Succession planning is a process for identifying and developing people, within an organisation, with the potential to fill in critical business positions in the company as they become vacant. Succession planning can be either short-term or long-term and usually involves internal and external training and development programmes. Succession planning ensures that the company can further progress by being efficiently managed and quickly adaptable to any organisational changes that may be prompted by changing market realities. A carefully planned succession strategy minimises risks of business management failure and ensures that people with the right skills are always available to fill in the positions of responsibility and drive the business forwards.
Succession Planning vs Replacement Planning
Many people confuse succession planning with replacement planning. Both of the terms should not be used interchangeably as they have some fundamental differences.
Replacement planning relies on the assumption that internal organisation structures will remain unchanged in future. Based on that assumption, a strategy is put in place to identify potential replacement candidates for critical positions that may become available soon. It is standard for human resources departments to have three alternative candidates, with various levels of experience, for each position available.
By contrast, succession planning focuses on building a ‘talent pool’ from which selections can be made as the positions become available. Many leaders prefer this, as a more viable long-term sustainability commercial option, than simple replacement strategy. The main idea behind succession planning is to have a wide selection of candidates for each position available. This way a company can better adapt to dynamically changing markets by creating new positions as well as replacing old.
What to consider when developing a succession plan?
Research provided by Randolph M. Kessler proves that identification of clear goals is crucial to efficient succession strategy planning. In practice most of the following human capital investment objectives are core to modern businesses that have well-developed business processes:
- Identification of individuals who are capable of greater responsibility assumption;
- Provision of sufficient development opportunities and training programmes to ensure that the most promising candidates further develop their skills;
- Ensuring that experienced managers and leaders provide support to the selected people and pass their knowledge onto younger talent;
- Ensuring that proper human resources reports are kept and compiled to improve selection processes.
A good succession programme also ensures that improvements are made for existing employees. Commitment and retention can be achieved by meeting the existing personnel’s professional expectations and ambitions. A good management of existing human capital will ensure that in long-term the company not also has strong management but also devoted human capital.
Tailoring the succession plan
There is no universal succession plan and every strategy should be developed in view of particular business and market conditions. For instance, a family run business will require a totally different strategy from multinational corporation. To be successful, your succession plan must form a part of your overall business strategy and risk profile. To give you an example:
The head of administration, in an advertising agency business, is a good leader who meets tight deadlines and has clear potential to become a vice president of the company. His past professional background has always revolved around administrative and project management positions. Optimally, he should gain a little bit more of sales experience and networking skills, to be better prepared for leading the company and bringing in more high profile work. The company recognises that need and his career progression development plan is includes a future move to sales department. If the company is keen to take a bit of a risk and put a person with relatively low experience in charge of the whole department, the plan may work very well and create a future leader with very broad professional experience. However, many companies are reluctant to do so and therefore have to spend more on external recruitment.