What Is Succession Planning? 4 Steps to Create A Smart Leadership Succession Plan

Every company has integral leadership members who are essential agents of stability and future success.

But what happens when one of those people gets a job offer or is ready to retire?

Is your company ready for such a big change?

The large majority of companies are not succession-proof. You need a plan and strategy to navigate the leadership changes that are bound to happen.

Succession planning is the strategic process of creating a plan for when a member of leadership or another essential role resigns, retires or otherwise leaves the company.

A successful succession plan facilitates a smooth transition of leadership roles to other employees when a member of leadership leaves the company. 

Here’s everything you need to know about succession planning. 

Key Takeaways

• Succession planning promotes business continuity, develops future leaders, mitigates risks and attracts talent.
• You can create an effective succession plan by assessing company needs, identifying successors, offering development opportunities and revisiting the plan as necessary.

Succession Planning in 4 Steps

I want to stress that succession planning isn’t about replacing — it’s about preparing. 

When creating your plan, your job is to think about what will happen when an employee leaves.

Also, remember that your plan won’t come together overnight. Starting now is preferable to starting when someone has already resigned (so your company continues to run smoothly even though abrupt leadership changes).

In four simple steps, you can create a smart succession plan for every essential position in your company, ensuring that the company can function smoothly even after those people are gone. 

Let me break it down for you.

1. Assess the Organization’s Needs

Your first step is deciding which positions are critical. Ask yourself and other company stakeholders, “What positions must I fill for the company to keep running?” 

For example, you likely can’t run a company efficiently without a VP of operations. 

Once you have your list of essential positions, you need a detailed job description and an outline of necessary skills for each role. It’s best to refer to the person that’s currently in the position for the most accurate description and role responsibilities.

2. Identify High-Potential Employees

Next, it’s time to evaluate the talent pool and identify potential candidates for when a member of leadership steps back. 

Start by conducting frequent performance reviews and monitoring employee growth. High-potential candidates will show a pattern of exceeding expectations and finding proactive ways to improve and add value to the company.

Consider these questions when identifying potential candidates:

• What skills do they possess now that benefit the company?
• What kind of training will I need to provide? 
• How committed are they to the organization and our core values? 
• Does this person take initiative?
• Do they have leadership skills and experience?
• Do you feel confident that they can successfully take on the new role’s responsibilities?
• What are their long-term goals within and outside of the organization? 
• Do others look up to this individual and see them as a leadership figure?

I’ll use an example.

Maybe you notice a top-level manager who isn’t ready to take on a chief marketing officer position. Perhaps they are lacking in one or two essential leadership skills. Yet they show consistent improvement, a strong understanding of various marketing skills and have multiple years of related experience. 

I’d give them the development training they need to become eligible for the position when the opportunity arises.

3. Offer Development and Training Opportunities

Great leaders offer skill development opportunities to prepare employees for future leadership positions.

Start by reviewing the hard skills and experiences an employee needs for such a promotion. Then, find ways to provide training and development sessions. 

Development opportunities include: 

1. Mentorships
2. Coaching 
3. Leadership experiences 
4. Conferences 
5. Goal setting
6. Cross-departmental training 
7. One-on-one meetings
8. Hard skill training
9. Being involved in professional organizations 
10. Individualized development plans

You should also encourage your employees to create individual development plans that identify their workplace goals, strengths, weaknesses and areas for improvement.

4. Monitor Change and Adjust as Needed

You may need to revamp your succession plan if a potential successor leaves the company or another employee shows greater capability.

Regularly monitor the successors’ progress by revisiting performance reviews and development plans to ensure they are on the right track to assume a leadership function when the time is right.

The Importance of Succession Planning

Your clients and employees (and even yourself) will all benefit from a quality succession plan. Here are four reasons to prioritize succession planning today. 

Promotes Business Continuity

Succession plans allow operations to move forward in a company’s delicate time of change. 

With a smart succession plan, there’s no need to halt or slow production while key players get acquainted with new positions. Instead, your company can continue running as usual — keeping your clients, shareholders and employees satisfied. 

Helps Develop Future Leaders

Do you remember step three of your succession plan? Offer development and training opportunities. This step is most beneficial for everyone involved. 

A smart succession plan encourages employees to seek personal and professional growth, and in return, you get the opportunity to shape leaders from the ground up. 

Mitigates Risks

When companies aren’t ready for big changes, they assume certain risks and potential negative side effects.

For example, when an unprepared company loses its chief operations officer, operations might slow down, making it difficult to process client orders. It could cause sales loss, unsatisfied customers and frustrated employees. 

Alternatively, when a prepared company loses its chief operations officer, it can quickly promote the successor and keep the business moving onward and upward.

Attracts and Retains Talent

When you commit to a succession plan, you show commitment to employee development — a substantial perk for current and potential employees.

Guaranteeing growth for your employees encourages them to stay with the company. And not coincidentally, incoming employees often look for a workplace where their success is recognized and rewarded. 

Succession Planning FAQ

If it’s your first time drafting a succession plan, you likely need further guidance. 

The good news is: I have some answers for you!

Who Is in Charge of Succession Planning?

Succession planning isn’t a one-person job. You should involve various parties in the planning and executing stages. 

Parties involved in succession planning include: 

• Human resources: Identifies key positions, assesses talent and skills, develops training plans and continually monitors performance. 
• Top-level management: Identifies successors, provides mentorships and approves succession plans.
• External consultants (if applicable): Provide guidance and objective perspectives. 
• Managers and supervisors: Provide training, conduct performance reviews and provide feedback to and about potential successors.
• Employees: Participate in training, express their desire to grow with the company and demonstrate their readiness to advance.

What Are the Key Elements of Succession Planning?

Succession planning can only be successful if it includes careful considerations and best practices. 

Here are five principles I follow while succession planning:

1. Make space for clear communication and transparency. Sometimes a brief getaway to a remote location creates the conditions for this to happen naturally.
2. Leave no stone unturned. Take all options into consideration so that you can create the most thorough, sound strategy possible.
3. Build a talent pipeline from the start. Do it today, not when you think it might be needed. By then, it’s already too late.
4. Monitor and adapt the plan to changes in the company. A succession plan is a living document, and it needs to be reviewed and adjusted often.
5. Don’t cut corners. Nobody wins when you skirt the details.

What Are the Challenges Companies Might Face in Succession Planning?

When succession planning is in place, there may be a shift in company culture — a  good one, but a shift nonetheless.

Of course, change can be hard. As a leader, I’ve seen a few major challenges when implementing a succession plan. 

Common challenges in succession planning include: 

• Resistance to change
• Lack of leadership development resources
• Difficulty picking suitable candidates
• Balancing short-term and long-term goals
• Tracking performance 
• Revisiting and revising the plan

Prepare for Your Company’s Future

Your company works hard to achieve its goals and improve the lives of your clientele or customers. Don’t let a sudden leadership change interrupt your growth. 

Succession planning will be your saving grace when the time comes for someone to retire or take a position elsewhere, so start today and review regularly. 

With a great succession plan, there’s no telling what your resilient organization can achieve in the face of change.

To your company’s future success, 
Thomas