Everything you need to know about succession planning. Succession planning is a process of ensuring a suitable supply of successors for current and future key jobs.
Succession planning is an essential activity that focuses on planning and managing the career of individuals to optimize their needs and aspirations.
The term succession planning can be better understood by studying its characteristics. A succession of persons to fill key positions over time is essential for the survival and success of an organisation.
The purpose of succession planning is to identify and develop people to replace current incumbents in key positions in cases of resignation, retirement, promotions, growth, expansion and creation of new positions.
Succession by people from within provides opportunities to employees for progress in their careers.
The purpose of succession planning is to identify, develop, and make the people ready to occupy higher level jobs as and when they fall vacant higher level jobs fall vacant due to various reasons like retirement, resignation, promotion, death, creation of new position and new assignments.
1. What is Succession Planning? 2. Need for Succession Planning 3. Nature 4. Purpose 5. Features 6. Elements
7. Guidelines 8. Steps Involved in the Process 9. Difference between Career Planning and Succession Planning 10. Advantages 11. Problems and 12. Challenges.
Succession Planning in HRM: Need, Nature, Features, Elements, Steps, Benefits, Problem and Challenges
- What is Succession Planning?
- Need for Succession Planning
- Nature of Succession Planning
- Purpose of Succession Planning
- Features of Succession Planning
- Elements of Succession Planning
- Guidelines for Succession Planning
- Steps Involved in the Process of Succession Planning
- Difference between Career Planning and Succession Planning
- Benefits of Succession Planning
- Problems of Succession Planning
- Challenges of Succession Planning
Succession Planning – What is Succession Planning?
Succession planning is a process whereby an organization ensures that employees are recruited and developed to fill each key role within the company. In a recent survey, HR executives and non-HR executives were asked to name their top human capital challenge. Nearly one-third of both executive groups cited succession planning, but less than 20% of companies with a succession plan addressed non-management positions. Slightly more than 40% of firms didn’t have a plan in place.
Looking across organizations succession planning takes a number of forms (including no form at all). An absence of succession planning should be a red flag, since the competitive advantage of a growing percentage of firms is predicated on their stock of human capital and ability to manage such capital in the future. One of the overarching themes of becoming better at succession is that effective organizations become much better at developing and promoting talent from within.
Succession planning is a process of ensuring a suitable supply of successors for current and future key jobs. It is an essential activity that focuses on planning and managing the career of individuals to optimize their needs and aspirations. The term succession planning can be better understood by studying its characteristics.
A succession of persons to fill key positions over time is essential for the survival and success of an organisation. The purpose of succession planning is to identify and develop people to replace current incumbents in key positions in cases of resignation, retirement, promotions, growth, expansion and creation of new positions. Succession by people from within provides opportunities to employees for progress in their careers.
In some professionally managed corporations every key executive is usually asked to identify three or four best juniors who could replace him in his job should the need arise. Complete dependence on internal sources may however cause stagnation in the organisation. Similarly, complete dependence on outside talent may cause stagnation in the career prospects of present employees which may in turn lead to a sense of frustration.
Succession planning is one of those initiatives that many companies don’t find the time to start until it’s too late — if you don’t address succession planning now your organization may end up facing the burden in the middle of a crisis.
Moreover, organizations that understand the need to manage the development of their high performers are a step ahead of their competitors! The effort required to establish a development programme for future leaders is worthwhile because it creates a motivated and capable group of employees that are ready to move forward in the organization when the need arises.
Succession Planning – Need
Succession planning is needed for:
Succession planning ensures business continuity. It means the organization does not cease to exist when the key positions become vacant due to sudden death, resignation or retirement.
Succession planning is important for grooming and developing competency of the next possible successor. The right training helps the potential successor to improve his strengths and overcome weaknesses. It also prepares him for various duties, challenges that he might face in future if he fills up the position.
The process helps to identify next possible successor in advance. Identification of successor in advance (before retirement/resignation/death of person on the key position) helps the organization to plan for future. Every business organization must invest in identifying the next successor for the organization.
Succession planning ensures smooth functioning of the organization. There is supply of competent and skilled employees to take up the role or responsibility of key manager whenever the need arises. Hence, temporary or sudden absence of key manager does not halt the activities of the organization.
With succession planning, the demand for human resources is met within the organization. It lowers the cost of organization as the time, money, energy required to recruit employee from external source is saved.
Succession planning helps the HR department to set up career advancement plans for competent employees. The assessment of skills and interest helps in providing right training to employees. It also helps to select suitable employee for specific job roles.
Organization invests in identifying and grooming employees. It also provides varied growth opportunities within the organization. This increases job satisfaction of employees, which results in increased performance and productivity. This ultimately improves image of the organization in market and attracts competent workforce towards the organization.
Succession planning provides growth opportunities to employees within the organization itself. It offers varied job roles to prepare employees to take up higher roles in future. The employees feel important and valuable as the organization takes interest in their career and personal development. Thus, it reduces rate of employee turnover and helps to retain competent workforce.
Succession Planning – Nature
The nature of succession planning can be listed as follows:
(i) Senior leaders are personally involved.
(ii) Senior leaders hold themselves responsible for growing leaders.
(iii) Employees are committed to their own self development.
(iv) Success is based on a business case for long term needs.
(v) Succession is linked to strategic planning and investment in the future.
(vi) Workforce data and analysis inform the process.
(vii) Leadership competencies are identified and used for the selection and development.
(viii) A pool of talent is identified and developed early for long term needs.
(ix) Development is based on challenging and varied job based experience.
(x) Senior leaders form a partnership with human resources.
(xi) Succession planning addresses challenges such as diversity, recruitment and retention.
Succession Planning – Purpose
Survival, growth and efficient continuous existence of an organisation require a succession of people to fill various important jobs. The purpose of succession planning is to identify, develop, and make the people ready to occupy higher level jobs as and when they fall vacant higher level jobs fall vacant due to various reasons like retirement, resignation, promotion, death, creation of new position and new assignments.
Succession may be from internal employees or external people. Succession from internal employees is advantageous to the organisation as well as to the internal employees. Organisation can buy the employees loyalty and commitment, belongingness, shared feeling of development along with the organisation by promoting the internal employees.
Employees get the benefits of growth in the organisation. The organisation mostly prefers to encourage the growth and development of its employees and as such tend to prefer succession from within.
Organisations appraise employees’ potentialities, identify training gaps for future vacancies, develop them for higher and varied jobs. The scope of succession plan would be more when the organisation grows steadily and employees have potentialities to take up higher responsibilities.
Professionally run organisations ask their managers to identify the internal employees having potentialities and develop them in order to occupy their positions as and when they fell vacant.
However, it is necessary to allow the inflow of new blood also. Hence, organisations should also search for outside talent in certain cases like when competent internal people are not available, when major expansion, diversification and growth plans are in offing, complete dependence on either internal source or external source is not advisable to any organisation. Hence, a judicial balance between these two sources should be maintained.
Succession Planning – 5 Important Features: Systematic Process, Supply of Labour, Used for Higher Level Organizational Positions, Internal Selection & Key Succession Plan
Succession planning is a necessary part of an organization’s human resource management system. It is a process where company identifies possible replacements for critical roles. Some of the critical roles are at management level and other roles include key functions where the loss of an employee could put the organization at risk.
They can be highly technical roles or sales positions with significant levels of customer interaction. Succession planning identifies individuals with the potential to develop into these critical roles.
Following are the features of succession planning:
Feature # 1. Systematic Process:
Succession planning is the systematic process of defining future management requirements and identifying candidates who best meet the requirements.
Feature # 2. Supply of Labour:
Succession planning ensures supply of labour within the organization for future staffing needs. With succession planning the skills and abilities of current manpower are assessed to see which future positions they may take within the organization when other employees leave their positions.
Feature # 3. Used for Higher Level Organizational Positions:
Succession planning is typically used for higher level organizational positions such as executive level positions. Like if a company predicts that its CEO will retire in near future, the organization may begin looking months or even years in advance to determine which current employee might be capable of taking over the position of CEO.
Feature # 4. Internal Selection:
Succession planning makes use of internal selection as opposed to hiring employees from outside the organization. With internal selection, the organization becomes aware of current employee skills and abilities and therefore is often better able to predict future performance than when hiring from outside.
Feature # 5. Key Succession Plan:
The key to succession planning is preparing a written succession plan. This document provides for the continued operation of a business in the event that the owner or a key member of the management team – leaves the company, is terminated, retires, or dies. It details the change that will take place as leadership is transferred from one generation to next.
Succession Planning – 3 Main Elements: Positions for which Successors are Needed, Identification of Successors and Grooming of Successors
Along with career planning many organization undertake the exercise of succession planning. Succession refers to coming into another’s place fallen vacant to fall vacant in near future. Succession planning, as an organizational practice is comparatively new technique but it has been in practice in princely states since long in which an heir used to be nominated and efforts used to be made to groom him to take the place of the king.
There are three main elements of succession planning:
1. Positions for which Successors are Needed – The first element of succession planning is to determine the positions for which successors are needed. Some organizations prepare succession plan for key positions which play strategic role in organizations. Sometimes these positions are separated from top management to be known as strategic management group.
2. Identification of Successors – The second element of succession planning is the determination of likely successors for different positions that are likely to fall vacant in future. Depending on the organizational practice, such successors may be from the organization itself or from outside.
3. Grooming of Successors – When successors are identified by key positions attempts are made to groom them so that they are fully equipped to take the positions ear marked when these fall vacant. In the case of internal successors, this exercise brings much ahead of the likely vacancy.
As succession planning deals with developing future managers and leaders, it should constantly involve:
i. Planning changes and habituating the same amongst the people
ii. Identify the potential of the existing employees and managers and utilizing the same for their further growth and development
iii. Ensuring continuity of leadership and executive positions
iv. Identifying gaps in existing talent pool
Succession Planning – Guidelines
The guidelines for preparing succession planning are:
1. Capacity and Needs Assessment:
These include the executive directors, senior management and other staff members, who would, for their specialized skills or level of experience, be hard to replace. Ask which positions would need to be filled almost immediately to ensure that organization continues to function effectively.
This will involve examining strategic and operational plans to clearly articulate priorities.
Prepare a chart that identifies the key positions and individuals in the organization. The positions might include those listed in step 1 and/or others that are pertinent to an organization.
Identify and list the gaps by asking questions such as:
a. Which individuals are slated to or likely to leave (through retirement, project completion, etc.,) and when?
b. Which new positions will be required to support the strategic plan?
c. Which positions have become or will become obsolete (for example, those related to a programme that has been terminated)?
d. What skills and knowledge will need to be developed (for example, to support a new programme)?
Evaluate/assess all staff members with the goal of identifying those who have the skills and knowledge or the potential along with the desire to be promoted to existing and new positions.
a. The evaluation can be formal or informal and can include, but is not limited to, performance reviews, 360 degree assessments and informal conversations with the individuals under consideration.
b. Every employee has aspirations to and the capacity to move up. This may be an opportunity to recognise this goal and support it.
c. Take this opportunity to give younger workers a chance. Many young people enthusiastically enter the sector and then, finding few opportunities for advancement, leave. Younger workers can remain engaged if you help to match their interests to opportunities provided through effective succession planning.
Based on the evaluation and on the requirements of strategic plan, identify the key person, one would like to develop and nurture for the future, the position we would like to groom them for, and the time frame required to prepare them. Consider different ways of developing employees like – self- development, books/journals, mentor programmes, special project work.
Identify the career paths that the selected individuals should be following. Customise the path to fit the individual’s abilities and talents by developing an action plan. The plan must be dynamic — able to be changed as the individual’s and the organization’s needs change. It must also consider the specific needs, learning style and personality of the individuals involved in order to be effective.
Formalise education, training, coaching, mentoring and assessment activities. The mix of activities included within the action plan should be linked to timeliness and specific outcomes.
If possible, move people into different areas for experience and training before they are needed in critical positions. Have individuals job-shadow for an agreed upon period of time to give the successor a real sense of the responsibilities and to allow the organization the chance to determine whether, the individual really is suited for the new position.
i. Always Update Grooming Plans:
As people leave and new people assume their responsibilities, the plan will have to be updated to identify the next person to be groomed for promotion and the requirements of his or her individual action plan. For organizations that engage in an annual (or regular) strategic planning process, the succession plan should be included in that discussion.
Be prepared to address issues such as concerns of staff who have not been selected for career advancement. Ensure alternative paths are identified to allow all employees who are interested in career enhancement to be given some type of professional development opportunity. Professional development can include such wide ranging activities as formal education and training, workshops and seminars as well as less formal learning opportunities such as the chance to represent the organization at a consultation.
Recognise that no matter how well you plan, something can still happen which the succession plan doesn’t address. For example, you may have dutifully trained a “second” only to have that person leave. Even though, there may be no one able to fill the breach immediately, the succession plan will ensure that there is a process to follow in filling the position.
Succession Planning – 5 Main Steps Involved in the Process: Planning, Analysis, Identification of Talent Pools, Development Planning and Implementing the Succession Plan
The process of succession planning includes the following steps:
Step # 1. Planning:
The first step is to develop a strategic plan that will provide a blueprint of how the succession plan is to be implemented. The long-term vision and goals of the organization are identified and the current personnel policies and procedures are studied. For a succession plan to be successful, it is vital to integrate the plan with the interests and aspirations of the senior employees who are being groomed for succession.
Step # 2. Analysis:
In this step, the various challenges the company is likely to face in the future and the skills and competencies the CEO would need to meet them are analyzed. The future CEO would need a variety of managerial and technical skills to be able to fulfil his responsibilities effectively. The current supply of manpower in the organization should be studied in relation to the anticipated demand.
Efforts should be made to determine the knowledge, talents, skills and capabilities that would be required in the organization in the future. It is necessary to identify the overall long term talent needs of the company and not just of a particular position.
Step # 3. Identification of Talent Pools:
The competencies and skill levels of the current workers need to be assessed in order to identify the available pool of talent. These may be measured by the use of performance evaluation tools like 360° Feedback, critical incident methods and rating scales. It is also necessary to evaluate the employee’s capacity to perform in more responsible jobs in future through potential appraisal techniques and psychological appraisal.
Factors like the employee’s educational background, time spent with the company, his behaviour and attitude should also be taken into account. The skill sets of the employees should be compared with the skills needed for the key leadership roles and any gaps between the two should be identified.
Step # 4. Development Planning:
After the gaps have been identified, the next step involves creating development plans. The development plan includes the formal development procedures, coaching and mentoring, special job assignments, learning projects, etc. which will help the employees to gain the necessary skills and experiences. The employee’s progress will be monitored against the plan. The duration of the development plan would depend upon the succession plan strategy of the organization.
Step # 5. Implementing the Succession Plan:
The succession plan should be linked to the HR processes like compensation, recruitment, performance planning, workforce planning, etc. It is a long-term plan, and sometimes the succession planning process is started from the time a brilliantly outstanding employee begins his career (Jack Welch, the highly successful former CEO of GE was being groomed for senior positions from the time he started his career as a junior chemical engineer in the same company).
Implementing the succession plan includes the retention strategies like retention bonuses, promotions, challenging work, etc. It is essential to compare the progress of the succession plan with the upcoming personnel requirements of the organization so that a capable employee is available to fill a prestigious post should it fall vacant either expectedly (due to planned retirement), or unexpectedly (due to death, disability, illness, etc. of the position holder).
Succession Planning – Difference between Career Planning and Succession Planning
Although the terms career planning and succession planning appear similar, they are different from each other. Career planning covers all levels of employees; whereas succession planning is generally meant for higher-level executives that are required to fill key positions in case of resignation, retirement, promotion, and death of existing higher-level executives.
Succession planning is essential for the survival and success of an organization as it identifies and prepares the existing workforce to replace the key personnel employed in the key positions. Moreover, succession planning provides opportunities to the existing potential employees to advance their careers.
While creating a succession plan, every key executive is asked to identify three or four employees at junior levels who have the potential to replace them when needed. For instance, a general manager who is about to retire after two years can select the four potential candidates as his/her replacement options.
Generally, career planning is based on the succession plan of higher-level executives. A succession plan indicates the vacancies that may arise in future and provides the indication to the probable successors. Career planning consists of charts representing the possible career paths for different categories of employees, whereas succession planning involves succession charts for a specific high- level position, such as general manager.
The career paths for different types of jobs. It represents the career path that can be taken by an unskilled worker, which passes from semi-skilled job, skilled job, and highly skilled job before reaching the position of a foreman. Similarly, the career path of a clerk involves the position of a senior clerk, assistant, and section officer, before acquiring the final position of undersecretary.
A supervisor has to achieve different milestones, such as assistant manager, deputy manager, and manager, to become a chief manager. Similarly, a lecturer has to pass from the designations of associate professor, professor, dean of faculty, and pro-vice chancellor to acquire the position of vice chancellor.
Succession Planning – Top 10 Benefits: Fulfillment of Leadership Gaps, Handle Attrition, Avoid Uninspiring Results in Executive Recruitment, Economy and a Few Others
Succession planning is more important than ever. With an aging workforce and approaching mass retirements, one part of the succession planning includes the need to capture and pass on the expertise, judgement, and insight of senior leaders before they retire. The second aspect of succession planning relates to the identification of employees within the organization who have the potential to move into leadership positions.
Following benefits are provided by the succession planning to the organizations opting for it:
Benefit # 1. Fulfillment of Leadership Gaps:
Succession planning identifies the needs of future employees and develops key skills and competencies among them for effective current and future leaders in the organization. These persons may replace the persons leaving the organization.
Benefit # 2. Handle Attrition:
Every organization will have some form of job vacancy due to attrition of people retiring from their jobs. But it is important for organizations to continue to function smoothly irrespective of loosing such key employees when organization have a succession plan, it makes it easier for them to handle any unforeseen attrition and prevent the organization from being greatly imparted by such attrition.
Succession management identifies and monitors various talent pools within the organization to match the future needs of the organization with the bench strength of available talent. Thus succession planning plays very important roles to fill the positions that arise due to forthcoming retirement of key workers.
Benefit # 3. Avoid Uninspiring Results in Executive Recruitment:
Succession planning helps to avoid uninspiring results in executive recruitment from external sources as they are inexperienced and less effective. In succession planning, we recruit internally groomed successors who understand the unique organizational agenda and environment.
Benefit # 4. Economy:
Dedicating time to plan the future of the organization saves the company’s time and money. Plans to promote and train people within the company means less time spent on recruitment of external candidates, interviewing them and checking their references. Money allotted to those efforts will also decrease with a solid succession plan in place.
Benefit # 5. Uncovering the Weaknesses:
Finding future leaders reveals the strengths within the workforce, but it also uncovers the weaknesses that your organization must work on to secure business and financial growth. Succession planning helps the company to discover weaker areas so that it could timely take action for the improvement of performance.
Benefit # 6. Rapid Recruitment to Meet Growth Needs:
Succession planning recognizes that some jobs are the lifeblood of the organisation and too critical to be left vacant or filled by any but the best qualified persons. Effectively done, succession planning is critical to mission success and creates an effective process for recognizing, developing and retaining top leadership.
Benefit # 7. Planning for the Disaster:
No matter how good the organization and its staff are at revenue projections or economic predictions, no one can truly plan for the disaster whether it’s an unforeseen illness, a natural disaster or a CEOs decision to suddenly retire, the reasons for having the succession planning in place before it is needed are endless. So one cannot plan for disaster, but can put into place a series of contingencies.
Benefit # 8. Motivates the Employees:
Succession planning motivates the employees to do their best for the accomplishment of the predetermined objectives of the organization. Employees are motivated and engaged when they can see a career path for their continued growth and development.
When an effective succession planning is done in an organization, the managers are required to identify the organization’s long term goals and recruit or hire superior staff for the purpose. Through succession planning process, organization also retains superior employees because they appreciate the time, attention and development that firms are investing in them.
Benefit # 9. Strengthens Departmental Relationships:
When regular communication occurs between departments, the organization more likely to experience synergy, which breeds a culture of strength. The succession planning activities are linked with human resource. By including HR in succession planning, one can incorporate elements like the employee evaluation process, which can help when deciding whether to fill vacancies with internal candidates.
Benefit # 10. Development of New Skills and Adjusting Development Programs Accordingly:
Development of learning ability plus other future oriented competencies as part of a flexible development planning process. Regular review of the process allows it to remain current and meaningful and always anticipatory of future business needs.
Succession management identifies and monitors various talent pools within the organization to match the future needs of the organization with the bench strength of available talent. Not having the right talent in the place is often a growth limiting factor in achieving business potential.
Succession Planning – Problems Faced by HR Professionals while Implementing a Succession Planning in an Organisation
The human resource professionals face numerous obstacles when attempting to implement a succession planning in an organisation.
These are as follows:
1. Narrow Focus:
Succession planning allows leaders to focus on potential new managers who are employed by the organization but does not allow for candidates outside the company. In many cases, managers will consider only their direct reports as potential successors. This is good in terms of career development for those inside the organization but it does not necessarily meet the company’s best interests.
In some situations it is better to replace a manager with an external candidate to bring new skills to the team. Other times there simply may not be a suitable candidate within the organization.
2. Changes in Organizational Structure:
Succession planning sometimes takes place even though an organization’s structure may not be completely stable. There is a need to develop leaders so that they can change the organization to meet the new business challenges. Sometimes a person may be developed for a role in the organization that may not exist in the future.
This can have negative impact on motivation of the earmarked individual. In addition to this the money spent on the training of the employee also gets wasted if the role for which he was developed no longer exists.
3. Managing HR Information:
The problem that can occur in succession planning is the concern with managing large amounts of HR information. Because succession planning requires retention of a great deal of information, it is typically best to store and manage it on a computer. Attempting to maintain such records by hand may prove daunting. Even on the computer it is very difficult to identify and evaluate the many years’ worth of information about employees’ performance.
4. Crowned Prince Syndrome:
Another problem with the succession planning occurs when upper management only considers for advancement, those employees who have become visible to them. In other words, rather than looking at a wider array of individual employees and their capabilities, upper management focuses only on one person – the crowned prince. This person is often one who has been involved in high profile projects, has a powerful and prominent mentor who has networked well with the organization leaders.
There are often employees throughout the organisation who are capable of and interested in promotion who may be overlooked because of the more visible and obvious ‘crowned prince’, who is likely to be promoted even if these other employees are available. Further not only the performance problems are the outcome of this syndrome, but also the motivation of current employees may suffer if they feel that this high performance has been overlooked.
5. Talent Drain:
Talent drain is also one of the problems of succession planning. Because upper management identifies small group of managers to receive training and development for promotion. Thus not all employees can be identified as successors. Consequently, there is the potential for some employees to feel left out, passed over and underappreciated.
So those managers who are not assigned to development activities may feel overlooked and therefore leave the organization. This turnover may reduce the number of talented managers that the organisation has at the lower and middle levels of the hierarchy. Due to this the talented managers may work for a competing firm or start their own business, thus creating increased competition for their former company.
6. Negative Effects on Motivation:
It is not always totally clear cut that to which employee a manager should prime for future leadership. In some cases there may be two or more strong candidates for the role. If leaders do not handle succession plan carefully and objectively other may see the person being trained for leadership as favoured. This can lead to motivated individuals losing interest and not trying as hard in the workplace. It may have the effect of making those employees think it is not worth their effort if there are no progression possibilities.
Succession Planning – 10 Major Challenges: Size of the Organization, Lack of Financial Resources, Nature of Funding, Attrition, Absence of Young Talent and a Few Others
The challenges faced by succession planning are:
1. Size of the Organization – Some organizations have so few positions that they may not have the ability to offer opportunities for advancement; employees with the potential and the desire to advance their careers may move to larger organizations .
5. Absence of Young Talent – In some cases, senior managers are staying on in their positions, despite the fact that the skills needed for the job may have changed or they are no longer making a meaningful and productive contribution to the organization.
If these challenges glare at the chances for implementing succession plan in an organisation and many a times we find that these challenges become barriers and control the entire process of succession plan, then what is the way out? The way out is to develop a roadmap for developing succession plan and implementing it without hiccups.