooth landings.
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