11 Succession Planning Best Practices to Follow in 2024
Imagine your CEO announces retirement tomorrow. Panic? Chaos? A well-planned succession strategy ensures a smooth transition, not a mad scramble. Learn how to avoid leadership limbo and future-proof your company.
Poor succession planning can be incredibly expensive. According to Harvard Business Review, badly managed CEO transitions can wipe out nearly $1 trillion in market value each year for S&P 1500 companies.
No senior leader lasts forever. But with a rock-solid succession planning strategy, you can ensure a smooth transition of leadership, minimizing disruption and maintaining stability. Providing clear pathways for career advancement encourages employee engagement and loyalty, and enables you to build a bench of highly skilled people ready to take over the reins – all fuelling long-term growth and innovation.
Contents
What is succession planning?
11 succession planning best practices to follow
Succession planning examples
What is succession planning?
Every organization, regardless of size or sector, needs a plan for the future. Succession planning is a proactive strategy for identifying and nurturing high-potential employees to fill critical roles when current leaders move to another role, leave the company, are fired, retire or die. Your company can ensure a smooth transition and maintain stability during leadership changes by preparing a talent pipeline of successors.
The process begins with identifying critical positions essential for continuity and growth, assessing the talent pool to pinpoint potential successors, and implementing targeted development programs to equip these individuals with the necessary skills and knowledge.
The result is a seamless transition that minimizes disruption and maintains operational stability. Also, a commitment to people development increases loyalty and retention among high-potential staff. Yet, many organizations still face challenges in implementing effective succession planning strategies, underscoring the need for continuous focus and adaptation to evolving business and workforce dynamics.
11 succession planning best practices to follow
1. Start early and plan continuously
Always be prepared for unexpected changes. Begin the succession planning process well before it’s needed and make it an ongoing effort rather than a one-time event. Starting early and planning continuously in is crucial for ensuring organizational resilience and adaptability.
HR tip
- Conduct regular reviews of your succession plan so that it remains relevant and effective during changes like shifts in business strategy, restructuring, or evolving market demands. Update plans to reflect current priorities, talent landscapes, and future leadership requirements.
- Encourage managers to discuss career ambitions with team members annually These discussions help align individual goals with organizational needs, identify potential leaders early, and tailor development opportunities to prepare employees for future roles.
2. Develop a formal succession plan
Create a structured and documented succession plan that outlines how potential successors are identified, developed, and prepared for their future roles.
A formal plan establishes clear criteria for succession, aids in the objective assessment of potential candidates, and outlines the development paths necessary for their readiness, facilitating a smooth transition of roles.
HR tip
- Create a formal document that acts as a roadmap, detailing the procedures, timelines, and responsibilities involved in preparing for leadership changes. Ensure all stakeholders understand their roles and the expectations placed upon them.
- Monitor and regularly update the plan to reflect changes in strategy and personnel and communicate changes to ensure transparency.
3. Involve senior leadership
Ensure senior leaders are actively involved in the succession planning process to lend it the necessary credibility and authority.
When top executives demonstrate a visible commitment to identifying and grooming future leaders, it signals to the entire organization that succession planning is a strategic priority, deserving of time and resources. This can take various forms, from participating in planning meetings and decision-making processes to directly mentoring potential successors.
HR tip
- Get senior leaders to communicate the importance of the succession plan for the organization’s long-term success. This sets a tone that encourages all employees to take the process seriously. By discussing their own career paths, including challenges, successes, and lessons learned, senior leaders can set an example and inspire potential successors.
- Encourage leaders to take a hands-on approach to identifying and mentoring potential successors. By helping to develop the next generation of leaders through mentorship, they can impart critical knowledge, skills, and organizational values.
4. Identify key positions and skills
Clearly define which positions are critical to the organization’s success, and identify the skills and competencies required for these roles. Conduct an analysis across departments to pinpoint roles that have a direct impact on the company’s bottom line, operational efficiency, and strategic direction.
By employing a combination of job analysis techniques, such as interviews with incumbents and supervisors, and reviewing performance data, your organization can define the essential functions and responsibilities of these key positions and develop people who can drive innovation, navigate change, and lead effectively.
HR tip
- Create competency models for key positions. A systematic approach to talent development and succession planning, enables you to align training and development initiatives with the critical competencies needed for success.
- Regularly review and update the skills and competencies required. Adopt a proactive approach that ensures your talent pool is prepared to meet future challenges. By analyzing market trends, tech advancements, and strategic shifts, you can adjust competency models accordingly.
5. Assess the current talent
Conduct thorough assessments of current employees to identify those with the potential to fill key roles, considering performance and also potential and aspiration.
Beyond evaluating past and current performance, consider the employee’s potential to grow and their ambitions within the company. You’ll gain an understanding of who has the drive and ability to succeed in more challenging positions.
HR tip
- Use the 9-box grid to assess employee performance and potential. This versatile tool helps in visualizing an employee’s current performance against their potential growth, placing them within a matrix that ranges from low to high on both axes. You can then categorize employees into segments that inform different development strategies, such as targeting specific training for high-potential individuals or creating action plans for those who are skilled but may lack motivation.
- Conduct regular talent reviews to update employee assessments. Regular talent reviews are essential for keeping employee assessments up-to-date and Annual or biannual reviews provide an opportunity to reevaluate employees’ positions on the 9-box grid, taking into account their recent achievements, improvements, and feedback.
6. Invest in professional development
Provide targeted development opportunities, including training, workshops, and further education, to prepare identified successors for their future roles.
This includes learning experiences such as specialized training, workshops, and further education programs. By focusing on the competencies and leadership qualities required for key positions, you can bridge the gap between an individual’s current capabilities and those needed for their next role.
HR tip
- Tailor development plans to the individual needs of potential successors. This maximizes the effectiveness of succession planning efforts. Work closely with these employees to identify their developmental needs and career goals and design a plan that addresses these through targeted training, mentorship, and stretch assignments.
- Offer a mix of on-the-job training, formal courses, and external conferences. Enrich the learning experience for potential successors. Formal courses, whether online or in-person, provide structured learning on specific topics, often leading to certification or advancement in certain skill areas. External conferences expose them to industry trends, networking opportunities, and best practices beyond their immediate organization.
7. Implement mentoring and coaching programs
Use mentoring and coaching to facilitate knowledge transfer and leadership development, pairing high-potential individuals with experienced leaders.
This accelerates the development of potential successors and strengthens the organizational culture by building a sense of continuity and investment in the future leadership pipeline. Mentoring and coaching provide a direct channel for the transfer of tacit knowledge that is often not captured through formal training programs, making it a key component of effective succession planning.
HR tip
- Match mentors and mentees based on career aspirations and developmental needs. This ensures that the mentorship is relevant and meaningful to the mentee, addressing the areas where they require growth to prepare for future leadership roles. Consider both parties’ personalities, professional backgrounds, and long-term career goals when making these pairings, as a good match significantly enhances the learning experience.
- Provide training for mentors on how to support their mentees effectively. Equip mentors with the right tools and knowledge on how to support their mentees. Cover areas such as communication skills, setting goals, providing constructive feedback, and understanding the mentee’s unique developmental needs.
Well-equipped mentors make the experience more beneficial for both parties.
8. Incorporate Diversity and Inclusion
Ensure the succession planning process is inclusive, promoting a diverse pool of candidates for future leadership roles.
Diversity in leadership reflects a commitment to equity and representation and brings a wealth of perspectives that drive better decision-making, enhance creativity, and improve organizational resilience. By consciously including individuals from a wide range of backgrounds, experiences, and identities, your company can tap into a broader set of skills and viewpoints, crucial for navigating complex global markets and promoting an inclusive workplace culture.
HR tip
- Actively seek diverse candidates for development opportunities. Go beyond traditional talent pools and consider people who may have been overlooked due to unconscious bias or systemic barriers. Broaden your recruitment efforts, use diverse selection panels, and implement targeted leadership development programs for underrepresented groups.
- Monitor and report on diversity metrics within the succession planning process. By regularly monitoring and reporting on these metrics, you can identify trends, pinpoint areas needing improvement, and adjust strategies accordingly. This data-driven approach ensures accountability and helps to maintain focus on building a diverse leadership pipeline.
9. Use succession planning software
Leverage technology to streamline the succession planning process, making it easier to track progress and maintain up-to-date information.
Advanced software solutions provide tools for assessing talent, monitoring development progress, and updating succession plans in real time. This facilitates better decision-making and allows for timely adjustments to plans based on current needs and future goals. It also provides a centralized platform for all related activities.
HR tip
- Evaluate and select software that meets the organization’s needs. Carefully evaluate different software options, considering factors such as functionality, scalability, user-friendliness, and integration capabilities with existing HR systems. The software must accommodate the unique aspects of your organization’s succession planning process, including the ability to track and analyze the competencies and progress of potential successors.
- Train HR staff and managers on how to use the software. This includes understanding how to input and update information, interpret data, and use the reporting and analytics features. Regular refresher courses and support resources also help users stay updated on new features and best practices.
10. Plan for emergency successions
Prepare for unexpected vacancies by having an emergency succession plan in place for key positions.
Identify potential scenarios that could disrupt operations, such as the sudden departure of key personnel, and develop plans to address these risks promptly. Having a clear action plan for immediate succession will minimize downtime and maintain stability, so that essential functions continue without significant interruption.
HR tip
- Identify interim leaders for critical roles. Work with current leaders to create a list of potential interim successors, based on leadership ability, experience within the organization, and familiarity with the role’s duties. Targeted development and cross-training, ensures they are ready to take on leadership responsibilities at a moment’s notice.
- Regularly review and update emergency succession plans. Emergency succession plans are living documents. Reassess the list of critical roles and potential interim leaders, and update procedures based on restructuring, strategy shifts, or lessons learned from past emergencies. Annual reviews mean you can respond swiftly and confidently to unexpected leadership vacancies.
11. Communicate the plan
Clearly communicate the succession planning process and its outcomes to stakeholders, including potential successors, to manage expectations and ensure transparency.
By openly sharing information about how potential successors are identified, developed, and selected, you demystify the process and encourage a positive and inclusive culture. Transparency helps to align the workforce with your organization’s vision and goals, ensuring that everyone understands the role they play in the company’s future success.
HR tip
- Develop an internal communication strategy that includes timelines and milestones. Outline what will be communicated, to whom, how, and when. Include timelines and milestones. Ensure that stakeholders are kept informed at critical points, such as when assessments are taking place, development programs are launched, or changes to the succession plan are made.
- Provide feedback to employees about their progress and future opportunities. Keep employees motivated and engaged with honest, constructive feedback, focus on areas of improvement and recognise achievements. Discussing future career paths and leadership opportunities helps employees see a clear connection between their development efforts and their career progression.
Succession planning examples
Apple: Internal development for leadership continuity
Apple’s focus on internal succession aligns with research showing that promoting from within leads to smoother leadership transitions and continued strong business performance. CEO Tim Cook believes in being ready for unforeseen circumstances.
His commitment to developing several internal candidates for the top position ensures that Apple has a pool of capable leaders ready to take over, and points to his desire for the next CEO to emerge from within the ranks. This strategy aims to maintain continuity and preserve the unique culture and innovative spirit that have been hallmarks of Apple’s success.
Microsoft: A lesson in internal leadership development
Microsoft’s decision to appoint Satya Nadella as CEO highlights the challenges many large organizations face in this area. Initially, when Steve Ballmer announced his departure, Microsoft’s response suggested a lack of preparedness, with a search process heavily skewed towards external candidates, despite the company’s position as a tech powerhouse with a strong internal talent pool.
Eventually, after a comprehensive search that considered 100 potential candidates, Microsoft chose to promote from within, selecting Nadella, an insider with a deep understanding of the company and a clear vision for its future. This decision turned out to be highly beneficial, leading to significant cultural shifts and substantial growth in market value. His success serves as a crucial lesson for other corporations: a well-defined succession plan that values internal candidates can drive innovation and propel sustainable growth.Top of Form
Key takeaway
Poor succession planning leads to substantial financial losses. It’s crucial for any organization to have a succession planning strategy that identifies and nurtures high-potential employees to fill key roles when current leaders depart. This ensures stability and continuity in leadership transitions.
Implementing best practices in succession planning, such as starting early, developing a formal plan, involving senior leadership, and investing in professional development, can mitigate these risks. Effective succession planning promotes long-term growth and innovation within the organization, demonstrating the critical need for continuous focus and adaptation to evolving business and workforce dynamics.
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