Introduction to Succession Planning Strategy
The succession planning strategy is tricky. It is the art of finding the right fit for a future empty position. The reason a succession planning strategy is tricky is that it makes an HR dig through everyone in the company and chooses the right fit. The second reason for which a succession planning strategy is tricky is if the HR team fails to choose the right person without realizing it, it would affect the company hugely in the long run. People don’t realize until it’s too late. But if a company has on-going succession planning for the organization’s top positions, it would become easier for the HR team to make the right choice without going into much detail at the last moment and there would be less chance of making a mistake in choosing the candidate for future replacement.
In this guide, we will be talking about “succession planning strategy”, why succession planning is important, the possible benefits you can get out of succession planning strategy, how to do succession planning (step by step procedure), and finally how you can integrate succession planning strategy into your HR strategy. We have a lot to discuss and if you hang on, you would get one or more ideas to implement in your business or company.
Let’s get started right away.
What is a succession planning strategy?
Succession planning is the art of strategically looking for the right fit especially for the position of senior management professional. Companies that start their succession planning strategy just prior to the requirement, increase their chances of failure as the succession planning process should be a continuous event to be effective. If companies start to do succession planning strategy as a process of putting HR strategy in place which we will discuss in the later section, the succession planning process would be successful beyond measure.
Whenever the HR team sits with the process of doing a succession planning strategy, what they do is to choose someone whose experience, qualification and ambition match the criteria for the senior management post. Moreover, the person (who would be chosen for the position to fill in the near future) should be so imperative for the company that the company can’t afford to lose him/her in near future. the succession planning strategy is an art and science. And it has a lot to do with the perpetuity of an organization.
Let’s understand with an example. B is about to retire from a senior position in company A. The HR team is looking out for people within the organization to fill up the position in near future. They find C to be the exact match for the position in experience, knowledge, qualification, and dedication. Thus C is being chosen as a successor of B. Thus when B will retire from company A, C will take his position. The whole process is called a succession planning strategy.
Why is succession planning strategy important?
The succession planning process is one of the most significant HR strategies in an organization because it ensures the perpetuity of the organization and helps the organization become dynamic and versatile in its approach to deal with change.
There are few things for which you should consider doing the succession planning process.
Risk of loss
The first thing is the opportunity cost. No talent will stay in your organization if you (HR/CEO/Founder) don’t help him/her grow in the long run. What would his/her competitive advantage if s/he will stay in the same position for years even after having the desired qualification and attributes to be successful as a leader? In that case, if another company offers him/her for a better opportunity, s/he will leave the organization for better prospects. So, you need to always on the look-out for people who are able and difficult to find in the marketplace because losing them would be the greatest loss for the organization. An effective succession planning process helps mitigate the risk of losing efficient people and facilitates in retaining and effectively understanding their position and ambition.
Prevention from being stalled
If the HR team do the planning just prior to the retirement of the person, it would be difficult for the organization to get going at the same pace. The HR team needs to maintain a log of each person, especially the top management to help the organization cope up with challenges. The succession planning process should be done every year, consecutively, and always with or without the need of replacement. What if a senior executive expires today, what would the HR team do? How would it affect the organization? If the organization does the succession planning process on a regular pace, they would know who will replace those during a setback or a crisis period.
Building leaders
It is important for a company to grow and expand at a level where no-one needs to be given instruction to be able to do the needful. Thus with a proper succession planning process, companies are able to convince the top management to train, develop and make the subordinate’s future ready. If the succession planning methods are done at a later stage, the chances of training and sensitivity program or conducting management development programs (MDP) are pretty low. So a company with an effective succession planning systems concentrates on building leaders since a talent joins the company. And it makes a huge difference.
Identify the performance gaps
An effective succession planning methods helps HR and the top management to find the gaps in the performance. To reach excellence, every company sets its own benchmark. And people who work in that company are expected to reach or reach toward the benchmark. A succession planning methods help identify people who reach the level and who don’t and why there the gap between the reality and expectation differ in terms of performance. Is it not being able to create a knowledge management system within the organization? Is it something more of an individualistic approach than a holistic issue? Is it something organization can find a solution for immediately? How not being able to achieve the benchmark would affect the company in the long run? succession planning methods help answer these questions and facilitate in finding answers.
Possible benefits of an effective succession planning strategy
In a recent study, it was seen that 90% of the correspondents who are running companies agreed that an effective succession planning methods has been an essential part of being successful. However, only 50% of them took action and did something about succession planning. Thus, we want to emphasize it more. Let’s see the benefits you would get if you take succession planning methods sincerely.
- Succession planning helps to retain better talent and let go of talent who are not worth keeping.
- It helps build the right leadership for the company in the years to come.
- Succession planning is a comprehensive planning which saves the company from any contingencies that may appear in the future.
- It connects the whole organization in a single thread which is the perpetuity of the company.
- Succession planning encourages the organizations to invest heavily in training and development to ensure better ROI and lower attrition rate.
- Succession planning also helps shape the overall strategy of Human Resources in the company.
How to do succession planning strategy (step by step procedure)
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There are exactly six steps by using which you will be able to create a great succession planning systems for the future of the organization.
Let’s look at all these six steps one by one.
1. Identify key positions
The first step is, of course, to identify which positions you need to keep in mind. These are the key positions and critical to organizational success. Better would be your identification of key positions; better would be the chances of right succession planning systems. To create effective succession planning methods, all you need to do is look at all the positions and find out the impact of each position in 5-10 years and then decide which positions have most impacts; identify them as key positions.
2. Review requirements
Once you find out key positions, you need to review the criteria and see the most crucial elements of the organization. You also need to identify key-actions the people are taking on every day basis which is not part of the job description. Then you need to make a list of requirements which are required to be eligible for being enrolled in this succession planning program.
3. Analyse gaps
The succession planning needs to be done to be able to analyze and fill the performance and expectation gaps organization is currently facing or expecting to face in near future. The HR team needs to realize which key positions are about to create gaps in the performance level of the organization and then take suitable actions to find a solution.
4. Develop a plan
On the basis of all the analysis, it’s time to make a plan. You need to write everything down and you also need to make sure that whatever criteria or key-result-areas you set are relevant to the strategic perspective of the organization. Set a vision. Then make a step by step process to reach now. Yes, you don’t need to go from where you are; rather you need to start from the end to get most effective results.
5. Implement succession strategies
Once the planning is being done, it’s time to implement what you have planned. Start from the end. And take action now. If you do that the strategy of the organization would be always relevant. Because today whatever action you are taking will reap benefits for your future! Find out key people and if the succession is necessary shortly, let them know beforehand so that they get time to prepare. If the succession doesn’t need to be done right away and you have 3-5 years to implement the plan (which is advisable), then train the potential candidates and see how they are expressing themselves in the simulative environment. Succession planning and implementation are partly strategic planning and part gut instinct. Rely on both and then go to the next step.
6. Monitor and control
Without control, no plan can be successful. Thus you need to see whether the actions are being implemented as per the planning or not. If yes, then you need to go ahead and take the next action. If not, then you need to prepare for course-correction.
Integrating succession planning strategy into HR Strategy
Succession planning is a significant part of HR strategy. Now as HR is treated as more important than any other resources in an organization, it is important that the succession planning systems should be done in alignment with the HR strategy.
Every organization wants to expand or remain the same and increase profits in the long run. Thus they need people to run the business. So, today you need to think about how you will remain in the competition for the next 10-20 years. A strategy will help you see through the fog of so many variable components like attrition rate, economic crash, inflation/deflation, entry of new competition, the emergence of new substitute,s or increased rivalry. You need to do succession planning in such a way that even if things go wrong, instead of being stuck; you can move ahead and take action immediately. To be able to align your succession planning with the HR strategy, you need to have a contingency plan and a feedback loop. The contingency plan will help you fall on a plan if things don’t go as planned. And the feedback loop should be continuous so that even if actions taken in the beginning don’t yield expected results, you can course-correct and adjust your direction.
To be able to that you need to create a succession planning that is thought upon and worked upon every year since the inception of HR department in the organization.
In the final analysis
Succession planning is not a one day job. To be able to make it effective, you need to plan ahead and do the things as you go and expand the horizon of the organization. Not doing succession planning from the beginning is a huge risk because if the leadership is not full proof, then it would not be possible for any organization to first exist and then to survive. Thus use this guide to create definitive succession planning systems and create proper control mechanisms to fill the gaps between what is actually done and what is expected.
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