What is succession planning?

Succession planning involves identifying ideal candidates to fill critical positions in an organisation, such as in management and executive roles. It therefore requires training and the nurturing of key leadership skills in managers.

Training might also involve shadowing an employee already in the role to observe how they handle their responsibilities such as team management, conflict resolution and approach to leadership. Some of the reasons that succession planning might be relevant include:

• Employees in executive positions are due to retire;
• Can help keep key talent in the business, reducing turnover ;
• Can save on time-to-hire as businesses may not have to rely on specialist talent acquisition to headhunt candidates for executive roles;
• Internal promotion can boost morale in a team as it demonstrates clear career progression paths.

There are different types of succession planning depending on a company’s aims. These are:

• Executive succession planning , which involves preparing successors for executive positions;
• Emergency succession planning , involving planning for any unseen disruptions or vacancies in essential roles;
• Basic succession planning , for smooth transitions in a business’s organisational structure.

Why is succession planning important?

Succession planning helps businesses of all sizes continue operating normally when changes occur. Some benefits of succession planning include:

• Helping employees reach their full potential. Succession planning identifies the most promising employees. It then nurtures their strengths and closes competency gaps so they can perform at their best.
• Making promoting from within easier. Internal promotion is usually the best choice, as existing employees already understand the business and industry.
• Reducing recruiting costs. Since succession planning encourages internal promotion, companies with these plans can save money normally spent on job advertising and recruitment services.
• Keeping knowledge within the organisation. With succession plans in place, experienced staff can work alongside future leaders. This collaboration ensures knowledge stays within the organisation when experienced employees depart.
• Keeping companies strong. Change can destabilise a company without good strategic plans in place. Effective succession planning minimises the impact of staff changes and keeps businesses strong.
• Improving staff loyalty and morale. Succession planning recognises employee achievements which boosts morale. Understanding they have a path for career progression can also help employees stay loyal and motivated.

Succession planning is long-term thinking

While businesses may be more concerned with day-to-day challenges and planning may be an additional challenge on top of this. However, the long-term importance of succession planning may help businesses to retain value, even when they experience turnover of experienced staff.

Focusing on reducing turnover and keeping onto top talent who show aptitude for key leadership roles may also be important. According to our guide on employer branding, we found that employee voice was three times more credible than a CEO’s messaging. Also, 84% of employees said that they would leave their current job to go to a company with an ‘excellent’ reputation. By keeping talented employees on board, you can draw from a wider internal pool when looking to plan a succession. 

Tech and engineering companies can strongly benefit from succession planning

Succession planning may be particularly relevant to industries such as tech and engineering, which might find it even more challenging to source talent externally and may benefit in training their existing employees in the skills required to take on more executive and managerial positions. Digital transformation for businesses also means that succession planning is even more important than before. Businesses might not be able to easily fill in the gaps due to specialised skills being required.

Succession planning for small and medium businesses (SMBs)

Succession plans are relevant to businesses of all sizes. In fact, it may be even more crucial for smaller businesses to ensure skills and knowledge are kept within their teams. Smaller teams means that only one or two staff may have a full understanding of certain systems and software. Using succession planning to keep these knowledge-bases intact, therefore, could be a great approach.

Succession planning for small and medium businesses may seem like a challenge to owners who are more focused on the day-to-day of running a business. However, it can be worth making time to ensure that one is in place.

How to implement a basic succession plan: step-by-step

One of the first considerations to make is how your succession plan lines up with the company’s overall business strategy. This may include considering the long-term aims of the business, including which skills leaders will need in the future, digital transformation strategy and which skills gaps could need filling. Other top basic considerations include:

• Retaining the existing workforce;
• Avoiding business closure;
• Retaining brand presence;
• Retaining business independence.

With these in mind, employers can start to put together a succession plan which works specifically for their needs. Below is a step-by-step guide to creating a basic succession plan:

1. Define your goal

Most succession plans start with a clear goal. Writing a clear and achievable goal helps employees understand what the succession plan might need to achieve and its value.

2. Identify the key roles in your business

Consider who is most integral. If the people in these roles left, others would need to take their place immediately for your company’s ongoing success. Also, CEOs or executives should consider their own position as someone will probably take over when they leave.

Employers may feel some roles should remain while others may merge with other positions. It can therefore be worth stating these intentions in a succession plan.

3. Identify succession candidates

Consider who can fill the most important roles. List suitable succession candidates for the listed roles, giving priority to internal rather than external candidates.

Often the right candidate will be the person just below each key role in the company hierarchy. However, assessing employees throughout the organisation may help identify new talent. You may match candidates with a specific role, or assign candidates to a selection of important roles. You may also rank suitable candidates to know which one will fill each vacant position first.

4. Identify necessary training

In most cases, succession candidates will need specific training to prepare them for taking on a key role in your business. Analyse succession candidates’ experience and skills and compare them to the people currently in each listed role. It may also be important to note the training candidates will need for the role. This training might include formal education programmes, mentoring arrangements with people in key positions and job shadowing with people in critical roles.

5. Discuss your plans with your succession candidates

Some employees are ambitious, while others would prefer retaining their current roles. Discussing goals with potential succession candidates can help employers gauge their interest in their succession plans. Note which position suits each candidate and the training they will likely need. It can be useful to explain how career progression depends on when the role becomes vacant, but that their new skills will help them advance when the time is right.

6. Increase professional development efforts

After having identified which succession candidates want to progress, an employer can then put their succession plans in place. It is at this stage that employers can implement the training that the chosen succession candidates need.

7. Trial succession plan

With some training, any succession candidates can benefit from feeling confident they could assume key roles in your business. One way to encourage this is to put candidates in the positions they’ve trained for when key staff take holidays or sick leave. The experience will also show you whether your candidates are ready for advancement or requiring extra training.

When someone in an essential role moves on, a succession candidate can assume their duties. Remember to restart the process and identify new succession candidates to take their place. Employers can also benefit from reviewing a succession plan regularly to ensure it reflects retirement plans and all key roles.

Having a succession important to ensure the long-term value and future of a business. Identifying and retaining key talent can be a good ongoing process which means that employers can tap into this when the time comes. Finally, our step-by-step guide to a basic succession plan provides employers with a guide to putting one in motion.

Succession plan template

Adapt the succession plan template below to reflect your own business. A sample success plan may read:

“Prestige Property Group’s Department of Human Resources developed the following succession plan, which can be edited and updated at any time.

1. This succession plan aims to streamline transitions when key employees leave the company. This plan reflects Prestige Property Group’s values by ensuring the business remains profitable and continues successfully serving local communities.
2. The roles under consideration are:

• CEO – Sofia Perkins
• Vice President – Sam Johnston
• District Manager – Alice Platt 
  • When Platt leaves the company, the regional manager will assume their duties and take on an expanded role.
• Regional Manager – Vicky Kent
• Office Manager – Brian Yeo
• Director of Marketing – Emma Austen
• Client Relations Supervisor – Phillip Small

3. Current employees who plan on retiring in the next five years include:

• Alice Platt
• Phillip Small

4. The current succession candidates for the key roles, in order of preparedness are:

• CEO 
  • Sam Johnston
• Vice President 
  • Vicky Kent
  • Emma Austen
• Regional Manager 
  • Despina Khatri
  • Nathan Brown
  • Mitchell Gardener
• Director of Marketing 
  • Isa Green
  • Lilly Ravel
  • Adam Thiers
• Office Manager 
  • Isla Scott
  • Sarah Myers
  • Matilda Haggerty
• Client Relations Supervisor 
  • Rebecca Mansfield
  • Lucas McMahon
  • Jock Smith

5. Qualifications and training for key roles include:

• CEO 
  • MA in business administration or similar
  • 10+ years of managerial experience
• Vice President 
  • MBA, MRICS or other relevant postgraduate or professional real estate qualifications
  • 8+ of managerial experience
• Regional Manager 
  • MBA or other relevant postgraduate or professional real estate qualifications
  • 5+ years of managerial experience
• Director of Marketing 
  • Impressive creative portfolio
  • 8+ of marketing experience
• Office Manager 
  • 8+ years of administrative experience
• Client Relations Supervisor 
  • Level 3 Diploma in Property or similar
  • 8+ of customer service experience

In addition, the top-ranked succession candidates should spend time in mentoring sessions with people in their key roles. These sessions should include time shadowing the person in the key role, so the candidates can see how they work.