Succession Planning: What Is It and Why?

Within any organization, people in leadership positions eventually cease to fulfill that role. This can occur for a variety of reasons, such as:

• promotion within the organization
• move to part-time arrangements for better work-life balance
• voluntary departure from the organization to pursue a career elsewhere
• involuntary departure from the organization
• retirement
• serious illness
• death

Organizations that fail to plan for the timely and effective filling of such leadership roles can be caught off guard, with the consequent disruption to normal business activities and the loss of market share. Succession planning is the preemptive process of identifying significant leadership positions that could put the organization at risk if left unfulfilled, targeting current employees that could move into such roles and grooming them for succession. Managing leadership succession effectively requires a structured approach that is agreed, understood and followed by everyone involved in the planning process.

The Succession Planning Process

Succession planning requires steps to obtain leadership guidance, collect relevant information, make key decisions, and execute succession and development actions. If undertaking this activity for the first time, you should consider creating a process that is "separate" from other, related activities such as performance management and development planning. Later, after you have executed your process a couple times, you may take down the special elements and start to integrate it with these other activities. The steps below outline such a stand-alone process.

Define purpose, goals, and scope

The top leader of the organization outlines the purpose, goals, and scope of the succession planning activity.

Assemble an oversight committee

The committee’s role is to establish a succession planning process that can fulfill the purpose, goals, and scope outlined by the top leader, and to govern over the process until most of the major questions and issues have been resolved.

Set policy

The oversight committee creates policy around such issues as data security, assessment, succession nominations, communication and development.

Define operational parameters

Again, this is the purview of the oversight committee. Operational parameters include: positions for which successors will be nominated, the scope of the pool of succession nominees and the rating scales used for assessing contribution and potential.

Develop and conduct the assessment

The assessment is essential for comparing succession candidates and slotting them against specific succession positions. The assessment data, generally provided by direct managers of the succession pool, should be reviewed for equity in the ratings and for consensus in the nominations.

Compile and organize the data

The voluminous data that is collected must be compiled into the kind of information needed by leaders to make key decisions. Some of the compilations include: coded organization charts, a “contribution-potential matrix,” reports of any “at risk” positions or individuals, and profiles for all individuals and positions. A spreadsheet or dedicated tool for organizing and displaying such information is recommended.

Conduct organizational reviews

Starting with business unit/functional heads, the succession plan and reports compiled are reviewed and key decisions made. These decisions could range from developmental opportunities for future leaders to actual leadership appointments. The business unit/functional level reviews are followed by reviews at the highest level – with correspondingly higher level decisions.

Implement development plans

While succession decisions may be executed immediately after the reviews, the developmental opportunities must be pursued over the following weeks and months. For future leaders to realize their potential and be better positioned to “step up” when the time comes, these development opportunities must not be allowed to languish once the spotlight is off the succession planning process.

Assess process effectiveness

Like any other business process, your succession planning process will need to be improved, streamlined, integrated with other human resources processes and possibly expanded to accommodate additional participants. While the experience is fresh, take a moment to gather feedback and assess process effectiveness – then set and achieve the most critical improvement objectives.