What does succession management mean?
With the help of succession planning, businesses can ensure that the most qualified individuals are promoted to key roles at the best possible times. So, how can you build an effective succession management strategy, and why is it so important?
A company can better prepare for the future by implementing a succession plan that systematically finds, selects, and develops high-potential new recruits to take over important responsibilities. Doing this makes sure that people with the right skills and motivation are in charge of important tasks.
A company’s success depends on its leaders’ ability to adapt to changing market conditions and keep the ship moving forward. On the other hand, many workers doubt their abilities and self-confidence when it comes to leadership roles. For this reason, many companies now place a premium on succession planning and management tools.
The board of directors and the chief executive officer are ultimately responsible for succession planning, but human resources will provide support and guidance throughout the process.
What is the significance of succession planning?
There are a number of reasons why success management is critical for businesses.
1. Strong leadership gives you an edge over your competitors
A strong leader will face problems head-on, find solutions, and stay ahead of the curve. With their unique set of skills, they can anticipate and meet their company’s demands in the years to come.
2. Learn the skills you need to be successful
To guarantee that your leadership team have the essential abilities needed to effectively steer and expand the company, it is crucial to invest in and cultivate talent within the organization.
3. Achieve company goals by assembling a top-notch team
When you have a clear idea of what you want to accomplish, you can recruit and train employees with the correct set of abilities to get you there faster and more efficiently.
Improving lead times and decision making is possible with the appropriate people in the proper positions.
If key executives suddenly get sick, die, or go for a rival company, projects and ambitions may suffer setbacks. If that happens, you won’t have somebody to step in and fill the void. To avoid delays, it is crucial to have the correct individuals ready to take over.
4. Minimize employee attrition by promoting from within
When compared to external recruits, internal applicants have a better chance of succeeding and staying with your company. The likelihood of layoffs or firings for external hiring is 61% higher, according to the report. Also, compared to internal hires, they have a 21% higher turnover rate. When you put money into succession planning and employee career development, you get more out of your employees.
Not to mention that external personnel frequently end up with higher salaries but lower ratings in performance evaluations.
5. Information sharing
An effective succession management plan facilitates the transfer of knowledge from one leadership generation to another and guarantees a seamless transition during times of leadership changes.
McDonald’s Corporation Case Study
After two previous chief executive officers passed away in the span of a year, Jim Skinner assumed the position in 2005.
He mentored Don Thompson, who would later become COO, throughout his seven years at the company. His other claim to fame was his habit of requesting that managers recommend two potential replacements for themselves in the event that they left or got a promotion.
He explained to Fortune that he felt obligated to ensure the board of directors had a successor to him so that the company could continue operations after his departure. He claimed that he would not leave the company until he had accomplished that.
With the knowledge that Thompson was prepared to succeed him, Skinner retired in 2012.
Step-by-step instructions on how to make a succession management plan
A good succession management strategy, followed and adjusted as needed, is the most important part of succession management.
To get yours started right now, here are 9 easy steps.
- Evaluate your current method of operation
Your succession management strategy should be based on an existing organizational strategy.
Think about the company’s long-term goals for expansion in the following decade. For instance, how does one envision the future in general? Are you planning to expand into other markets? In the event that you shift your emphasis or plan, who will your rivals be? How is your present setup structured, and how will it evolve over the next few years?
If you want to know what your company is trying to accomplish, you need business acumen. You can use it to establish rules and procedures that are in line with this. Gaining insight into your organization’s strengths and areas for improvement allows you to adjust your day-to-day operations and policies, which in turn boosts your bottom line.
- Get top-level help.
As previously mentioned, human resources experts are crucial in developing and implementing a succession management plan. However, in order to properly implement your plan and achieve the intended results, it is vital that you have the backing of corporate executives.
As a result, HR managers and executives may better coordinate top-down strategies for personnel development and management.
- Identify the critical roles
The next stage, after having a well-defined plan and the backing of important company executives, is to identify the roles you wish to fill regularly with competent individuals from your succession pipeline.
A good starting point is to identify the top five or ten jobs that are absolutely necessary. Keep in mind that your succession management strategy will not require every senior position. You should rank them based on how important you think they are.
- Choose potential successors
After you have defined your primary responsibilities, the next step is to identify the people working for you who may soon be able to step into these shoes.
One effective strategy is to zero in on those workers who show the most promise as future leaders. This might be your 9-box grid’s stars, or it could be one of your employees with great will and skills. Important data, like employee performance indicators, can inform your decisions. The beauty of this strategy is that it zeroes in on the individuals with the most potential and the best odds of success.
Pay close attention to the high potentials who have shown they have the basic abilities needed for those more senior roles. Before you formally announce your succession plans, make sure to discuss these prospects with them. All positions and situations are subject to change, therefore it’s important to make that point plain to new hires.
People who are next in line for a job might not necessarily be the best fit, so it’s important to keep that in mind. They can also be uninterested in moving up the ladder to the position you’re envisioning for them.
Finally, while developing a succession plan, focus on the most important positions and the most promising people. Doing so will allow you to direct your efforts and resources where they will yield the greatest return. Also, by keeping the number of available promotion seats to a minimum, you may manage employee expectations and avoid the inevitable disappointment and aggravation that comes with disappointment.
- Create a solid talent pool
There are a lot of obstacles and time commitments involved in building your succession pipeline. So much so that the most difficult part of succession planning, according to 74% of public organizations and 52% of private companies, is keeping a robust pipeline of talent.
But it’s a bad idea to disregard your pipeline completely since it could cost you money and put your company at risk. It is essential to begin creating your pipeline today, regardless of whether there are no current openings. That way, you can always draw from a group of qualified individuals to select future leaders.
You can create successful development programs that prepare people for these future roles and put the firm up for success by analyzing your current leaders, identifying skill gaps, and keeping in mind the organization’s future goal.
- Prioritize the ongoing training of future leaders
Prepare your current staff to take on leadership responsibilities in the future by developing a strategy for their professional development that takes into account the roles and candidates you have identified.
Having programs to help leaders grow, though, isn’t enough. As the organization’s objectives and strategies change, it is critical that these be followed and improved upon at all times. A single educational endeavor, such as a training session, will not cut it. Organizations invest a whopping $370 billion annually toward leadership development. But what’s even more concerning is that 74% of executives say they aren’t ready for the difficulties of senior leadership.
Get your workers involved and have them create their own personal development plans. Keep an eye on how they’re doing by giving them tests at regular intervals. Mentoring and leadership coaching are investments in their personal and professional growth that will pay dividends in the future. In addition, you should assist them in gaining experience, gaining confidence in different tasks, and testing their ability to adapt to new situations and cope with new responsibilities.
Identify the most important outcomes and skills that each candidate must possess in order to succeed in the future position. Establish reasonable deadlines for their completion. Here, it is crucial to have clear expectations.
When done regularly, this will guarantee that your employees are well-prepared for any challenge that may arise in their future positions of senior management.
- You should evaluate your leadership bench strength on a regular basis.
Ensuring a solid leadership pipeline at all times requires regular assessment and evaluation of the progress made by your potential successors.
For instance, you might want to reevaluate your strategy for a certain employee if they don’t seem to be improving at all despite receiving consistent training and mentorship. You can’t make a well-informed choice without monitoring and evaluating. You might promote someone who isn’t a good fit for the position while ignoring a perfect match.
If you want to know what to work on next to strengthen your talent pool, it’s a good idea to look at how strong your leadership bench is right now.
- Purchase software to assist you.
It becomes increasingly difficult for larger organizations to effectively manage their talent and succession plans using manual methods such as spreadsheets or paper files. You should get an HR software system right now if you haven’t already.
The majority of HR software these days lets you handle a wide range of activities, such as hiring, onboarding, development, and performance evaluations.
With the reports generated by these platforms, you can streamline succession planning, compare personnel, and spot skill gaps with ease.
Here are several well-known tools for succession planning:
- SAP SuccessFactors
- Halogen
- Oracle Taleo
- Silkroad Wingspan
- Peoplefluent
- Ensure that your recruitment strategy includes succession management.
Even though you should prioritize your present staff, your recruiting approach should also include succession planning.
Now that you know what positions are crucial and where your company is lacking in ability, you can better define the ideal individuals to fill those positions.
Assume for the sake of argument that you have insider knowledge that the company plans to enter new markets and grow internationally in the next five years. What this means is that you should prioritize hiring people who are open to living abroad or who are comfortable traveling frequently.
Maintaining a robust and future-oriented talent pipeline is possible through incorporating your succession management strategy into the hiring process.
To ensure continued success, a solid succession management strategy is essential.
They say you’re setting yourself up for failure if you don’t prepare. Having a clear vision for your company’s future growth is essential in developing a successful succession management strategy. Once you have a plan, you need to follow it through and keep an eye on it so you can make changes as needed. This will assist you in cultivating future leaders and preserving your advantage in a constantly evolving industry.
