A succession plan ensures that your organization has the right talent prepared to step into critical roles when they become vacant. This process helps minimize disruption, ensures business continuity, and creates a pipeline of future leaders.
Below is a step-by-step guide to developing and implementing an effective succession plan.
Definition:
A succession plan is a proactive strategy that identifies and develops employees to fill critical positions in the organization when those roles become vacant due to retirement, resignation, promotion, or other reasons.
Key Objectives:
- Ensure business continuity by having qualified successors ready for key roles.
- Prepare employees for leadership and advanced roles through development programs.
- Retain top talent by offering clear career progression pathways.
- Minimize the risks associated with sudden vacancies.
Key Actions:
1. Create a list of key positions:
- Focus on roles that significantly impact business operations, strategy, or decision-making (e.g., senior leadership, technical experts).
2. Identify roles with high turnover risk:
- Example: Employees nearing retirement or highly sought-after positions.
3. Ask:
- “If this position became vacant tomorrow, would the organization face a major disruption?”
Key Actions:
1. Identify High-Potential Employees (HiPos):
- Use performance reviews, manager feedback, and leadership assessments to identify high performers.
2. Assess employees’:
- Skills and Competencies: Are they equipped for higher-level responsibilities?
- Potential: Do they have the capacity to grow into a leadership or critical role?
- Interest: Are they interested in career advancement or leadership opportunities?
3. Use tools like:
- 9-box grid: To map employees’ performance vs. potential.
- Skills Matrix: To evaluate current competencies and identify gaps.
Key Actions:
1. Develop Individual Development Plans (IDPs):
- Include targeted training, mentoring, and stretch assignments.
- Example: A potential CFO may need financial modeling training or cross-functional exposure.
2. Implement the 70/20/10 Development Model:
- 70%: On-the-job experiences (e.g., leading projects, cross-departmental tasks).
- 20%: Coaching and mentoring from senior leaders.
- 10%: Formal training programs (e.g., leadership workshops, certifications).
3. Use job rotation or job shadowing:
- Example: Allow HiPos to shadow their potential successor role to understand its demands.
Key Actions:
1. Document processes:
- Encourage employees in key roles to create SOPs (Standard Operating Procedures) for their tasks.
2. Conduct knowledge-sharing sessions:
- Create opportunities for retiring or exiting employees to train successors.
3. Use technology to store critical information:
- Tools like SharePoint, Google Drive, or knowledge management platforms.
Key Actions:
1. Engage leadership:
- Secure buy-in from senior leaders and managers.
2. Be transparent with HiPos:
- Inform employees identified as successors about their career path to keep them motivated.
- Example: “You’ve been identified as a potential successor for [position]. We’ll support your development to prepare you for this opportunity.”
3. Maintain confidentiality:
- Avoid unnecessary disclosures that could create competition or dissatisfaction.
Key Actions:
1. Track development milestones:
- Example: Has the employee completed necessary training? Are they ready for the next step?
2. Conduct regular succession planning reviews:
- Example: Hold quarterly or annual reviews to evaluate progress and update the plan as needed.
3. Adapt the plan to organizational changes:
- If the company’s strategy shifts, reassess which roles are critical.
4. Gather feedback:
- From managers and employees to identify gaps or areas for improvement.
| Tool/Technique | Purpose | Examples |
|----------------------------|----------------------------------------------------------------|---------------------------------------------------|
| 9-Box Grid | Assess employees’ performance vs. potential. | High potential, high performance = future leader. |
| Skills Matrix | Identify current competencies and gaps in the workforce. | Technical skills, leadership skills, etc. |
| Leadership Assessments | Evaluate leadership readiness and skills. | Tools: Hogan Assessment, Gallup StrengthsFinder. |
| Individual Development Plans (IDPs) | Create personalized growth plans for successors. | Include mentoring, training, and job rotations. |
| Mentoring Programs | Pair HiPos with senior leaders to develop skills and knowledge.| Mentorship or reverse mentoring. |
| Stage | Action |
|----------------------------|---------------------------------------------------------------------------|
| Identify Critical Role | CFO is a critical role for financial strategy and decision-making. |
| Assess Current Talent | High-potential employee identified: Finance Director (strong skills, high performance). |
| Create Development Plan | - Provide training in strategic planning and risk management. |
| | - Assign stretch projects (e.g., leading the budgeting process). |
| Knowledge Transfer | CFO to mentor the Finance Director for 12 months before retirement. |
| Monitor and Adjust | Review progress quarterly, adjust development plan as needed. |
| Challenge | Solution |
|-----------------------------------|----------------------------------------------------------------------------------------------|
| Lack of leadership buy-in | Educate leaders on the benefits of succession planning to the organization’s success. |
| Identifying HiPos accurately | Use objective tools like performance reviews, assessments, and manager input. |
| Fear of favoritism or bias | Implement transparent criteria for identifying and developing successors. |
| Limited development opportunities | Provide stretch assignments, online learning, and leadership coaching. |
| Unforeseen vacancies | Have contingency plans to address sudden departures. |
| Metric | Definition | Why It’s Important |
|-----------------------------------|-------------------------------------------------------|---------------------------------------------------|
| Leadership Promotion Rate | Percentage of leadership positions filled internally. | Measures the effectiveness of leadership pipelines. |
| Readiness Percentage | Percentage of roles with identified ready successors. | Tracks preparedness for vacancies. |
| HiPo Retention Rate | Percentage of high-potential employees retained. | Ensures that top talent remains engaged. |
| Time to Fill Critical Roles | Average time to fill key positions. | Indicates how quickly successors can step up. |
| Engagement Scores of HiPos | Engagement levels of employees identified as successors. | Reflects how motivated HiPos are by the plan. |
A well-designed succession plan safeguards your organization’s future by identifying and developing employees who can step into critical roles. By focusing on talent assessment, development, and knowledge transfer, you ensure business continuity and reduce the risks associated with leadership or role vacancies.