Leadership is a lot like a relay race. Imagine your departing manager is at the last leg, but no reliable teammate is waiting to grab the baton and sprint to the finish. That’s a disaster, right? That’s why companies looking to thrive in the long run can’t afford to brush aside succession planning — or do it poorly.

Succession planning software facilitates the process. However, technology is only a part of the equation. This guide covers everything you need to know about identifying people who’ll rise through the ranks and secure your company’s future.

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To reap the best results, you first need to understand what it is, why it matters and the key ingredients you need to be successful.

Here’s an overview of what we’ll cover:

• What Is Succession Planning?
• Importance
• Succession Planning Framework
• What To Avoid
• The Wrap-Up

What Is Succession Planning?

Succession planning is a key talent management process that identifies critical positions within your organization, enables knowledge transfer and develops action plans for individuals to assume those positions. Taking a holistic view of current and future goals, this type of preparation ensures that you have the right people in the right jobs today and in the years to come.

Importance

Whether you’re a family-owned business or a mega-corporation with offices around the globe, you need to invest in future leadership — much like a professional sports team uses draft picks and minor league affiliates to ensure they can remain competitive for years to come.

According to a recent Josh Bersin Company survey, developing leaders and sustainable change management are extremely high on the HR capabilities impact list. Yet, only 26% of companies feel ready for an unplanned or emergency CEO replacement.

What’s more, in the same highly-researched think piece, Bersin emphasizes that leadership is evolving:

Leadership is now everyone’s job. The new employee or first-line manager leading a project to save money or analyze the sales team is now a leader. What education, training, and perspectives have you given this person?”

Laying a strong foundation for the future starts at every organizational level. Cultivating replacements for lower leadership positions like managers and supervisors ensures the long-term health of the company at every level.

The reasons for this approach are complex and multifaceted:

1. Diminished Labor Market

Talent markets have and will continue to have downturns, and a steady talent stream won’t always be available. According to recent data, the U.S. recorded 5.3 million employee separations in November 2023.

As staffing problems persist, employers must make better efforts to retain talent. The good news is that talent is abundant if you search in the right places, and your existing teams are a potential goldmine.

Promoting from within the organization is often a cost-effective and efficient approach. Succession planning includes coaching and mentoring current employees to prepare them for future roles.

2. Skill Shortages

Today, talent sourcing heavily relies on those possessing the right competencies, knowledge and expertise in their respective fields. Despite the emphasis on skill-based hiring, a recent Forbes article states that skill shortages will be an issue for employers that don’t offer career progression plans.

When recruiters fight tooth and nail to acquire qualified talent, the question arises: why stop there? A structured succession plan secures your talent pipeline and ensures that the valuable expertise gained over the years doesn’t walk out the door when employees leave.

Additionally, succession plans are a win-win. These plans prove that your company aims to identify individuals with growth potential and invest in their career development in your organization.

3. Retiring Baby Boomers

Boomers are retiring, and they’re taking their wealth of leadership and management knowledge with them. As more and more boomers prepare to retire, many employers are on the brink of losing that wisdom acquired from experience if they don’t take action now. So, as the older generation naturally ages out of the workforce, it’s your responsibility to mentor and train your company’s younger talent, preparing them to step into these roles seamlessly.

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Succession Planning Framework

According to the North America Family Business Report, merely 39% of family-run companies had a formal succession plan, while 8% said they relied on an informal plan. In a business world evolving at breakneck speed, not having succession plans or poorly structured ones simply won’t cut it.

Consider the following steps to create a succession framework:

Phase 1: Preparation and Assessment

Lay down the first bricks by conducting an internal analysis determining where your organization is and where you want it to be.

• Identify Critical Positions: Pinpoint key roles and responsibilities essential for your company’s growth. Rank positions that are challenging to hire and measure the impact of each vacancy. Start with jobs that, if left vacant, would create a significant void in your organization’s ability to meet strategic goals.
• Develop Competency Models: Outline the essential characteristics, qualifications and skills required for each critical position.
• Capture Knowledge: Reach out to seasoned professionals in your organization and ask them to document their experiences. Recognize key people required to mentor potential talent to transfer skills, experiences and insights.

Additionally, it’s important to be clear about clearly assigning tasks and key people overlooking different phases. Ask the following key questions internally to get the ball rolling:

• Who will be in charge of the process? Typically, this is the realm of the HR department, key executives (CEO, CHRO, etc.) and a Board of Directors, if relevant.
• What’s our timeline? Some positions may require years of experience and expertise. It’s best to identify these positions and the time to prepare qualified replacements.
• How will we deal with resistance? Prepare for situations when managers or other leaders aren’t on board. Employees might also resist the disruption. Change is hard, so it’s essential to plan how to address resistance.
• Do we have the tools we need? For example, you’ll have to invest in training or career development programs if you don’t already have any in place.
• Are we committed to succession planning? Successful execution starts on the top floor. Leaders need to take an active interest in developing their successors.
• How much time can we invest? A half-baked approach won’t work. You need to devote enough time to do it well and see the ROI.

Phase 2: Talent Identification and Development

You won’t need to fill just one role with one set of responsibilities. Succession planning frameworks require a diverse, multifaceted approach. For that reason, cultivating a healthy talent pipeline is essential.

• Assess Current Talent: Evaluate your team’s performance and potential. Organize your staff in a 9-box grid to gain a holistic understanding of the quality of performance, competencies and prospects for growth. This assessment helps locate high-potential individuals suitable for leadership positions.
• Create Knowledge Transfer Plans: After spotting the top performers, assign the resources, assessments and coaching required to hone them into future executives.
• Develop Talent Pools: Succession planning isn’t a one-size-fits-all approach. Identify top talent based on their career progression and current skills to create succession pipelines. Tailor each group for each critical role.

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Phase 3: Implementation and Monitoring

Succession planning isn’t a secret mission; it’s a strategic necessity, so it’s time to get everyone on board. Every employee has different career goals, and not everyone wants to be a manager. Targeting the ones who want or are willing to become leaders ensures you make the best use of effort and resources.

In this stage, nominate your successors and identify the key people to mentor these individuals into these roles.

Communication is vital, so here’s what you have to do:

• Communicate Plans and Procedures: Share the succession plans and procedures with key stakeholders, employees and leaders. Use a collaborative approach while discussing future opportunities with employees, and they’re on the path to leadership. Balancing expectations is also vital to avoid any false impressions and frustrations down the line.
• Monitor Progress: At this point, measure progress against the defined competency models. Request mentors to evaluate performance and determine alignment.
• Provide Feedback and Evaluation: Without feedback, employees won’t know if they’re performing up to expectations. Collect input from coaches and evaluate assessment results to determine any weaknesses and readiness levels. Use your findings to adjust learning paths and training.

Phase 4: Ongoing Maintenance

Flexibility is a vital component of succession planning. Monitor your plan’s effectiveness and analyze progress to adjust the plan as circumstances change. This phase is all about being agile and responsive to ensure long-term success.

When evaluating your succession planning program, consider the following:

• Your organization’s overall productivity and performance before versus after establishing clear succession paths.
• The number of high-value individuals ready to level up.
• Impact of employee training, coaching and mentorship initiatives. Determine whether new learning resources and skill improvement initiatives like upskilling and reskilling improved candidate readiness.
• Diminished risk associated with sudden departures or resignations.

What To Avoid

While building a strategy is critical, it’s also equally important to avoid pitfalls during the process. Here are a few you should be on the lookout for:

• Failure to prepare – You need everyone on board to implement your plan properly, including high-level leaders down to managers. Communicating the strategy, plan and overall goals helps set everyone up for success.
• Unconscious bias – Too often, it’s easy for leaders to want their replacements to be clones of themselves. Focusing only on individuals with similar backgrounds can lead to rejecting talent with true potential.
• Too narrow of a focus – Don’t confine yourself when looking for talent to nurture. Be open to including talent outside your organization or those in roles that aren’t next in line based on their position. The goal is to find the best fit, not rigidly follow a set of processes.
• Lack of action – While having a plan is essential, it can’t make a difference unless you put it into action. There needs to come a point where you transition from simply planning to actively developing your talent according to your succession plans.

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The Wrap-Up

A succession strategy is like insurance for your company, serving as the foundation of your business amid a volatile and uncertain environment. A robust strategy combined with the right tools makes for a winning combo. If you’re contemplating a toolkit upgrade, jump on board with our free customizable requirements template. Leverage built-in frameworks to mix and match different features based on your software needs.

Where is your company at with succession planning? What tools do you use? Comment below to share your thoughts!