Succession planning is not only about identifying potential successors; it is an evolved strategic process that aligns talent development with organizational goals and objectives. This guide will explore the importance of proactive talent identification, the role of data-driven insights in decision-making, and the significance of fostering a culture of continuous learning and development.
As we navigate the ever-changing business landscape, it is also necessary to address the impact of technological advancements on succession planning. From leveraging artificial intelligence and predictive analytics to harnessing the power of digital platforms for talent management, evaluate how organizations are embracing technology to enhance their succession planning strategies.
Succession planning is a strategic process of identifying the next generation of leaders who can ensure business continuity when key leaders move on to new opportunities, retire or are no longer there. It is a means of preserving the company’s future and the stakeholders associated with it. By identifying possible successors for crucial roles, honing and nurturing their talent, and ensuring they seamlessly fit into the organization’s structure, companies future-proof themselves against the most visible and unforeseeable odds.
Succession planning is a well-structured step-by-step process that combines regular activities and ongoing procedures to comprehend and evaluate potential employees as future leaders. Various companies ensure that the succession plan is adhered to periodically and is adapted, considering the evolving workforce. It is ideal for mitigating risk and building value.
Succession planning broadly covers the senior-most positions in the company’s hierarchy, but companies also consider critical roles along the various stages of the corporate ladder. Employee development is integral to succession planning, as it builds a high level of engagement among the high potentials who desire achievements and career advancement.
There are two succession planning models that a company can implement at all organizational levels; they include
A succession plan positions the leadership for success and prepares for the unknown. Some key objectives of succession planning in an organization bring more perspective to the entire process.
One of the goals and objectives of succession planning is to ensure effective all-around business continuity. Building a leadership pipeline by selecting, shortlisting or developing the abilities and skills needed to maintain a forward-looking trajectory for the company automatically makes it future-ready. It makes one less likely to rush into making wrong decisions during crises.
One of the objectives of succession planning in HR is to identify critical frontline positions important to a company’s success. C-suites aren’t necessarily the only significant positions. Middle-management and market-vulnerable roles such as sales are equally important in many companies. With a succession plan, companies can outline a defined structure with role-specific job descriptions and strategic contributions that offer clarity to the executives and board members. Concurrently, it is also feasible to identify obsolete or declining positions within the organization with a succession plan.
Another strategic objective of succession planning is implementing competency mapping criteria in the organization. Sustenance and growth are crucial in a competitive environment, and critical competencies help understand the attributes already possessed by the organization. It offers a detailed understanding of talent competencies to be recruited, promoted or developed for long-term stability. Competency mapping is a comprehensive matrix that is practical and worthwhile when planning for succession.
Succession planning’s smart objective is understanding strengths and vulnerabilities, enabling HR to identify existing employees’ latent talent or untapped potential. Such insights allow the management to initiate functional cross-disciplinary training, mentoring and skill development for the designated employees to enhance their existing capabilities. This initiative ensures a better understanding of the internal talent pipeline while creating awareness of the current individuals’ strengths. It also keeps the company a step ahead of its talent needs.
High-potential identification is the first step in any succession planning exercise. HRs must gain valuable insights. For example, which employee is nearing retirement? Is that employee an asset and, therefore, must be retained? Which employee needs to be given a different role? Whose expertise requires a departmental shift? Several such critical insights are taken into consideration to enable successful transitions.
Some of the many ways succession planning is essential include:
A succession plan upholds the company’s vision and mission, ensuring owners and executives understand the business’s future direction. The board members often wish to maintain the company’s culture and how values are implemented. A well-charted succession plan gives the board faith in new leaders to maintain continuity in the company’s broader goals and objectives.
A succession plan also creates awareness about the quality and strength of high-potential employees. High potentials exhibit high competency levels in their current role and a high propensity for taking up significant future responsibilities and challenges. The awareness about an employee’s ability to take on critical future roles makes the workforce future-ready, providing business advantages.
Succession planning’s importance extends to offering excellent incentives to employees. If the employees understand the value accorded by their company to them, they are motivated to work toward the business goal. It improves the company’s retention and employee satisfaction rate. The succession planning process also attracts quality and dependable candidates.
Amidst a fast-transforming business landscape, a thorough succession plan bolsters the chances of managing disruptions. Only able and foreseeing corporate leaders can embrace the risks and uphold the company’s reputation and long-term growth. It enables them to focus on long-term business opportunities rather than the opportunities in the next few quarters.
Internal candidates are well-familiarized with the company’s culture. Hence, they are inclined to proactively take charge and smoothen the transition from one leader to another. Thus, succession planning benefits extend to disaster-proofing the business against such odds.
Having a succession roadmap can be perceived as an expense by the company. However, it is an ongoing process that minimizes time and financial resources in shortlisting, recruiting and grooming leadership from outside when one already has a qualified pipeline of candidates internally.
HR plays a crucial role in succession planning, encompassing responsibilities such as identifying potential successors, designing and executing development initiatives, tracking progress, and offering consistent feedback.
Additionally, HR fosters a culture of succession planning, encouraging employees to consider their career paths, promoting diversity and inclusion, and adapting to changing internal and external factors. This comprehensive approach ensures that organizations fill vacancies and adapt and flourish in the present and future.
A succession planning framework is essential in ensuring a consistent and effective process. The framework has two preconditions: creating a culture of leadership development and selecting critical roles.
The succession planning framework usually requires two preconditions, as described above. Once these preconditions are met, the succession planning process can commence. The essential steps in this process include:
Taking a long-term approach and integrating talent and leadership development initiatives is recommended for an effective succession planning strategy. Succession planning often focuses on senior leadership positions that can be filled by individuals currently in mid-level leadership roles. Therefore, combining talent and leadership development with succession planning is beneficial. It involves implementing talent development programs that provide high-potential employees with training, diverse tasks, and challenging assignments. Career planning, job rotation, and mentoring are essential for talent development.
Continuous monitoring and evaluation of participants in talent development programs are necessary to succeed in critical leadership positions. Various tools, such as mentors, committees, surveys, and coding systems, can aid in assessing managerial strength and identifying potential leaders. Diversity should be a key consideration during this phase, as it contributes to a more varied future boardroom.
This stage involves further developing individuals with strong leadership potential. Leadership development differs from standard talent development and includes organizing internal courses, workshops, and opportunities for future leaders to establish connections with current organizational leaders. Active learning through challenging projects, stretch assignments, 360-degree feedback, and executive coaching are also crucial for their growth.
Based on the previous steps, a succession matrix can be created to map potential successors for each function. Considering the likelihood of turnover in critical roles identified earlier is crucial, as turnover can impact the succession plan. Managing expectations and monitoring turnover rates are vital to ensure the effectiveness of the succession planning strategy.
In 2008, McCormick & Co executed a successful succession planning strategy when they smoothly transitioned their CEO, Robert Lawless, to his successor, Alan Wilson. Lawless took a proactive approach by creating a five-year timeline, gradually transitioning to a non-executive chairman role. He also allocated a portion of his discretionary compensation to identify and prepare the ideal candidate for his position. The organization developed the succession plan over an extended period, implementing tailored development strategies for senior executives. They closely monitored potential candidates before selecting Wilson based on his alignment with company culture and understanding of critical issues.
Similarly, Apple Inc. has implemented a successful succession plan by promoting internal talent and fostering an innovative culture. They have a structured leadership development program identifying and nurturing potential successors for critical positions. Apple emphasizes cross-functional exposure and encourages employees to gain diverse experience within the organization.
While some businesses have a definite succession plan, others hire new candidates for important positions. Such instances pose grave challenges and disadvantages to business continuity in unforeseen situations in the following ways:
Not having a succession plan exposes the company and its stakeholders to unnecessary risks, creating confusion and chaos. Leaving critical roles vacant for an uncertain period may severely damage the business infrastructure.
Alienating potential successors and promoting the wrong talent due to hasty decisions can create a volatile work environment and a lack of motivation. Many experts and in-house employees have claimed that choosing an outsider can endanger employee loyalty.
Employees want growth opportunities in the company. If they don’t see the company investing in their professional development and career advancement, they may choose to leave their jobs. Consequently, the company may end up losing a high-performing employee.
It takes work to foresee business challenges. But without a succession plan, it isn’t easy to survive an evolving business landscape. It’s not prudent to announce someone’s retirement and not name a replacement; this can impact the company’s image.
Below is an insightful, seven-step succession planning process to help get started with the succession planning procedure. The seven steps of succession planning include:
The nine-box grid is a valuable tool managers use in succession planning to assess team members’ performance potential and identify high-performing individuals with the potential for promotion. Engaging these top performers through challenges, recognition, and rewards is crucial for their ongoing growth and motivation. To effectively utilize the nine-box grid for succession planning, follow the below steps:
One can start by creating a three-by-three grid, with the X-axis representing different performance measures (such as productivity, leadership, or teamwork) and the Y-axis representing levels of potential (such as low, moderate, or high).
It is essential to evaluate each team member’s potential and performance, considering factors such as their current abilities, growth potential, and readiness for advancement, followed by assigning them to the appropriate box in the grid based on this assessment.
Using team members’ positions in the matrix to develop tailored action plans for each employee yields good results. For example, individuals with “moderate performance, high potential” can be earmarked for promotions and provided with targeted training or mentorship to enhance their skills and readiness for advanced roles.
Implementing the action plans developed for each team member to maximize their potential and improve their performance is vital. It is essential to offer development opportunities such as training programs, stretch assignments, or coaching, as well as provide the necessary support and resources for their growth and tracking progress.
Regularly reviewing and updating the nine-box grid is recommended to ensure its relevance and effectiveness in succession planning. As performance and potential can change over time, it is essential to periodically reassess team members and adjust their positions on the grid.
Trends impact businesses worldwide. Some of the global trends influencing succession planning are:
As remote work and virtual teams become more prevalent, organizations must adapt their succession planning practices, identifying and developing leaders who can effectively lead in a remote or hybrid work setting.
The increasing significance of digital transformation requires leaders with strong digital skills and the ability to navigate technological advancements. Succession planning should prioritize the development of digital leadership competencies.
By utilizing predictive analytics, organizations can identify high-potential employees, assess performance, and make informed decisions regarding succession planning.
Embracing an agile approach to succession planning allows companies to respond swiftly to changing market dynamics and unexpected leadership vacancies.
Understanding the significance of diversity and inclusion in succession planning efforts is crucial for fostering a broader range of leadership perspectives and driving innovation.
Businesses are expected to remain relevant by adapting, innovating, and accelerating toward the digital ecosystem. They must prepare and prioritize their vision, identify vulnerabilities, shortlist pipeline potentials, and envisage a path forward. These can be achieved with a leader, plan, or tools.
Succession planning tools help identify employees with the potential knowledge and skillsets to fill critical roles. They allow one to navigate ahead by syncing the vision with a suitable leader. The succession planning toolkit identifies and prepares top talent for various roles and challenges for achieving organizational success by providing in-depth knowledge of individuals’ essential, work-relevant personality traits and behavioral tendencies.
In succession planning, gaining a comprehensive understanding of personality is vital, which management might need to be aware of. Therefore, companies consistently assess personality traits exhibited by the candidate despite changing circumstances.
Personality assessments are commonly undertaken at the mid and senior levels. This top succession planning software tool is validated and optimized to test beyond the traditional ‘Big-Five’ personality framework. It provides a comprehensive picture of the culture and role-fitment while evaluating the likelihood of handling integral work-related activities. It also offers objective insights into how others might react to the same situation.
A behavioral assessment tool requires candidates to demonstrate chosen and critical behavioral competencies in one or multiple exercises that mirror actual workplace situations. It identifies and analyzes behaviors required of employees when they take the lead, professionally and socially.
A behavioral tool brings clarity to how people behave at work. Hence, they combine innovation and scientific rigor to assess role fitment. Different types of behavioral assessments can be used independently or in combination for an individual’s holistic overview. It includes caselets, situational judgment tests, and inbox exercises to gauge an employee’s mindset and potential.
Cognitive ability is the brain’s ability to undertake core tasks such as thinking, learning, memorizing, paying attention, visualizing, recognizing, organizing and interpreting the surroundings (perception).
In succession planning, cognitive tests assess critical thinking and reasoning logic related to on-the-job performance. The test measures two intelligence types, crystallized intelligence and fluid intelligence, through a series of complex questions. When planning succession for top management, cognitive tests help measure leaders’ aptitude to achieve excellence aligned with business goals.
A technical competency framework provides detailed insights into identifying IT/ non-IT skill sets for companies assessing technical roles. Various professional tests offer comprehensive knowledge of the on-the-job-relevant behaviors and the technical expertise required to be successful.
Seeking feedback from multiple stakeholders, such as the employee’s superiors, peers, direct reports, and clients, enables them to understand their perceptions of the employee’s readiness to take on future roles. Leveraging this information can help the employee develop a more well-rounded perspective on performance, skill levels and behavior as perceived by others. Using a multi-rater feedback mechanism, such as Mercer | Mettl’s 360-Degree Feedback survey, allows one to understand whether the concerned employee has demonstrated leadership qualities. Using this tool as an additional metric to determine the most suitable fit ensures that multiple perspectives are factored in when making the final decision.
Assessment and development centers (ADCs) are scalable, cost-efficient, and tailor-made tools that help identify successors across various jobs and levels. ADCs combine roleplays, situational judgment tests, group discussions, presentations, interviews, simulations, psychometric and aptitude tests, and similar activities to make crucial decisions. These multiple assessments provide a detailed evaluation of candidates to determine their most appropriate roles. The ADC toolkit can be administered either virtually or in a blended format.
A virtual assessment and development center employs multiple online tools to evaluate the extent to which chosen participants display select competencies. It is a detailed evaluation of individuals’ role fitment by assessing their various aspects for success in a critical role. With no logistical hassles, no bias, and simple infrastructure requirements in internet connectivity and computers, decision-makers gain a holistic understanding of the candidates through multiple lenses.
Blended assessment and development centers are a combination of onsite and online assessments. The assessors gain insightful and data-backed outcomes by expanding the means and methods of measuring a potential candidate. This interwoven scenario is a valuable supplement to the repertoire of available assessments and provides different perspectives on each outcome.
Additionally, the blended ACDC toolkit consists of the following:
To ensure the management undertakes the best succession and talent management practice, providing significant benefits, here are a few factors to remember. Some of them are:
The role or title one is planning is a crucial factor affecting which succession planning toolkit is needed. The profile specifies how complex or straightforward the tools must be while deciding. For example, a senior leadership role will require a more comprehensive succession planning system than a junior role. A higher role demands a more thorough assessment of the candidate’s leadership qualities, knowledge, future-thinking approach, and actions.
The succession planning requirements of every industry are distinct. For instance, a software firm’s requirements don’t need to be like that of a retail firms. While one must prioritize technical performance, the other will prefer different skill sets. Therefore, one cannot follow a one-tool-fits-all approach here. Hence, businesses considering succession planning tools should comprehend their industry’s goals in sync with their business requirements and dynamic workforce.
Succession planning takes time to design and is implemented in the future. Hence, time is a critical factor that helps decide the succession planning tools required in a succession planning model. For instance, the more time you have at disposal, the greater advantage is in expanding the tool kit, viz-a-viz someone who needs to fill a role urgently.
Like any organizational initiative, a systematic succession plan can only be initiated with budgetary considerations. After all, scouting, recognizing, developing, and evaluating talent needs financial input. Hence, fiscal consideration allows organizations to focus on the tools to implement a succession planning system.
Effective succession planning is crucial for any organization’s long-term success and sustainability. This guide provides insights and steps to help organizations navigate the complexities of succession planning. It offers a roadmap for building a robust succession plan, from assessing current talent pools to creating development programs and establishing clear communication channels. By investing in succession planning, organizations can mitigate risks, foster a culture of growth and development, and position themselves for future success. With careful planning and execution, companies can confidently navigate leadership transitions and secure a flourishing future.
Originally published February 24 2020, Updated June 7 2024
Archita Bharadwaj has worked as a Content writer at Mercer | Mettl since April 2023. With her research background, she writes varied forms of content, including blogs, ebooks, and case studies, among other forms.
Behavioral Competencies
Cognitive Competencies
Coding Competencies
Domain Competencies
