7 Examples Of Succession Planning To Maintain Growth And Stability
Understanding succession planning, importance of succession planning, 5 examples of succession planning, real-life examples of succession planning at apple and ibm.
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- Leadership Continuity: Succession planning helps organizations prepare for inevitable leadership changes, such as retirements, promotions, or unexpected departures. Organizations can ensure a seamless transition by identifying and developing potential successors in advance, minimizing disruptions, and maintaining stability.
- Talent Development: Succession planning catalyzes talent development and employee growth. By identifying high-potential individuals within the organization, organizations can provide them with targeted training, mentoring, and leadership development opportunities. This prepares them for future leadership roles and enhances their skills, engagement, and job satisfaction.
- Knowledge Transfer: Effective succession planning facilitates the transfer of critical knowledge, skills, and expertise from experienced leaders to potential successors. This ensures the preservation of institutional knowledge, promotes learning and reduces the impact of knowledge gaps during leadership transitions.
- Organizational Agility: Succession planning enables organizations to adapt to changing business landscapes. Organizations can adapt quickly, make informed decisions, and capitalize on emerging opportunities by cultivating a pipeline of talented individuals. It also promotes diversity in leadership, bringing fresh perspectives and innovative thinking to the organization.
- Retention and Engagement: Implementing succession planning demonstrates a commitment to employee development and growth. It signals employees that their contributions are recognized and valued, increasing job satisfaction and fostering loyalty. Engaged employees are more likely to stay with the organization, reducing turnover and retaining institutional knowledge.
- Mitigating Risks: Succession planning helps organizations mitigate risks associated with leadership gaps. Organizations can ensure business continuity, maintain stakeholder confidence, and minimize the negative impact of sudden leadership vacancies by identifying and preparing successors in advance.
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- Identifying high-potential employees and grooming them through leadership development programs, mentorship, and exposure to senior leadership.
- Providing opportunities for potential successors to gain experience in different departments and functions to develop a well-rounded skill set.
- Conducting regular performance assessments and assessments of leadership potential to track the progress of potential successors.
- Implementing a mentoring program where experienced managers guide and coach potential successors, sharing knowledge and insights.
- Offering managerial training programs to enhance the skills and capabilities of individuals with potential for future leadership positions.
- Rotating employees through different managerial roles or projects to broaden their experience and prepare them for higher-level responsibilities.
- Identifying employees with exceptional technical skills and providing specialized training and development opportunities.
- Creating a knowledge-sharing culture where experienced technical experts mentor and transfer their expertise to potential successors.
- Encouraging continuous learning and professional development in technical fields through certifications, workshops, and conferences.
- Implementing a structured sales training program to develop potential successors’ sales skills and business acumen.
- Assigning potential successors to work closely with experienced sales professionals to learn from their strategies and techniques.
- Offering opportunities for potential successors to take on increasing sales responsibilities, such as managing key accounts or leading new market initiatives.
- Identifying HR professionals who exhibit leadership potential and providing them with opportunities to work on strategic HR projects or initiatives.
- Offering specialized training in HR management, such as employee relations, talent acquisition, and performance management.
- Developing a talent pipeline within the HR department , nurturing high-performing HR professionals for future HR leadership roles.
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Succession planning examples.
- Succession planning is the process of making sure a business’s critical roles are always filled by qualified employees.
- An effective succession plan process takes time to identify and prepare high-potential candidates to backfill roles that could become vacant.
- Formalized training and leadership development support diverse succession planning that draws on a wider range of talent in the organization.
Since employees can leave an organization at any time, companies typically have two weeks to come up with a plan to fill that role, unless they’ve already done some succession planning. Succession planning prepares companies to backfill critical roles to maintain regular business operations. It therefore makes the difference between scrambling to fill an urgent vacancy or tapping into next-in-line talent.
In this article...
What is succession planning?
Succession planning is the process of ensuring that all critical positions in the organization are always staffed by preparing employees to take on those roles in case they become vacant. Succession planning, therefore, involves identifying necessary skills for key positions and training employees in those skills.
The succession planning process is also becoming increasingly predictive and proactive, moving beyond current roles to plan for future roles a company will need to add to its ranks.
Succession planning examples
Among examples of effective succession planning, IBM, Apple, Barneys New York, and others share the ingredients of time, intentionality, and varying degrees of structure.
Yet, they fall into one or both types of succession plans: long-term and formalized. These two succession plan approaches aren’t mutually exclusive. Rather, they should be combined to maximize the effectiveness of a company’s unique succession planning process.
Long-term succession planning
Long-term succession planning entails identifying and preparing someone for a role long before they officially take on that role.
This requires recognizing and nurturing high performers over time to set them and the organization up for success. That way, when the opportunity arises to take on a key role, that individual is well prepared to assume those responsibilities.
As an employee moves up the ranks and acquires a more complex understanding of how all the pieces of the business fit together, they’ll be ready to take on a leadership role when the time is right.
With regard to timing, a long-term succession plan can lead up to a known point in the future when a replacement will be necessary, for example, when a CEO knows they’ll retire in five years. The transition can also happen earlier than expected if, for instance, the CEO resigns.
An example of long-term succession planning: IBM
IBM created a long-term succession plan when promoting Virginia Rometty to CEO to replace Samuel Palmisano in 2011. Rometty had started working in an entry-level position at the company 30 years prior to her promotion and had worked her way up over time before attaining the CEO position.
Rometty was key in this role until her retirement in 2020, and IBM’s succession plan enabled the smooth transition of power to Rometty’s successor, Arvind Krishna. In each situation, the company was able to maintain continuity by:
- Establishing professional development pathways.
- Cultivating a positive company culture.
- Allowing candidates to compete at the same level.
Three decades is an extreme case of long-term succession planning, since employees change jobs an average of 12 times over the course of their career and the median number of years a private-sector employee stays with one company is only 3.7 years .
Perhaps a more realistic example is Barneys New York’s five-year succession plan to prepare Daniella Vitale to become its CEO. The former CEO had already worked with her for many years and intentionally gave her opportunities to grow at Barneys before officially appointing her as successor.
Requirements for long-term succession planning
Recognizing that this strategy takes time—but not necessarily 30 years—companies can recognize and nurture high-performing employees early on and implement career pathways. Long-term succession planning requires a number of ingredients that maximize employee retention :
- A supportive company culture with competitive benefits.
- Performance and talent management tools that help managers identify top internal talent early on.
- Robust learning and development programs that are personalized to employees’ goals and strengths.
Though requiring sustained effort, long-term succession planning is more effective than getting caught off guard with someone leaving and scrambling to train an employee to take their place.
Formalized, educational succession planning
A company’s learning and development or HR team can develop an internal educational academy, complete with a curriculum that trains and develops employees as future leaders in the company. Going through formalized training accelerates employees in their progress toward professional goals. It could even directly get them to their next position once they complete the training.
An example of educational succession planning: Apple
Former Apple CEO Steven Jobs took this type of succession planning upon himself and founded Apple University. Its digital curriculum drew from Jobs’s experiences to teach employees “how to think like Steve Jobs and make decisions that he would make.”
Jobs still wound up choosing a successor who didn’t ultimately attend Apple University, but academy-like training isn’t only meant to train employees to become CEOs. It trains cohorts of employees on how to be effective leaders in order to fill talent pipelines for other management and executive positions at Apple.
To foster creativity and innovation in a succession plan, a company should draw from a range of leadership examples in its training. These can be from within the company or in the industry rather than focusing solely on the lessons from the company’s current leader. This more flexible succession planning strategy inspires employees to find their unique leadership style and voice rather than becoming a replica of the current CEO.
How formalized succession planning supports corporate commitment to DEI
Formalized, training-based succession planning supports a company’s commitment to diversity, equity, and inclusion (DEI). Leaving a succession plan entirely up to interpersonal dynamics in the workplace without formal structure opens up the door for promotions based on relationships rather than skill set. Managers might favor and recommend those in their team and/or those they’ve worked with for a long time whether they’re qualified to take on the new role or not.
Also read: How Performance Bonuses Help Avoid Bias and Increase Productivity
Training employees across teams and tenure provides more employees with a chance to progress in their career trajectory—not just those employees who work most closely with the C-suite.
In addition, forward-thinking succession planning is smart, but as companies strategically train employees for future roles, managers need to ensure that the training maintains work-life balance, lest they fall victim to employee burnout .
Why is succession planning important?
Companies need to take inevitable turnover into account and have a succession plan in place to keep critical roles filled. A succession plan can help maintain growth and stability as well as encourage retention and internal development.
Succession planning prepares the company for the loss of key personnel. The benefits of this preparation include:
- Business resilience no matter the economic climate.
- Continued operations with minimal downtime.
- Equitable workloads, so other employees aren’t overburdened with taking over tasks as a result of a vacancy.
- Potentially mitigated unconscious bias.
- More diverse workforce and leadership.
- Higher employee retention and engagement.
The most important ingredient for any succession plan is time and investment in top talent. Browse our list of top corporate human capital management (HCM) software to start your succession planning process today.
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Business succession planning examples.
Succession planning and the Peter principle
Have you ever come across a manager or a key position employee and wondered how they reached that position? Yet, when speaking to them, you realize they’re just not the right fit for the job. If you’re nodding your head vigorously in agreement, then you’ve just been introduced to the Peter Principle.
The Peter principle, a concept by Laurence J Peter, states that “People in a hierarchy tend to rise to their “level of incompetence.”
The further explanation of the principle is that an organization often promotes or prepares people for higher or key positions based on their past performance. This goes on until the employee is no longer competent in their position. Are you wondering how the Peter principle is connected to examples of succession planning? Well, it is one of the most critical factors.
Let’s take an example to make it clearer.
A sales manager at Company X has suddenly resigned due to health issues. The company needs to fill this key position immediately so as not to disrupt the operations. They promote the salesperson within the team that has the best sales track record. That’s only fair, right? However, it so happens that although this newly promoted employee has an outstanding sales record, they might find it extremely difficult to execute their role as a manager. A good sales manager needs a different set of skills and competencies than a salesperson. They could lack necessary skills, like being able to motivate their colleagues, distributing tasks and responsibilities, communicating with different management levels, conflict management skills, etc.
This may lead to underperformance and feelings of demotivation, frustration, and anxiety. On the other hand, the succession planning model involves building core strategies so that you do not fall prey to the Peter Principle and can fill in a key position with the right employees at the right time. It includes:
- Identifying the requirements for key roles
Developing a succession planning model with correct assessment and training tools
- Investing in the talent management processes
The three points above can help prevent organizations from falling prey to mediocre succession planning management and assist them in taking effective leadership decisions based on the value they will bring in the future.
Succession planning model with examples
Succession planning means an organization is prepare d to replace key employees who leave their positions , suddenly or otherwise . Each step in this process is critically important to ensure that your successors will add to the company’s future success. Below are examples for each step to help you better understand the sample succession plan document .
Identifying requirements for key roles
It’s often only after someone leaves an organization that a gap in knowledge and expertise is felt. This gap can take a while to fill and could complicate business operations. Therefore, succession planning examples emphasize identifying the key roles, skills, and competencies needed for the organization to constantly be operating at peak efficiency. There are generally two levels of management that need to be a part of identifying the requirements of key roles and positions. Below are the examples of responsibilities of each department in succession planning.
The managers of each department should actively recognize the key areas and positions that could disrupt operations if left vacant. They must identify the knowledge, skills, and abilities needed for key positions. If they notice any critical gaps, they should tailor the learning and development plans accordingly. Below are some responsibilities that managers must perform to implement a successful succession planning model.
- Discuss career development with members of their teams
- Create opportunities for employee development
- Organize performance review meetings to understand if there is a need for further development.
Human resources department
The HR department plays a crucial role in succession planning. They advise managers to identify vulnerable positions that may soon fall vacant. For example, the employee in question could be retiring, moving to another city, or taking up a job in another company. This oversight allows managers to be alert and provide ample time to prepare a successor for a key position on time. Their responsibilities include:
- Engaging in ongoing discussions with new/old prospects
- Organizing performance management exercises and talent review meetings
- Consulting with different departments to understand the current and future human resources
- Evaluating succession planning initiatives
- Helping to communicate key areas and positions to employees.
Once the people who are part of the succession planning process are recognized, the next step is to equip them with the right tools. These tools can help to match the right employees that will fit the future needs of the organization and help it achieve greater and consistent success. Below are some succession planning tools that can help walk you through the process.
Outlining the succession plan
Start with ensuring that you have a clear outline of the aim of the succession plan. A successful succession plan must include the below criteria:
- A focus on progression and movement as well as on promotions for development purposes.
- Guides for individual development
- The ability to empower employees to self-nominate.
- Ensuring that people on the plan are very well-versed with how it works.
- Providing rewards and recognizing employees that support the plan.
- An element to “retain” and improve individual performers.
- External candidates to spur competition
Establish a board of key decision-makers
All the key decision-makers must be on the same page so that the plan is effective and can be enacted when the need arises. These key decision-makers constitute a board composed of managers, HR, stakeholders, C-suite, and the owner or stockholders. Together they can plan to grow and develop internal prospective candidates; note down the succession timetable, and create a contingency plan in case of emergency.
Selecting potential candidates
Selecting and analyzing suitable candidates can ensure that the employees do not feel forced into a position they may not wish to obtain or that is appropriate for them. It’s possible that, when introducing a range of evaluation methods for prospective candidates in your succession planning model, a sense of favoritism may seem to come into play. However, it’s necessary to make clear that decisions are based on quantitative and objective measurements that reduce bias, and the influence of organizational politics. A good way to achieve this is to practice transparency in the evaluation process.
Recording technical skills
Listing down the technical skills, educational background, and work experience required for the key position can help select candidates that have the right capabilities to perform the job. These include requirements like:
- Education and certifications
- Work experience
- Strengths and weaknesses
- Promotion readiness
- Reference checks
Psychological profiling has become a top-rated tool to select suitable candidates. This is done through psychometric assessments and interviewing, to identify any blind spots or characteristics that can derail the prospective candidate.
Selecting a training plan and activities
Now that the prospective candidates are identified, it’s time to develop a training program to support their growth. There are numerous succession planning models designed to develop the current employee into future leaders as the elected successors within the organization.
This method provides an opportunity for the selected candidate to demonstrate additional capabilities. Examples of stretch assignments include developing a new market entry plan, leading a new technology platform, or any tasks that are currently beyond their level of knowledge or skill and that will challenge them to learn and grow.
This includes investment in academic programs such as higher education or enrolling them in any formal programs that can help them to upskill. Take a look at the most sought-after skills of 2022 here.
Motivate your employees to take charge of their career
The success of succession planning depends on fostering and promoting the continual development of employees. When you encourage a learning culture within your organization, your employees will be prepared and motivated to tackle bigger challenges. In our guide, you can understand the concept of upskilling, reskilling, and cross-skilling that can be detrimental to future-proof your workforce.
In this method, an experienced senior employee coaches and prepares the selected candidate for the demands of a more leadership-based role. The importance of this type of coaching is evident through leadership development statistics that show that 71% of companies do not feel their current leaders can carry their organization into the future.
Measure and evaluate the progress
To ensure that the succession plan is working, you should review and evaluate the model and its effectiveness.
Here are some useful metrics to measure and evaluate the success or failure of the succession planning model.
- The percentage of positions filled internally as compared to external hires: as external hires are more expensive; a high rate of internal placement indicates that the plan has been successful.
- The percentage of employee promotions without taking tenure into account: while generally, promotions often go to candidates with the longest tenure, an effective succession plan selects the candidates most aligned with the key position.
- The percentage of promoted employees that are promoted again within 3 years: this is a clear indication that the first succession strategy was successful as the employee has been able to exceed their job requirements.
- The percentage of quick fill-in when a sudden job opening occurs wherein preselected employees can immediately fill a sudden “unplanned” opening without a loss in productivity.
Investing in the talent management processes
Effective succession planning includes making judgments and predictions to identify high performers who can succeed in meaningfully more significant or more challenging roles. Thus, the question arises, “What certainty do you have that you are investing in the right people? What if you are a victim of the Peter principle?”
Take a look at statistics that show how catastrophic things can be when businesses fail to invest appropriately in future employees.
- 24% of employees worldwide are “actively disengaged.”
- 75% of companies agreed that it was more time-consuming this year than last year to find the right talent to fill positions.
- The cost increased to replace employees have increased to 30% of an annual salary .
These numbers can affect both employee happiness and your company’s overall productivity. The solution to this nerve-wracking dilemma lies in investing in a talent management process that relies on scientifically proven processes to help organizations tackle the challenges of succession planning.
To understand how HRForecast can help you prepare for key people leaving or any questions that aren’t covered here, get in touch with one of our experts.
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Succession Planning Examples – Learning from Industry Leaders
In this article, we will explore real-life succession planning examples from successful companies.
Published by Orgvue July 31, 2023
Home > Resources > article > Succession Planning Examples – Learning from Industry Leaders
Succession planning is a critical strategic process that ensures the smooth transition of leadership within a company. It involves identifying and developing individuals with the potential to fill key roles, such as top executives or essential team members, when the current incumbents retire, resign or are promoted to higher positions.
By proactively selecting and preparing successors, businesses can minimise disruptions, maintain stability and foster a valuable culture of growth and innovation.
In today’s fast-paced and competitive business landscape, organizations must also plan for the future to remain resilient and sustainable. Leaders come and go, and without proper preparation, their departure can lead to uncertainty, internal turmoil, and even financial setbacks. Succession planning is the antidote to these challenges, providing a strategic framework that ensures leadership continuity and a seamless transition of power.
In this article, we will delve into the significance of succession planning in business and explore real-life succession planning examples from successful companies. Additionally, we will discuss how to implement an effective succession plan, highlighting essential steps and best practices – revealing how succession planning can be an absolute game-changer for your organization’s long-term success.
Succession planning is not just a theoretical concept; it has been successfully implemented by industry giants like Apple and Microsoft for example.. Learning from their experiences can provide valuable insights into the significance and impact of effective succession planning.
However, it should be noted that successful succession planning is not just limited to Fortune 500 companies; it is always applicable to businesses of all sizes and in all sectors. Every company, regardless of its scale, should recognize the significance of preparing for leadership transitions to avoid disruptions and maintain organizational stability.
Here, we take a closer look at two succession planning examples, from Apple and Microsoft:
Apple: Successful Succession Plan Example 1
Steve Jobs’ visionary leadership was instrumental in shaping Apple into a revolutionary technology company. However, Jobs knew that his health challenges necessitated a well-planned succession to ensure the company’s continued success. He actively participated in identifying his successor and preparing him for the role. In 2011, before his untimely passing, Jobs handpicked Tim Cook, who was then serving as Apple’s Chief Operating Officer, to take over as CEO.
Jobs’ decision to appoint Cook was not solely based on their professional relationship; it was a result of careful consideration of Cook’s capabilities, alignment with Apple’s culture, and understanding of the company’s values. Cook had demonstrated exceptional leadership during Jobs’ medical leaves, showcasing his ability to manage the company effectively during critical periods.
Under Cook’s leadership, Apple continued to thrive and innovate. Cook’s operational expertise and keen understanding of the technology landscape allowed Apple to sustain its growth trajectory. Moreover, Cook infused his own strategic vision, which emphasized diversity and sustainability, while staying true to the core principles laid down by Jobs. This seamless transition ensured that Apple’s legacy persisted, and the company continued to be a global leader in the tech industry.
Microsoft Corporation: Successful Succession Plan Example 2
Microsoft, one of the world’s most influential technology companies, faced a significant leadership change in 2014 when CEO Steve Ballmer announced his retirement. The board of directors recognized the importance of finding a successor who could navigate the company through a rapidly changing tech landscape and capitalize on emerging opportunities.
The board selected Satya Nadella, who had been with Microsoft for more than two decades and had a proven track record of success in various leadership roles. As the head of the cloud and enterprise division, Nadella was at the forefront of Microsoft’s transformation into a cloud-first company. His visionary approach and technical acumen played a crucial role in expanding the company’s cloud services and harnessing the potential of artificial intelligence.
Under Nadella’s leadership, Microsoft underwent a cultural shift, focusing on fostering innovation, collaboration, and customer-centricity. The company embraced open-source technologies and formed strategic partnerships to remain at the forefront of industry trends.
Nadella’s appointment was a testament to the effectiveness of succession planning. By recognizing internal talent and choosing a leader who aligned with Microsoft’s evolving vision, the company seamlessly transitioned into a new era of growth and relevance for success far into the future.
Tangible Succession Planning Strategies for Long Term Success
The examples of Apple and Microsoft demonstrate that succession planning is not an abstract concept, but a tangible strategy that can significantly impact a company’s trajectory. By proactively identifying potential successors, training them for leadership roles and ensuring a smooth transition, organizations can secure their future and sustain their growth in the face of leadership or further-reaching structure changes.
Succession planning goes beyond merely filling a vacant position; it’s about nurturing a talent pipeline, empowering future leaders and fostering a culture of continuous development. By investing in human capital, companies can build a strong foundation for long-term success and resilience.
Ultimately, the success of succession planning hinges on the commitment of top leadership and the entire organization to embrace this strategic process.
Businesses that proactively plan for the future, learn from industry leaders, and prioritize talent development will undoubtedly be better equipped to navigate the challenges and opportunities of tomorrow.
How to Ensure Successful Succession Planning in 7 Clear Steps
Implementing a successful succession planning strategy requires a systematic approach and commitment from the entire organization:
1. Identify Key Positions
Begin by identifying critical roles that, if vacated, would significantly impact your company’s performance and success. These positions might include C-suite executives, key department heads, or subject matter experts. Take into account the potential for future expansion and any emerging roles crucial for the company’s growth.
2. Assess Talent
Once key positions are identified, conduct a thorough assessment of existing talent within the organization to identify potential successors. Consider not only their technical skills but also their leadership qualities, adaptability, and cultural fit within the company.
3. Develop Leadership Skills
Invest in training and development programs to nurture leadership skills among potential successors. Encourage mentorship and coaching to help them grow into their future roles. This investment in talent development not only prepares future leaders but also improves employee engagement and retention throughout the organization.
4. Promote a Culture of Learning
Foster a culture that values continuous learning and skill development. This will not only benefit potential successors but also the entire workforce, enhancing overall organizational performance. Providing opportunities for employees to attend workshops, seminars, and leadership training sessions will contribute to a well-rounded talent pool.
5. Look Beyond Internal Talent
While internal talent is a valuable resource, don’t hesitate to consider external candidates when necessary. External hires can bring fresh perspectives and diverse experiences to the organization. A healthy balance of internal promotions and external recruits can invigorate the company’s leadership team and challenge existing paradigms. Internal candidates often have the advantage of a lower hire cost overall, but this can be easily mitigated by the right-fit candidate, saving business costs in the long term.
6. Succession Planning Committee
Form a succession planning committee comprising senior leaders and HR representatives. This committee can oversee the process, ensure transparency, and provide valuable insights into the selection of potential successors. Involve individuals from various departments to gain a broader perspective on talent within the organization.
7. Regularly Review and Adjust the Plan
Succession planning is not a one-time event; it should be an ongoing process. Regularly review the succession plan, assess the progress of potential successors, and make necessary adjustments based on changes in business needs, market dynamics, and individual performance.
Succession planning is a pivotal aspect of organizational sustainability and success. By identifying and developing future leaders, businesses can ensure a seamless transition when key positions become vacant. Examples from companies like Apple and Microsoft demonstrate the significant impact of effective succession planning on long-term success. Embracing a proactive approach, investing in talent development, and fostering a culture of learning will empower organizations to secure their future and navigate leadership transitions smoothly.
Succession Planning FAQs
No, succession planning is vital for businesses of all sizes. Whether a small family-owned enterprise or a large multinational corporation, preparing for leadership transitions is crucial to maintaining stability and continuity.
It’s advisable to review the succession plan regularly, at least once a year or whenever there are significant changes in the organization’s structure or leadership team. This ensures the plan remains relevant and aligned with the company’s goals.
In such cases, you will need to revisit your succession plan and identify new potential successors. This highlights the importance of maintaining a pool of talent to mitigate risks associated with unexpected departures. Ideally, you would have a list of candidates formed with a readiness assessment to clearly identify those employees in a natural hierarchy.
Succession planning enables companies to identify and develop employees with diverse skill sets. By fostering a talent pipeline, a business can respond quickly to changing market demands and leadership needs. For example, identifying those employees who have transferable skills into other departments, through shadowing programs or mentorship schemes.
When engaging in succession planning, watch out for these common pitfalls: Lack of Diversity: Ensure diversity and inclusion in the selection process to avoid a homogenous leadership team that may lack fresh perspectives. Overlooking High-Potential Talent: Be comprehensive in identifying potential successors, considering not just top executives but also emerging talent within the organization. Neglecting Development: Don’t assume potential successors are ready for leadership roles without providing adequate training and development opportunities.
Succession planning is an ongoing process that evolves as your company grows and changes. Embrace it as a strategic investment in your company’s future success.
By nurturing a robust talent pipeline and creating a culture of continuous learning, businesses can secure their long-term prosperity and resilience in an ever-changing business landscape.
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3 succession planning examples and best practices.
Every organization can expect to deal with leadership changes, especially given that we’re seeing a record number of CEO turnovers this year.
But, without the right approach in place, leadership transitions can put companies in a vulnerable position – from stock prices taking roller-coaster rides to employees feeling anxious about the ongoing changes.
That’s why it’s critical to have a thoughtful succession plan in place.
In this post, we’ll provide best practices to keep in mind for succession planning and share examples of successful leadership transitions.
3 best practices for developing a succession plan
A seamless leadership transition doesn’t happen overnight. That’s why a key part of succession planning is being able to think ahead at least three to five years. Here are four best practices to help you stay ahead of the curve.
1. Cultivate a pipeline of talent
Building a high-quality talent pipeline is a challenging and time-consuming process. In fact, 74% of public and 52% of private companies reported that maintaining a robust talent pipeline is the most difficult aspect of CEO succession planning.
Unfortunately, the pipeline is something that many HR teams tend to neglect. 40% of companies report not having a single internal candidate to replace the CEO should he or she exit the position. This puts the company in a vulnerable position and will ultimately cost the company in several ways, from paying for executive search costs to seeing turnover amongst high-potential employees (HiPos) who feel overlooked when they’re not considered for leadership positions.
That’s why, even though you might not have any open positions now, it’s important to start cultivating that pipeline today. This means accurately identifying who your HiPos are and making sure you’re constantly adding new candidates into the mix.
Want to learn how to identify, retain, and develop the HiPos in your organization?
Check out our ebook .
2. Invest in the ongoing development of leaders
Simply having a pipeline isn’t enough for succession planning. Companies also need to invest in the leaders they’ve identified and make sure they’re prepared for executive roles when they become available. In practice, this means helping HiPos develop relevant leadership skills, align with the company culture, and have opportunities to be exposed to various roles and responsibilities.
On the surface, companies invest a lot of resources in training their leaders. A Training Industry study found that organizations around the world spend $370 billion per year on leadership development . Yet 74% of executives were not prepared for the challenges they faced in senior leadership roles. This indicates a gap between the type of training that’s being provided and the intended effectiveness.
We’ve found that one of the best ways to invest in the growth and development of these leaders is to offer mentoring and leadership coaching programs. Not only are mentoring and coaching the two most unmet needs of HiPos , but we’ve also found within our own dataset that 92% of mentees report improved confidence in handling challenges and increased skills for the job . Similarly, the International Coach Federation also reports that 86% of companies report that they recouped their investment in coaching and more .
3. Regularly monitor and assess your leadership bench
Organizations and people are constantly evolving. That’s why it’s necessary to regularly monitor and assess your leaders. This process ensures the HiPos leaders in your pipeline are still aligned with the needs of your company. It can also help you identify any new or rising HiPo leaders you may have missed in your initial assessment.
For example, you may have identified a promising HiPo leader in your talent pipeline. But, after a few years at your organization, it’s evident that they’re not growing in the direction that you anticipated. Without regularly assessing this individual’s performance, you wouldn’t be able to identify that they’re no longer a good fit for the executive position they were originally being considered for. And you may be passing up a better fit for the role in the process.
3 succession planning examples
Given the public nature of leadership transitions, we’ve seen many succession plans in action. While not all of them go as smoothly as anticipated, some companies do an excellent job of putting the best practices we outlined above into practice.
McCormick & Co.
In 2008, spice and flavorings giant McCormick & Co. transitioned its CEO position from Robert Lawless to his successor Alan Wilson using a succession model that was praised for being thoughtful, comprehensive, and well-executed. Lawless made a point of establishing a transparent timeline of five years, planning his transition to a non-executive chairman of the board role. He also tied part of his discretionary compensation to succession planning, proving his investment in finding and preparing the right person.
What McCormick & Co. did right:
- Developed its own robust succession planning over the course of many years, taking its time to intentionally identify and create thorough development strategies for all senior executives
- Monitored the progress of its potential candidates over several years before settling on Wilson, who demonstrated a strong fit with the company culture and a deep understanding of front-line issues
Virginia Rometty’s succession as CEO of IBM in 2012 is also a case of internal succession planning done well. Rometty’s advancement worked well because of her cultural fit, and because of the professional development systems that allowed her to succeed based on merit and become IBM’s first female CEO. HR analyst Josh Bersin said of Rometty’s appointment: “IBM’s talent management process is very mature, integrated, and global. At the executive level, the company takes development planning and succession very seriously.”
What IBM did right:
- Rometty started at IBM as a systems engineer , eventually climbing the ranks upward to SVP and Group Executive for Sales, Marketing, and Strategy before being offered the CEO role
- She’s a prime example of an incoming CEO who was well-entrenched in the company culture, known to the board, and had a sterling track record
Barneys New York
Luxury retailer Barneys New York went through a long-planned change as Daniella Vitale stepped into the CEO role in 2017, replacing her predecessor and mentor Mark Lee. With her long tenure in the high-end fashion retail industry, Vitale was considered “uniquely qualified” to run Barneys. She worked as an assistant buyer while still in school at LIM College and moved her way up through lateral moves between major brands, including Ferragamo, Armani, and Gucci, before joining Barneys in 2010 as a Chief Merchant.
What Barneys New York did right:
- Vitale was given substantial leadership opportunities and had experience running nearly every facet of the organization by the time she was offered the CEO position
- Lee spent a long time investing in Vitale’s success, and he was instrumental in putting together a formal five-year succession plan specifically for her
Succession planning is a long and laborious process. But done right – by cultivating a high-quality talent pipeline, developing your HiPo leaders, and regularly assessing fit – it can make an otherwise stressful transition much smoother. Want to learn more about how to identify and develop the HiPos in your organization? Download our ebook here .
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The sudden, unexpected departure of a skilled employee can devastate businesses that are unprepared for it. Their talent pool and knowledge base immediately diminish, while costs increase as they scramble to hire a replacement and maintain productivity. This vicious cycle can only be stopped by having a pipeline to fill open vacancies as they occur, a process otherwise known as succession planning.
Table of Contents
What is succession planning?
What is the succession planning process, benefits of succession planning, common mistakes made during succession planning, succession planning best practices.
- Frequently asked questions
Succession planning is how employers identify and develop internal talent to replace employees who take a leave of absence, resign or retire. Traditionally, it was reserved for grooming future chief executive officers (CEOs) and senior leadership, but that approach is no longer considered strategic. Many employers today extend succession planning to a broader base of employees throughout their organization.
Why should employers build a succession plan?
Admittedly, succession planning requires resources, but the alternative could be a talent crisis. Consider these points:
- Finding a qualified candidate can take up to six weeks or longer
- Locating candidates with a specialized skill can be incredibly challenging
- Training an existing employee is generally less expensive than hiring a new one
- Succession planning is easier than it sounds, thanks to technology
Reframing your talent strategy with a people-centered approach
Businesses can prepare themselves for the departure of an employee and prevent talent and knowledge gaps by following these steps:
- Create a strategic roadmap that outlines the company’s talent goals and the responsible parties.
- Write detailed job descriptions that can help match talent with the tasks required for the positions.
- Use workforce projections to determine which current and future positions need to be filled.
- Identify competencies for each job so that employees understand performance expectations.
- Promote employee growth with lunch and learns, job shadowing, cross-training and mentorship programs.
- Measure success using relevant metrics, i.e., retention rates, time to fill, percentage of vacancies filled by the talent pool, etc.
By strategically identifying and developing high-potential employees for future roles within their organization, employers may be able to:
- Maintain productivity
- Preserve organizational knowledge
- Retain valued team members
- Improve employee engagement
- Reduce recruitment and hiring expenses
One of the most common mistakes made during succession planning is not planning enough or at all. Employers who have gotten a late start should prioritize workforce development and may need to rehire retirees as part-time staff or contractual workers in the interim.
Expanding a succession plan to include many employees other than senior leaders can be challenging. Here’s how to make the process smoother:
- Use talent management technology to guide strategic decisions about succession.
- Ensure that employees with high potential have the support resources and training opportunities they need to be effective in their future position.
- Be transparent with potential successors so they can have a say in the next phase of their career, but also be discreet to avoid creating workplace tension.
- Conduct exit interviews and periodic engagement surveys to determine what makes employees leave or stay with the organization.
- Sponsor a retirement plan so employees can feel comfortable retiring from the organization when the time is right.
Frequently asked questions about succession planning
What are the five levels of succession planning.
- Outline goals and stakeholder responsibilities
- Write detailed job descriptions to help match talent with required tasks
- Set performance expectations by identifying job competencies
- Give potential successors the training and education they need
- Determine the metrics that will be used to measure success
What is an example of succession planning?
Family-owned businesses that transfer ownership from one generation to the next are prime examples of succession planning. Simply assuming a child or relative will one day take the reins does not ensure the organization's survival. The transition requires strategic conversations, training and thorough preparation.
What succession planning tools are available to employers?
When planning potential successors for critical positions, employers often use talent management technology to identify:
- Departments within the organization with high turnover
- Employees who may be at risk of leaving
- Employees who have high potential for succession
- Skills and experience necessary for each current and future role
Who is responsible for succession planning?
Depending on the organization’s size, succession planning may be conducted by business owners, senior leaders or HR professionals. But no matter who takes the lead, it’s usually a good idea to make potential successors part of the process to ensure they are comfortable with their future roles and have ample development opportunities.
How much does succession planning cost?
Succession planning is usually less expensive than replacing an employee, which can cost as much as the individual’s annual pay. This estimation accounts for the cumulative expenses of recruitment, training and lost productivity that occur when an individual abruptly leaves an organization.
This article is intended to be used as a starting point in analyzing succession planning and is not a comprehensive resource of requirements. It offers practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax advice or other professional services.
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Top 10 Succession Plan Example Templates with Samples
The succession planning process involves identifying critical positions within your company and developing processes and action plans to fill those positions. By adopting a comprehensive approach to both present and future objectives, this type of planning ensures you have the right people doing the right jobs, both now, and in the foreseeable future (at least five years or more).
By engaging in long-term succession planning, organizations can increase their competence and market relevance. The uncertainty of business environment or political vacuums are not unduly worrying for firms that have a firm succession planning process in place. This happens as there is no time lag in continuity at the top; such businesses have already documented and developed ways to map personnel with the necessary skills and knowledge to the critical job positions and roles to ensure business continuity.
An analogy to business succession planning is observed in the field of sports or even in politics (to a degree).
If a star player or a captain retires, the team cannot be allowed to fall off the cliff of high-performance; the wins have to keep rolling in, hence the need for an equally competent successor, without delay or hesitation. This is why organizations use succession planning to ensure they are prepared for the future.
Succession planning emphasizes leadership development, which can take time and money, but it is always wise to develop bench players, as well, to step up and take on a more critical role in the future.
There should be a succession strategy in place for every firm. Succession planning is a must for three scenarios. These are:
1. Technical leadership roles
If you must fill a leadership role requiring technical abilities, replacing a technician with years of experience in specialized software can be challenging. To plug this eventuality, include a buffer in the recruiting process to ensure the right candidate can be trained and developed.
2. Senior executive roles
As senior executives approach retirement, succession planning is critical. The earliest possible start to this process is necessary to find and train the ideal applicant for the job, again a process that takes years.
3. Family-owned businesses
It is essential to have a documented succession plan for your family-owned company rather than relying on informal or verbal succession arrangements.
With this primer on how to ensure you have no business uncertainty as to the future in terms of the top guys, here’s SlideTeam’s top 10 succession plan example templates to help you ensure you can offer the best solutions to your clients, the top management if you work as HR head, or a business owner.
These templates are 100% editable and customizable, but the given framework is an apt fit for all your needs. Just key in your own data and the job is half-done. Now, just find the right guy and add to the template.
Let’s explore these best-in-class now.
Template 1: Business Succession Planning PowerPoint Presentation Slides
This PPT Template allows you to incorporate and understand aspects, such as critical position, planning metrics, employee competency, risk of loss, and many more. Use this talent and career planning presentation template to ensure stakeholders realize the importance of succession planning. Also, brand yourself as a clear leader in resolving obstacles to succession and career planning with the deployment of this template.
Template 2: Succession Planning PowerPoint Presentation Slides
Use this template to plan your talent needs, budget, and the potential to develop new skills. Make strong and purposeful succession planning to identify management needs of your business and lead it to success. Download this impactful template to understand the areas where you need to step in to ensure smoother succession planning and clear impediments to it.
Template 3: High Potential Employee Succession Planning PPT Presentation Slides
Create a report for every working individual to analyze their performance using this high-potential succession planning template. Incorporate visuals to demonstrate ways to create career opportunities and raise your company's productivity. Download this template now and get an outstanding succession planning PPT, complete in all respects. Alongside, for planning best talent management, click on our SlideTeam’s blog featuring the best talent management templates .
Template 4: Customer Success Playbook Succession Planning Grid to assess employees
Use this outstanding succession planning PPT presentation template to assess your employees’ performance. The aim is to see who can fit in the bill for that steep move up the ladder, when needed. A sit-in through this presentation helps employers understand which employees need improvements and in what areas. Download it now to generate better performance and motivate employees.
Template 5: Succession Planning Process PPT Sample Presentation
Want to create a perfect succession plan? Download this Succession planning Process PPT Sample Template to generate a step-by-step plan. Demonstrate the level of competition and success at levels such as business platforms and strategy consulting. The aim is to ensure that the mapping of the personnel to the job role is perfect, and is akin to a round peg in a round hole, and so on.
Template 6: Succession Planning Template PPT Sample Download
If you plan to pass the leadership to another employee or a group of employees, you need to have a well-defined, clear structural guideline manual in place. Using this template, you can provide details on what job roles or responsibilities a particular employee will take over, when, and how much time the transition will take. Download this template now and create that perfect and strategic succession planning. Use this template to also showcase your preparedness for succession planning, as this actionable presentation divides potential candidates into UP-NEXT, ON-DECK and HI-POTENTIALS.
Template 7: Succession Planning Process PPT Model
With this Succession Planning Process PPT Model, you can aim at creating continued smooth leadership for your organization, and it includes key aspects of replacement planning. Download now to help your company stay ahead, with crystal-clear processes on the leadership issue.
Template 8: Succession Planning PPT Presentation Examples
Use this Succession Planning PPT Presentation to improve your business model. This template allows you to identify the ideal leader for your organization to meet target goals. The USP here is the team-wise segmentation that this design provides. Download and get going with this extraordinary template.
Template 9: Integrated Talent Management Process with Succession Planning
Create the perfect succession plan using this PPT Template, which gives you the design to do this, completely and successfully, in seven process stages. Using this presentation template, highlight talent strategy & planning, leadership development, performance management, and other vital aspects. Download now and take full advantage of this template.
Template 10: Key Best-Practices For Succession Planning Model
Our PPT Template will help you demonstrate the four key elements: planning, developing, monitoring, and reviewing in succession planning. Evaluate your employee’s performance and build strategic organizational planning and management. Assessment of key talent is one rea where this listing of best-practices will make you a star, as you present this template before your audience.
Succession planning is an essential process for any organization. This ensures that businesses can continue their mission and operation without disruption. It involves creating a plan for identifying, training, and designing potential successors to key leadership positions over time and assessing and developing current employees, for future leadership roles.
These customizable templates provide you the structure, the format and even offer the flexibility to present this powerful idea into a simple PowerPoint format. Just to reiterate, the customizable nature of the templates is a bonus, which is what makes these really yours. Your savings in time and money are humungous, if you give these templates a chance to augment your already-rich knowledge base.
FAQs on Succession Plans
What is the purpose of succession planning.
Succession planning aims to prepare for any staffing and leadership needs that may arise due to retirement or other events. This process is broken down into steps such as creating a succession planning model chart and selecting one or more successors for critical roles. Once successors are identified, they should be trained for their next-level roles.
What are the five steps in succession planning?
STEP 1: Identify Key Positions and Areas
STEP 2: Determine Capabilities for Important Positions and Areas
STEP 3: Determine each chosen employee’s competency and assessment grid and evaluate them against the needed competencies.
STEP 4: Create and implement plans for transferring knowledge
STEP 5: Design the effectiveness and succession plant flowchart.
What is succession planning as an example?
The best example of succession planning is:
An example of internal succession planning is Virginia Rometty's appointment as the CEO of IBM in 2012. Because Rometty fit in with the company's culture and had access to professional development programs, she was able to develop and ultimately become IBM’s first female CEO, after having risen through the ranks.
What are the four stages of succession planning?
- Establishing Goals and Objectives: This involves identifying the organization’s current and future needs and developing a plan to meet them.
- Identification of Potential Successors: This stage involves researching potential successors and assessing their skills and abilities to meet the organization’s needs.
- Preparation and Development: This stage involves providing training and development opportunities for potential successors, such as mentoring and coaching, to prepare them for the additional responsibilities.
- Transition and Implementation: This stage involves the actual operationalization of the succession plan, including the selection of the successor, the communication of the change to the organization, and the integration of the new person into the organization.
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More From Forbes
5 case studies in successful succession planning.
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Case study: the PLC
The investors and board of a PLC assume a high level of foresight by its executive team.
“We need to have succession plans that are for the next 12 or 24 months or an even longer time frame than that,” says Sarah Totham, Director of Talent and Organisational Development, Legal & General.
The FTSE 100 financial services company is organised into seven divisions, such as investment management, insurance and mature savings. Each one is headed by a divisional CEO reporting into the group CEO Nigel Wilson.
One of the key challenges in such organisations is moving talent between divisions. But, of course, it is also an opportunity.
“We have moved people around a lot. The internal appointments of divisional CEOs have all moved from one part of the business to head up a different business,” says Totham.
“Next level down, we work with the divisional CEOs on the development plans for their teams so encouraging moves across the group because these CEOs tend to work within their verticals.”
Key advice: “Make sure you have a successor and are dispensable in your role. It’s a sign of strong leadership that you have nurtured a successor and gives you the chance to move on. ”
Case study: the global consulting partnership
At McKinsey & Company, over 600 senior partners elect its global managing partner every three years. Incumbents resubmit themselves for re-election at the end of three years.
“You’ve got to make sure there is a group of candidates from which to select every three years. That is done by giving partners leadership opportunities where they can be tested ,” says McKinsey's Dominic Barton , Managing Partner Emeritus.
Barton, himself, was first elected global managing partner in 2009 and went on to be re-elected two more times.
He was running the Korean office of McKinsey when his name first appeared on the list of candidates in 2003. Ian Davis, the then successful candidate, arranged for Barton to take on the role of chairing Asia from 2004, standing him in prime position five years later.
“The successful global managing partner uses the ballot to identify potential future candidates and gives them leadership opportunities.”
Planning by the global managing director for this succession is crucial.
“If a bunch of people leave after the vote, it is not a good sign,” concludes Barton.
Key advice: “If you go around saying you want to be a leader, it puts people off. Spend time talking to people who have been leaders in the past. Find out how they have developed at inflexion points such as in a crisis or building business from scratch.”
Case study: the specialist resourcing company
Huntswood supplies its client, the financial services sector, with freelance contractors to handle a series of customer-focused services such as complaints handling.
“Vetting of such contractors is absolutely key because of the nature of our clients’ business. So all of our contractors are known to us,” says Sara Robinson, Huntswood’s Chief of Staff.
“We’ve even seen contractors develop. We have one contractor with us today who started at 16 and is now, at 26, a manager.”
It is not just Huntswood that gets to know the contractors.
“Some of the contractors have worked with a client for so long it becomes a risk if they move on,” adds Robinson.
Succession planning for Huntswood is of necessity focused not just on its 226 employees but also its 4,000 contractors.
It works with its financial services clients often suggesting that it move the contractor on to its at-risk register.
“We encourage the client to take on a full-time employer and the contractor to develop other skills.”
Key advice: “HR ‘did’ succession planning to the business in the past - that is why it gets shelved. But now HR gets it started, helps train colleagues and then they take over.”
Case study: non-executives on PLC boards
“If a CFO wants to succeed a CEO, you would look at all sorts of opportunities to develop that person,” says Milena Djurdjevic.
“But you cannot do that for non-executives because there’s not much potential for personal development on a board.”
A couple of exceptions come to mind, says the founder of Calibro which advises chairs, senior independent directors and nomination committees on board succession planning and composition.
“You would not take someone on to be a chair of a board without having been a chair themselves. But they could have chaired the remuneration or audit committees.”
The strength of a board and the importance of changing the composition becomes even more important as businesses face rapid changes in markets.
Djurdjevic works with her clients to hire people with broadly-based skills so that even if a business’ strategy changes, its non-executives should have the skills to deal with it.
“Non-executives that cannot contribute to strategy after change have limited value.”
Key advice: “Have someone on the board with insight in the direction the business is going. A non-exec can help executive teams to deliver the strategy.”
Case study: the scaleup
Most startups don't really think about succession planning.
“The assumption is that the founder/CEO will not be leaving until the company goes bust or gets acquired,” says Eamonn Carey , MD of Techstars London, the accelerator. “But that’s not always the case.”
Take the example of Denver-based SendGrid , founded in 2009 and a Techstars alumni, to deliver, track and scale email messages. Customers include Uber, Spotify and Airbnb.
Isaac Saldana, its cofounder and founding CEO, stepped aside in 2011 to focus on driving product innovation as the then-startup numbered 20 employees and several thousand customers.
In Saldana's place came CEO Jim Franklin, formerly of Oracle, “to focus on managing growth and scaling the business,” as he wrote in a blog post at the time.
Three years later, the then scaleup boasted 250 employees and 175,000 customers. It was Franklin’s turn to hand on the CEO’s role to Sameer Dholakia , a Group VP and GM at Citrix, who subsequently took the company public in 2017 and announced an agreement for SendGrid to be acquired by Twilio in 2018.
Key advice: “Starting, scaling and public company, each of these stages is very different. While there are some CEOs that can manage all of them - there are also a lot who understand that they occasionally need to swap out with someone who ’ s got a handle on how to run that next stage.”
This is the second in a two-part series on succession planning. Read seven steps to successful succession planning here .
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What is Succession Planning?
Succession planning process with examples, succession planning examples in the business world, what are the benefits of succession planning, succession planning faqs.
The lesson is that No. 1, this management has to be at the highest class possible. No. 2, they have to have a succession plan. - Al-Waleed bin Talal
Great organizations plan ahead as part of best practices. This is because the future is inevitable, and failure to plan is a sure way to fail.
Part of this planning is creating a succession plan that ensures that there are potential candidates when vacancies arise to ensure a smooth transition.
Creating a succession plan is vital as there are bound to be promotions, resignations, firings, or deaths in a company's lifetime.
The great resignations swept across American corporates starting in 2021 offer a great example. What began with junior employees quitting extended to CEOs throwing many organizations into a spin.
If there is a lesson that organizations can learn from this is to make succession planning a core element of their leadership development plan.
Succession planning is identifying and developing people (usually talented employees) to fill key positions when a vacancy arises later. Succession planning creates a leadership pipeline ensuring smooth leadership transitions.
It is essentially a way to ensure that there is a plan for who will step into leadership roles as current leaders retire, move on to other opportunities, or are otherwise unable to continue in their positions.
Succession planning helps ensure a smooth transition and continuity of leadership, which can be especially important for the business's ongoing success.
Succession planning can either be emergency or done in the long term.
An emergency succession plan is done when a vacancy arises that needs to be filled in the shortest time possible. For example, when a CEO role becomes vacant due to resignation. On the other hand, long-term succession planning takes place way ahead of time in anticipation of events such as retirements or mergers.
To create an effective succession plan, use the following succession planning template:
Step 1: Identify key areas and positions
A good starting place to ask: Which position is vital for the success of this organization? Or which position can this organization not do without?
The significance of this position needs to be considered in terms of financial impact, regulatory requirements, public perception, workplace morale, etc.
Once you have identified these positions and the critical roles, they serve. You will be guided on the next step.
For example, for a CEO position, ideally, this position needs to be filled in the shortest time possible since this is where the fulcrum of the organization operates.
Step 2: Identify capabilities & eligibility requirements for key areas and positions
This answers the competency management question for the right candidate. There should be a baseline of competency.
For example, does a key position come with more responsibility? If yes, what does the perfect successor need to have for a smooth succession process?
Does the right candidate need to have both technical and business skills?
What are the key skills required for the critical role?
Evaluating candidates for leadership positions will reveal, among other things, if they have the right temperament to handle the stress of being a manager , knowledge gaps, etc.
As you evaluate this, ensure to include the organization's future needs.
Step 3: Identify interested candidates
Make a list of candidates that meet the set criteria and go further by first asking them if they are interested and, if yes, prepare a path for them to learn more about the key roles they could assume in the future.
This can be done for both internal and external candidates.
For prospective candidates, assess capabilities(performance management) through interviews, discuss career development plans, etc.
It is important to be objective and observe merits at this stage.
This way, you will sieve potential candidates and start cultivating the next generation of leaders.
Step 4: develop and implement succession and knowledge transfer plans
This entails shaping the right candidates for the position through an individual development plan, coaching, and mentoring by senior management. Moreover, attention should also be on leadership coaching , managing expectations, etc.
Candidates at this stage should:
- Have Demonstrated competence in their specialty through excellent job
- High-potential employees with the necessary skills looking at serving at the executive level
- Be high performers recognized by peers as competent and knowledgeable in their work
- Be ready for the increased responsibilities that come with the new position
At the end of these development activities, the potential candidates should be ready to assume the challenging roles assigned.
Step 6: Handing over
The recruits assume their leadership position at this stage of the succession plan. This process should not happen overnight. For a successful succession plan, there needs to be a transition period.
This means that the occupier of the officer should acquaint the new office bearer with key roles and business secrets that might not be covered in the earlier stage. Also, the new recruit should manage up.
Setting a deadline for this step is important to avoid possible conflicts.
Step 5: Evaluate Effectiveness
This measures if the succession planning process delivers in recruiting potential successors. For example, did the process deliver the right person?
Were there unexpected events that derailed the process?
What is the performance of internal hires compared to external hires?
what gaps exist in the succession plan?
Evaluating effectiveness assists in better talent management by creating a feedback mechanism and contingency plan that refines how you will recruit new leaders.
The following companies offer great examples of succession planning.
Apple faced a significant leadership transition when Steve Jobs, Apple's co-founder, and CEO, left his position in 2011. But because of their succession planning, the changeover went relatively smoothly. The company's Chief Operating Officer, Tim Cook, took over as the new CEO.
Given that Cook had been acting as the "de facto" CEO while Jobs was on medical leave, it appears that Apple had been preparing for this eventuality.
In his resignation letter , Steve Jobs recommended Tim cook for the position:
“As far as my successor goes, I strongly recommend that we execute our succession plan and name Tim Cook as CEO of Apple.”
Cook had been a key team member managing day-to-day operations for the business for more than ten years. He was already acquainted with the business's strategy, culture, and procedures, which made a move less difficult.
Why Apple's succession plan worked
Apple's internal succession planning worked and delivered the following:
- The company culture philosophy as an innovative company continued with the launch of revolutionary products such as the Apple Watch, Apple podcast, Apple silicon, and Airpods, among others.
- Investors gained confidence making it the first tech company to achieve a $ 1 trillion valuation.
2. Microsoft Corporation
Microsoft is another tech giant with an enviable succession plan. Although, it has suffered bumps along the way, like the transition between Bill gates to Steve Steve Ballmer. The former successor, Satya Nadella, has restored the company's former glory.
Satya Nadella, a Microsoft employee since 1992, rose by showing exemplary leadership in key roles and was picked as one of the possible succession candidates by the board, including impressive personalities such as Alan Mulally, the former CEO of Fords motors.
Why Microsoft Succession Plan Worked
When Microsoft's board chose an internal candidate for this key position, the company needed new thinking after the unsatisfactory leadership of Steve Ballmer. By settling on an insider away from the expectation of many, they achieved the following results:
- Satya understood the company culture, business operations, and what needed improvement to compete with Apple and Google. He has been able to sheer the company to greater heights and profitability, including investments in new products such as Open A. I and GitHub.
- They avoided peter's principle. Laurence J. Peter, the author of the Peter principl e, defines it as "in a Hierarchy, Every Employee Tends to Rise to His Level of Incompetence." Time has vindicated him as the person uniquely qualified for this powerful position.
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Any firm can benefit from succession planning because it ensures a seamless transition when important leaders or workers go. The following are some advantages of succession planning:
Internal talent identification and development :
Organizations can use succession planning to find and prepare internal candidates for important positions so they are prepared to step in when needed. Due to the lack of a drawn-out hiring procedure, this might save the business time and money.
Ensuring business continuity
When a key employee leaves, there may be an interruption while the organization looks for a replacement. Planning for succession ensures a strategy is in place for how the organization will continue, reducing this disturbance.
Organizations with succession plans are better equipped to deal with unforeseen departures and are less likely to be caught off guard by losing a key person. This might lessen the possibility that a key employee's departure will hurt the business.
Increasing employee engagement
When staff members know a plan is in place for their professional development, they are more likely to feel invested in and engaged in the organization. A culture of learning and development can be fostered by succession planning, which can boost employee engagement and retention.
Enhancing organizational performance
Succession planning aids businesses in locating and nurturing internal talent, which fosters a more effective and efficient workplace and raises overall performance.
Reduces chances of Disruption
If the goal is to retain the workplace status quo, a succession planning process ensures this goal is attained. This gives sufficient training on workflow processes, learning culture, and protocols.
Investors are a jittery lot. They hate uncertainty, and when performance is good, the unfamiliar. When effective succession planning is in place, this can assure investors that new management will not rock the boat.
Create a competitive advantage
By prioritizing succession planning, an organization creates a competitive advantage that ensures its employees are primed for leadership positions. These leaders understand your business, company culture, and internal processes. This makes employees feel valued, boosting retention efforts and commitment.
Q: Who should be involved in Succession Planning?
A: Succession planning should involve a team of key stakeholders, including the organization's senior management(CEO, COO, etc.), promising employees, departmental heads, etc. A good place to start is by first identifying the goal of the succession plan and creating a succession planning template.
Q: How often should Succession Planning be reviewed and updated?
Succession planning should be reviewed and updated regularly -typically annually. This ensures that it is relevant. Moreover, the frequency of review and update can be adjusted based on changing business circumstances.
Q: How do you identify key positions in Succession Planning?
Key positions in an organization are personnel important for the smooth functioning of an organization. Examples of these positions include CEO, CFO, departmental heads, etc.
Q: Does a Small Business Need Succession planning?
The principles of running a small business don't deviate from bigger companies, including succession planning. For small businesses, such as family-owned businesses, having succession plans in place future-proof the business. If your concern as a small business owner is the business's success beyond you, then you need to create one.
Q: What causes succession planning to fail?
A succession plan can fail due to factors such as biases in recruiting process, lack of support from senior management, making assumptions, absence of a Leadership development plan, and having a cookie-cutter approach to your succession plan.
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