Finding Future Leaders - Why is Succession Planning Important?
Fail to plan, plan to fail. It’s an old adage, but it still rings true.
Many factors are at play when it comes to a company's success. However, one of the most important aspects of any business is its ability to plan for both the short-term and long-term future of the company.
Succession planning is essential in identifying and training potential leaders who will take over when current leaders retire or move on to other opportunities. Without an effective succession plan, your company risks losing stability and momentum, which can be detrimental to your success.
This blog post will explore why succession planning is important and strategies for implementing an effective plan.
What is Succession Planning, and Why is it Important?
Succession planning is developing talent to replace leadership roles and other key employees when they transition to another position, retire, are fired, or just leave the company. The goal is to create a pipeline of successors to keep your business running with little to no interruption.
You might be thinking succession planning only applies to larger organizations, but it’s relevant to all companies. And it doesn’t only apply to executive positions. There are significant roles at all levels.
It’s not damage control or attempting to replace leaders as quickly as possible. You want to replace a leader with someone who is developed and prepared for the role and will transition successfully.
Think of succession planning as a framework. A solid framework provides your organization with the proper steps to develop talent. From identifying the key positions through to handing over the job, you should have a plan in place.
Without a succession plan, your organization might go downhill fast. It might lead to wrong hires–both external and internal–when there’s an urgency to fill a vacancy quickly. Bad hires negatively influence the workplace, are a drain on resources, and are a financial burden.
When top talent leaves a role without a successor, knowledge and skills are lost as well as the relationships built with stakeholders and clients.
Finally, organizations lose out when internal talent who might be perfect for the role and want the job is overlooked.
5 Benefits of Creating a Succession Plan
You know the risks of not having a succession plan, but what are the benefits?
Identify Future Leaders
When you identify the candidates who might step into leadership roles, you create a pipeline of potential talent. Once you identify employees with unique skills and abilities, you can start preparing them for leadership roles. One day they’ll be ready, and they will develop into leaders with careful planning and training.
Executives who come from within already know your organization and how you operate, especially in businesses where knowledge is specific. As your organization changes and evolves, shared institutional knowledge is key to reducing the gap between experienced and new leaders.
Retain Top Performers With a Career Path
Top performers are less likely to be tempted elsewhere if they have a career path mapped out with your organization. If you want to retain your employees and top performers, you must give them a clear path to executive roles.
For effective career mapping, you’ll need to determine your organization’s future needs; what are your goals? Have you planned for growth? What’s your product roadmap? Consider the skills you’ll need and whether they might be in short supply in the future.
You’ll need to ensure your organization’s needs match your employee’s career ambitions. Discuss your ambitions and where they might fit in. Have frequent discussions about where you see your employee within the organization, especially for roles where they seem like a natural fit.
An internal candidate has time to prepare. You can provide resources and training without urgency or time constraints. You can assess strengths and weaknesses and provide actionable feedback to aid development.
Candidates can also engage with leadership, attend meetings, observe, and get a firm grasp of the role. The added benefit is they can decide if they like what they see. If the position isn’t for them, you can move on to the next candidate without the risk of a wrong hire.
Less Need for Expensive Recruitment
External recruitment is expensive and time-consuming. One study published in Administrative Science Quarterly found that employees promoted from within an organization performed better in their first two years in a role than external hires.
External hires cost more because they’re hired based on experience and education. Will they perform better than someone you already know and fits your culture? Not necessarily.
With fewer recruitment responsibilities, you free up your HR department to work on more critical tasks. They can work with Learning and Development and focus on your current employees to upskill your current workforce. Finally, if abrupt personnel changes occur, you’re better positioned to hire from within from a pool of qualified candidates.
HR Departments can Establish a Process for Selecting Future Leaders
With more time and a clear plan to develop from within, HR can focus its time and efforts on establishing procedures and processes for selecting and training top and middle management.
In an ideal world, HR aligns with the vision of your organization and supports managers in creating proactive programs. With more resources, HR can research, identify, and implement the right software to support the process and decide the approach they would like to take; from leadership soft skills assessments and interviews to workshops and simulations.
Getting buy-in from everyone in the organization is crucial. HR facilitates the plan and provides the tools but should engage stakeholders at every step of the process.
Identify and Address Skills and Competency Gaps
Once the whole organization is on board and employees know that succession planning is a part of your culture, you can start getting them to participate in assessments and interviews and discover their future in the company.
The benefit is clear: establish the skills gap between current and required competency levels. With a clear plan and evolving process, you’ll have touchpoints throughout the year to prepare employees for future roles.
An employee does an outstanding job of resolving conflict with a client but struggles in larger groups. Let them know they did a great job, but also suggest that they would benefit from sitting in executive meetings to build their confidence in a group setting.
How to Identify and Develop Future Leaders for Your Company
There are a few ways to identify and develop future leaders for your company.
Firstly, take the assessment of predictive talent seriously. It’s easy to fall into the trap of picking people who think, talk, and act like you. Your organization doesn’t need another you. It needs someone with your talent and aptitude, but with their own ideas and skills.
Predictive assessments allow you to identify high-potential talent and weed out those who are a poor fit for leadership. Assessments include future-focused skills and discipline to ensure top talent can execute strategies moving forward.
You can use inbox simulations to significant effect here. They’re an easy way to place employees in real-life situations in a risk-free environment.
Keep in mind that high performers don’t necessarily make great leaders. Beyond performance, potential leaders show a desire to grow, lead projects and teams, have a vision, communicate superbly, and take pride in their work.
What are they like in the workplace? Are they respected, collaborative, and empathetic? Do they exhibit specific behavior patterns? Are they emotionally intelligent? These are all character traits and soft skills needed in the workplace.
Give future leaders access to your entire operation. How they work in their own department, where they might feel comfortable and secure, isn’t indicative of how they’ll react in a high-pressure environment. Rotate them through different roles and responsibilities to push them and expand their expertise.
Encourage your employees to gain a broader understanding of your industry, your company, and your planned trajectory. Do they seem excited by the prospect of growth? Do they show a keen interest in the future of your company?
Help them develop an understanding of higher management’s role and responsibilities. Place them in real business situations. Stretch them and give them heavy projects to assess their ability to overcome challenges. Of course, support must be provided, and HR manages the workload of potential leaders.
Provide mentoring and guidance. Group leadership development programs are an option, but working directly with an established manager or leader is invaluable. Be sure to give constructive feedback and evaluate for resilience. If the same issues repeatedly arise, high-potential candidates will try things differently until they see success.
Implement Your Succession Plan: The Next Steps
It’s all well and good knowing what a succession plan looks like, identifying potential leaders, and getting buy-in from your organization. The hard part is implementation.
Step #1: Create a Plan
Identify the roles in your organization that need a succession plan. Be sure to include relevant stakeholders, and brainstorm the critical skills, competencies, and experience required. You cannot skip this step.
Ask yourself two questions:
- Which roles have the most impact on our day-to-day operations?
- If the person currently in that position left, how would it affect our operations?
Once you have the answers, you can start your search.
Step #2: Identify Future Candidates
Create a list of potential candidates for every defined role. This should be a company-wide endeavor. Ignore bias and let HR take the lead.
You might have people ready to step into roles based on their current position, but don’t discount other promising employees. Don’t just assume they will want to move into leadership positions. Instead, present your thoughts to them and gauge interest.
To find out who might be interested in leadership roles, you can conduct informal interviews, send out surveys, and gather assessment data on every potential candidate’s capabilities, goals, and engagement with your organization.
You can also use inbox simulations to assess skills. This includes a self-assessment and an objective, simulation-based assessment to spot any skill gaps and make employees aware of them. Armed with this knowledge, you can develop a plan to bridge the gap.
Be sure to keep candidates informed to motivate them and help them visualize a career path with your company. It’s crucial to establish an understanding that there are no guarantees, but they are being singled out for positions of importance.
Step #3: Define Your Succession Planning Strategy
Once you have a pool or pipeline of potential candidates, you need a strategy to train and upskill employees. We talked above about leadership development, and now is where you take action.
First, establish benchmarks with soft skills and capability assessments. Then, create personalized development plans and take candidates through your process. Be sure to keep open lines of communication, provide support and guidance, and connect them with mentors.
Step #4: Provide Room for Growth
Real-world simulations provide an immersive experience for candidates to test their knowledge, skills, and capabilities. Trial runs are even better. When a manager is on vacation or otherwise engaged, potential candidates might step into their role temporarily.
They can assume more responsibility, gain valuable experience, and might appreciate the opportunity to shine. You’ll also be able to assess where they might need additional training and development.
Step #5: Execute Your Plan
The ideal scenario is for the person leaving the role to be involved in the handover process. A new employee learns their new role and is shown how to complete complex tasks by their predecessor.
This period shouldn’t be rushed. If it’s too short, the transition might not go smoothly. Too long, and the new executive might feel pressured to perform the role as it used to be.
Somewhere in the middle ensures the person leaving the role can impart existing knowledge, and the new executive can take it onboard while putting their one stamp on the position.
3 Things to Consider Before Implementing Your Succession Plan
Don’t Focus Solely on Leadership Roles
If you focus too much on leadership roles, you might miss out on opportunities to level up your entire team. For example, replacing a senior executive with someone from another team without having someone to replace them means you leave gaps.
Instead, map out the talent capabilities within your company and mitigate the talent gaps left by departing team members. Your succession plan should include all roles that impact the day-to-day running of your organization.
Keep Communication Open
You must share your plans and processes for succession plans to be successful. Your employees want to know if there is a future for them at the company. And if there is, are you hoping to develop their skills and capabilities? How?
It’s essential to keep employees informed. Hold informal private meetings to let them know your plans. Do they want the role? Are they happy where they are? You don’t know unless you keep them in the loop.
Finally, let your whole organization know your plans. It’s a morale booster for the potential candidate if they know everyone is invested in their development and future.
Regularly Review Your Succession Plans and Strategies
One of the most important parts of succession planning is documenting the process. You need to know where you can improve your process, which parts of the process went smoothly, and any gaps that exist.
Regularly reviewing your succession plans, processes, and strategies ensure that transitions are smooth and all parties are happy with the way future leaders are chosen, developed, and hired.
Why Succession Planning is Important: The Future of Your Company
Without a clear succession plan, your company isn’t thinking of the future. The most successful companies are proactive, not reactive.
It’s crucial to identify future leaders, either internally or externally. And once you do, and your succession plan is ready to go, you need the software to execute it.
Capsim provides all the tools you need to train prospective candidates, including assessments, skills gap analyses, learning modules, progress tracking, and more.
Run through a self-guided demo of CapsimInbox today and see how simulations help inform your succession planning efforts.