As the great resignation wave continues with a recent trend of quiet quitting haunting the workplace, employees are leaving their roles at unprecedented rates, often unexpectedly and without much warning.
The war for talent empowers employees to weigh their professional options, resulting in a large-scale talent loss for organizations worldwide. Along with that, there is a looming risk that a vacancy in a critical role cannot be filled satisfactorily within an acceptable timeframe.
Fortunately, well-thought-out and strategically positioned succession planning make it easy to plan for the unexpected and replace top talent seamlessly. The aim of successful risk management is to mitigate the risk of vacancies in critical roles.
What is Succession Planning?
In August 2013, Steve Ballmer abruptly announced that he would step down as chief executive of Microsoft as soon as his replacement could be found. Thus began one of the most important CEO searches in the past decade—and a case study in the dos and don’ts of senior leadership succession.
Succession planning is the process used to identify replacements for high-level positions. It helps increase the availability of candidates prepared to fill critical roles when your senior leaders leave or retire. But succession planning is so much more than simply picking replacements—leaders need to understand how open positions and bad hiring decisions can potentially impact the company.
An effective succession plan equips identified successors with the skills and competencies needed in their future roles. By using a customized development plan, organization can build and promote employee growth and ensure that the successors make the right impact. Plus, Talent team won’t be scrambling to fill open positions when top leaders leave.
Why is Succession Planning So Important for Organizations?
Specialized talent with the right kind of cultural and competence fitment is hard to find. More so for an organization that is undergoing a massive transformation in business processes, culture and people practices.
The talent shortage is a universal phenomenon regardless of industry or company. It is one of those top HR challenges which needs constant planning, assessment, and a robust implementation muscle for better management.
Succession Planning is key for long-term business sustainability and success. It fosters growth in future leaders and protects organizational health when key contributors leave.
Organizations should design & follow the modern succession planning approach, with a broader vision, greater openness and diversity, and closer links to wider talent management practices. As a matter of fact, HR must ensure that the following pointers are taken care of and communicated well within the organization.
- Succession planning is closely tied to medium to long-term business strategy and goals
- Engaging the executive team and senior leaders in the process
- Clearly defining the development of key talent and related agendas
- Ensuring that the staff understand their role in the process and know what is expected of them
- Identification of business-critical roles at all levels within the organization and not limit the succession planning only to the leadership positions
The Debate Continues….
While we believe that every company should first master the art of spotting internal talent and create succession plans based on its current roster, we also see value in external searches for benchmarking and comprehensiveness. Whether you’re shopping for a house or for your next top executive, comparative evaluations produce better decisions.
‘Insiders’ versus ‘outsiders’- There are valid reasons to recruit externally, especially at senior levels, to bring new ideas and approaches. However, many organizations seem to rely either too much on outsiders or too much on insiders, suggesting that it’s difficult to find the right balance.
It’s also sometimes argued that outsiders should not be brought in at the board level but somewhere below so that they become accustomed to the organization’s culture before making the next step up. Others argue that bringing in outsiders at the board level should be done where appropriate and that a failing business, in particular, needs to recruit from outside and to be seen to be doing so, to satisfy investors.
Nurturing internal talent- While many employers want to attract highly talented individuals from outside the organization for key or senior positions, there’s also the desire to promote widely from the home-grown talent pool. This is particularly so where there’s a high degree of organization-specific knowledge in business-critical roles.
Some commentators believe that leaders developed from within tend to be more successful than those brought in. They have relevant operational experience, understand cultural nuances, and have benefited from in-house leadership programmes. Succession planning can help retain talented individuals as they are aware of internal opportunities to progress in their careers. It’s therefore central to the internal elements of talent management programs.
Here are 4 top reasons why succession planning is critical to the business:
1. Guideline for Capability Building- The right succession plan will guide the organization’s capability development plans and prepare employees for their future roles. A structured succession planning framework highlights areas for growth within each employee so they can develop critical skill sets, empowering them to thrive now and in the future.
2. Significant cost reduction to recruit, hire & onboard talent –The resources used to recruit and hire top talent will soar if you don’t have a plan in place. If top roles go unfilled for too long, in desperation often companies are forced to make rushed and costly hiring decisions, only to regret them later.
Hiring top talent typically requires bonus offerings and relocation costs. By shaping a talent pipeline, we can safeguard the return on the hiring investment with well-equipped and sound successors.
When successors come from within the company, which reduces costs further. Companies can invest the money elsewhere—like in reskilling and upskilling thus futureproofing the business.
3. Identify key leaders- With the right approach to succession planning, we can identify key employees and top-quartile talents with the abilities to perform well in business-critical roles. Plus, companies can ensure that the succession pool aligns with the organization’s diversity & inclusion goals.
4. Promotes long-term planning & foresight- Businesses that aim for long-term success need long-term plans. In the face of rapid change, volatility, post-pandemic era, organization need a set of robust strategic plans to guide key actions. With a thorough succession plan, HR can create a path to retirement for top leaders and ensure their expertise and institutional knowledge are transferred to their successors.
With clarity and focus, HR can outline clear plans to equip, support, and lead the people practices for future growth and eventually evolve as a successful organization.
Checklist for Implementation, Having a Blended Approach Of Clubbing Business Intelligence With A Robust Technology Backbone.
- Step 1: Identify significant business challenges in the next 1–5 years.
- Step 2: Identify critical positions that will be needed to support business continuity.
- Step 3: Identify competencies, skills, and institutional knowledge that are critical success factors for future.
- Step 4: Consider high-potential hi performer employees.
- Step 5: Select the competencies individuals will need to be successful in positions and to meet identified business challenges.
- Step 6: Capture the talent’s interest and readiness to fill top roles understanding each individual’s skill set, learning agility, role fitment and potential
- Step 7: Develop a pool of talent to step into critical positions through targeted career development strategies.
Succession planning helps to protect the company and bring greater sustainability. Let’s face it, top leaders may be swayed to leave for higher pay or be affected by a serious illness, for example.
Whatever the case, when top roles within the organization go unfilled for too long, the business success may be put in jeopardy. If we are blindsided by top talent loss and have no backup plan, the business is likely to face a negative impact.
Succession planning helps you shape the mindset that is key for continuity. While replacement identification is important, succession planning promotes big-picture growth. When leaders continually think about how certain events can affect the business, they’ll be more agile and resilient in the face of unexpected events.