There’s a reason why Succession is one of the most popular shows on television right now. Audiences love the drama of watching a media mogul’s children vie for the top spot in the company and succeed their father, while a billion-dollar company hangs in the balance.
Succession planning is a little less cutthroat in real life, but the stakes can be just as high. For example, experts estimate the cost of poorly managed CEO and C-Suite transition for companies in the S&P 1500 to be close to $1 trillion a year.
Unfortunately, succession planning is one practice that tends to fall to the backburner. While you probably know how important it is to have a consistent flow of people ready to move into key positions when needed, you don’t really need to put the plan into action until somebody leaves. As a result, employers procrastinate and are left scrambling to find a replacement at the last minute.
Sound familiar? Then keep reading. In this post, we’ll answer some key questions and break down some of the most important aspects of succession planning, such as:
- What is succession planning?
- What are the key benefits of succession planning?
- Common succession planning pitfalls and how to avoid them
What is succession planning?
In a nutshell, succession planning is a strategy for identifying and developing employees with the potential and capabilities to fill critical company roles in the future. Succession planning isn’t just about filling top C-suite spots but major roles at all levels. A good succession plan should highlight the skills needed for each position, identify top talent within the organization with those skills (or the potential to develop them), and establish clear career paths and strategies for those individuals to develop their skill sets and move into those roles when needed.
What are the key benefits of succession planning?
Avoid rushed decisions.
One of the biggest benefits is that it allows employers to be proactive, rather than reactive, with their hiring. Let’s be frank: your top people will probably leave at some point. Sometimes you know when that will happen, like a planned retirement, but sometimes you’ll be caught off-guard. Succession planning ensures you’re always prepared for these departures and can help you avoid a crisis if a hard-to-replace employee leaves at a critical time.
More efficient hiring and onboarding.
External hiring is a costly and timely process, and even once you find a great candidate, you won’t be entirely sure how well they’ll fit into your company’s culture and functions until they start. However, you can skip the extra hiring costs when you hire internally. And even though moving into a management role comes with a new set of challenges, you won’t have to spend time getting an internal candidate up to speed on how your company operates.
Improved employee retention.
Two words: growth opportunities. They’re what most employees want from their employer and one of the biggest reasons they stay. According to LinkedIn research, roughly a quarter of Gen Z and Millennials say learning is the number one thing that makes them happy at work. Over a quarter (27 percent) of Gen Z and Millennials say the number one reason they’d leave their job is if they didn’t have the opportunity to learn and grow.
Fortunately, succession planning can check a lot of boxes. Identifying and preparing employees for succession provides them with clear goals and skill-building opportunities. It also gives them the security of knowing they have a bright future at a company and their employer cares and values them enough to invest in their development and promote them.
Common succession planning pitfalls and how to avoid them
Managers blocking transfers or promotions.
Some managers may feel threatened by a high-potential direct report and actively undermine their career development efforts. However, employers can get ahead of this by hiring managers who embody a growth mindset. According to Stanford University psychologist Carol Dweck, these people have “a zest for teaching and learning, an openness to giving and receiving feedback, and an ability to confront and surmount obstacles.” Dweck also encourages employers to “train leaders, managers, and employees to believe in growth, in addition to training them in the specifics of effective communication and mentoring.”
Only focusing on the executive level.
C-suite roles can be time-consuming and costly to replace, so it makes sense that you’d want to focus the majority of your succession planning efforts on them. But, unfortunately, doing so may leave your organization vulnerable when other critical employees leave. This is why you need to consider all the essential people in your organization and understand the value they contribute and the potential impact on operations if they were to leave. With this knowledge, you can plan more strategically and ensure all your bases are covered.
Idealizing the role.
Most employers have a vision of who they’d like to see in a particular role, but this idea may not exactly line up with the competencies needed to be successful. It can also lead to bias. For example, maybe you believe that all leaders need to be extraverted, leading you to overlook more qualified introverted candidates. Fortunately, solutions like Career Spark can help with this by providing you with an objective, data-based blueprint of success for every role against which you can measure potential candidates.
Using past performance as an indicator of future success.
A good salesperson doesn’t always make for a good sales manager. Likewise, a great IT professional doesn’t always make a great IT manager. You get the gist. The skills that made someone a strong independent contributor rarely translate to management, so you need to carefully identify the competencies required for success in the intended role and evaluate all potential candidates against this criteria, not their past performance in their current position.
Not updating the plan.
That one internal candidate you had in mind? They could leave or move to a different department. And as we’ve seen with the COVID-19 pandemic, big shifts in technology, your organization, or the broader industry can happen practically overnight. Knowing this, your succession plan needs to be a living document that you continually review and update. For example, you need to make sure you’re developing employees for roles that will still be around and needed when they’re ready and building skills that will be essential in the future. You also can’t pin all your succession hopes and dreams on a single candidate. Instead, you need to regularly identify candidates, develop them, and evaluate their readiness to move into new positions.
It’s never too early to start succession planning
Effective succession planning is as much a process as it is a mindset. You need to actively foster a work culture that’s open to growth and movement and make sure your people understand that one employee’s development or career trajectory doesn’t threaten their own. Your employees can’t just think about what’s best for them but need to have a broader awareness of how all of these decisions and strategies are much bigger than them and support the health and success of the organization as a whole.
Once your team is culturally on board with this mindset, you can use Career Spark to develop the right systems to continually identify and develop talent for future positions. Still, you can’t have one without the other. That’s why the earlier you start the succession conversation, the better. You can make sure your potential candidates are interested in the role and want to learn new skills, take the time to develop them properly, and can look at multiple opportunities to find the right move for them.