The importance of succession planning for continued organisational growth and success.Reading Time: 4 minutes
In an efficiently built organisation, every employee fulfils some essential purpose. A truly successful business relies on the different skills and experiences its staff members bring to the table.
But whether it’s retirement, a desire for a change of pace, or just a more lucrative job offer elsewhere, people can leave a job for any number of reasons. When that happens, you need to have a short-list of suitable candidates for their position.
So let’s talk about the importance of succession planning for your organisation.
What to do when leaders and key staff leave your business?
While people do leave jobs for all sorts of reasons, the biggest and most inevitable is retirement.
Baby boomers, as the name suggests, are one of the biggest generations around today. By 2030, most of them will have entered retirement. Although some workplace flexibility schemes include phased retirement, these people aren’t going to be around your organisation forever. This is why the need for succession planning in your business cannot be ignored.
To use traditional law firms as an example, lawyers who obtain a partner position often reside in that role for the rest of their careers, potentially meaning that firms can go decades at a time without significant changes to their most senior leadership.
Research in 2017 found that 40% of firm partners are baby boomers, and 52% are Gen X. This makes sense, as professional and literal seniority often go hand-in-hand, but it presents the issue that the backbone of leadership in the legal sector is soon set to step down.
Of course, leadership roles aren’t necessarily the only ones that require succession planning. But organisations struggle to function without effective leadership, and higher up personnel tend to be more complicated and expensive to replace.
But the fact is that anyone with specialist knowledge, or who otherwise plays an essential role in the day-to-day running of your company has the potential to create a huge gap in your corporate structure if they decide to leave.
It’s not enough just to focus on reducing turnover. You have to plan for it as an eventuality, or be left hanging when it does.
What is succession planning?
Succession planning is exactly what it says on the tin. For every leadership role or major staff position in your business, you need to have some idea of who you’ll promote if that role becomes vacant. It’s often imperative to get these roles filled quickly. After all, you might lose key HR personnel, and suddenly, nobody’s getting paid. Or if the person in charge of marketing gets head-hunted by another company just before Christmas, your ad campaign for the first quarter of the New Year might not roll out on time.
While the best plan for succession may sometimes be to hire externally, it’s often a good idea to up-skill pre-existing staff members when feasible. Not only does taking on new staff open you up to additional hiring costs, but refusing to promote from within can also breed resentment in your most career-minded workers. Whatever you decide to do, having a plan in place enables you to manage turnover in senior positions, unexpected or otherwise, before it adversely affects the business.
How to plan for succession effectively
Now that you understand the benefits of succession planning, it’s time to go over the essentials. Although your plan should be swift in its execution, it’s vital not to rush the planning stage. This is why we really can’t put a strong enough emphasis on the importance of succession planning well in advance of it becoming an issue.
- Assemble a team to create a succession plan: Due to the importance of succession planning, it’s definitely worth getting breadth of perspective. You should bring your senior-most leaders (or for much smaller businesses with few leadership roles, a selection of your most distinguished employees) to help you make these decisions. Having a team to plan with helps you make the smartest decisions, because they may offer insight about aspects of the business you’ve overlooked, or they might have good candidates in mind for internal promotion when the time comes.
- What’s the reason for your plan?: You need to figure out which positions need a succession plan. As we’ve said, this should include your top leaders, and any specialists that you employ. At this stage, you should consider the factors that will require you to fill positions. Maybe one of your senior managers is set to retire soon, or someone in your industry is known to be head-hunting promising talent. But your succession plan might not have anything to do with turnover at all. Perhaps your company is thriving, and you’re planning to open a new branch. Understanding the reasons behind your plan is essential for making the most appropriate decisions going forward.
- Identify issues that will affect your plan: There are plenty of factors that can influence your succession plan. Practical concerns like hiring costs might determine how likely you are to fill the position externally. Then there are changes to workplace culture that happen over time, which you’ll need to consider. You might want to hire or promote someone who has experience with a target market you’d like to move into, or perhaps you want team leaders who will promote a culture of feedback in the workplace.
- Connect your succession plan to business objectives: Along with the issues you identified in the last step, your business objectives are the other major determining factor. It should go without saying that the aim of your succession plan should be to promptly fill vacant positions with people who can help the business to grow and develop.
- Create a functional action plan and follow it through: Finally, the most important step! The objectives of succession planning include identifying positions that need suitable replacements lined up, creating a short-list of potential candidates for internal transfer or promotion, as well as considering the costs and suitability of external hiring. If up-skilling is required for an employee to fill the role, you’ll need to ensure that they have access to the proper training and development opportunities, so as to up-skill into the position successfully.
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