Succession planning is a process by which individuals are scanned to pass on the leadership role within a company. The process ensures that business continues to operate efficiently without the presence of people who were holding key positions as they must have retired, resigned, etc.
Succession Planning, specifically termed as Management Succession Planning, involves coaching and development of prospective successors or people within a firm or from outside to take up key positions in an organization through an organized process of assessment and training.
It ensures a smooth transition of power in key leadership roles. If the successor is chosen within the organisation, it will help motivate the employees, and also save on cost and extra time which the management would have spent in scanning candidates from other firms.
There are four main stages in the succession planning process, which involve initiation, selection, training and transition (movement of new role).
Phase 1: Initiation
In the first phase of ‘initiations’, potential candidates for the job learn about the business, more importantly about its value system, guidelines, values, vision, etc. Here the CEO or any top leader of the organisation talks about these key things to the candidates.
Phase 2: Selection
The second phase or ‘selection’ is a complex task, where a specific candidate is chosen to be a successor among other candidates who were running for the same job.
Phase 3: Training
In the third phase of ‘training’ involves an exhaustive training scheduled for the successor so that he can meet the goals of the organisation as well as returns for the shareholders.
Phase 4: Transition
In the fourth and the last phase of ‘transition,’ the business owner or the CEO retires or moves out of the organisation, and the chosen successor formally takes up the responsibility as his/her new leadership role.
4 Benefits of Succession Planning
1st Benefit: Availability of capable individuals for management positions is increased
Effective corporate succession planning increases the availability of capable individuals who are prepared to assume such roles as they become readily available. Leadership roles can easily be filled as senior executives retire or if the senior management positions are vacated due to resignation of key officers.
It then becomes imperative to realize that effective talent management is not simply about a position-driven replacement. The succession planning process is a well-planned-out, long-term procedure building a number of so-called “feeder groups” of qualified candidates, able to fill vacancies as they emerge.
2nd Benefit: The risk of losing experienced corporate leaders is minimized.
The most prominent potential benefit of workforce planning is associated with decreased risk of the loss of experienced corporate leaders. The existence of effective corporate succession planning diminishes the need for an external search of qualified candidates for a particular position.
3rd Benefit: Less financial resources will be spent in the external search and development of candidates.
It also minimizes use of time and financial resources looking for new people capable to run senior management positions in the company. In situations of abrupt personnel changes, the benefits of succession planning become very apparent. There will be less time and reduced financial expenditure on recruitment and leadership development as qualified internal candidates have been already identified and trained.
4th Benefit: HR departments can establish formal procedures to support the process of selecting top and middle management.
One of the advantages of succession planning concerns the ability of the HR department to engage and establish formal procedures to support the process of selecting top and middle management. Such actions minimize random or rushed selections, and re-establish the much-needed degree of commitment to corporate succession planning from everyone in the firm.
Even though organizations are often dissatisfied with the manner of its implementation, they cannot operate successfully without a well-developed succession plan. The key to a successful leadership management approach is to continuously engage and implement corporate succession planning and talent management.