Succession planning is “the process of ensuring a suitable supply of successors for current and future senior jobs arising from business strategy so that the careers of individuals can be planned and managed to optimise the organisations’ needs and individuals’ aspirations”.

The growth and development of an organisation requires a succession of people to fill various important positions in the organisations. The objective of succession planning is to identify, develop and make available people ready to occupy higher positions in the organisation. The vacancies may arise due to retirement, resignation, death, creation of new posts and new assignments.

Succession planning can be defined as a process of selecting and grooming employees for higher positions within the organization. It enhances the organizational capability by providing experienced and competent individuals for senior level roles that are critical for the company.

Succession can be ensured from within or from outside the organisation. Succession from within ensures the satisfaction of employees as they see the opportunities for growth. Organisations, therefore, should see the potential available inside, and make efforts to groom them for occupying higher positions and for taking more responsibilities. A steady flow of internal talent, to fill up higher posts, creates healthy environment and better human relations.

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Learn about:- 1. What is Succession Planning? 2. Need for Succession Planning 3. Main Objectives 4. Activities 5. Steps Involved in the Process 6. Difference between Succession Planning and Career Planning 7. Advantages 8. Challenges 9. Practical Ideas on How you can get more Impact from your Organisation’s Succession Planning Efforts.


Succession Planning in HRM: Meaning, Need, Objectives, Process Steps, Advantages, Challenges and Other Details

Succession Planning – What is Succession Planning?

Succession planning is “the process of ensuring a suitable supply of successors for current and future senior jobs arising from business strategy so that the careers of individuals can be planned and managed to optimise the organisations’ needs and individuals’ aspirations”.

Succession planning can be defined as a process of selecting and grooming employees for higher positions within the organization. It enhances the organizational capability by providing experienced and competent individuals for senior level roles that are critical for the company.

Succession planning is often represented through a sub-set called replace­ment planning. Replacement planning is focused narrowly on identifying specific back-up candidates for given senior management positions. The final outcome of the effort is replacement charts.

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Successors may come from internal employees or from external people. Internal employees are advantageous to the organisation. The internal employees are already familiar with the company policies and procedures and the organisational culture. Normally, organisations would like to consider internal employees to occupy senior positions.

It is relatively easy to identify potential employees who have the knowledge and skills to occupy higher positions in the organisation. Further, the organisation can provide necessary training to upgrade the skills of potential employees, if required. The scope of succession plan would be more in a growing organisation. Complete dependence on internal candidates for succession is not desirable; and it is necessary to allow inflow of new blood in the organisation.

While career planning covers executives at all levels, succession planning is needed for key positions at higher levels of the organisation. Career plan also includes succession planning.

Continuity of an organisation requires a succession of persons to fill up key positions. The basic purpose of succession planning is to fill up the vacancies, whenever they arise, in key positions. Vacancies take place due to superannuation, resignation, promotion, growth, diversification, creation of new positions, etc.

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This is the process of ensuring proper supply of successors, for the present and the future, for important senior or key jobs arising due to various reasons, so that the organisational process is not affected and career path of individuals can be managed. This helps in fulfilling organisational needs as well as satisfying the individual’s aspirations.

Succession can be ensured from within or from outside the organisation. Succession from within ensures the satisfaction of employees as they see the opportunities for growth. Organisations, therefore, should see the potential available inside, and make efforts to groom them for occupying higher positions and for taking more responsibilities. A steady flow of internal talent, to fill up higher posts, creates healthy environment and better human relations.

Also, organisations may find, if necessary, talents from outside where internal potential is not suitable/available or, at the time of massive growth and diversification when internal supply is not sufficient.

Complete dependence on the internal source may cause stagnation. Organisations without new brains/new talents may not get new ideas, innovations and aggressiveness. Also, complete dependence on the external source may cause (may cause what?).

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Within any organisation, people in leadership positions eventually ceases to fulfill that role.

This can occur for a variety of reasons, such as:

i. Promotion within the organisation

ii. Move to part-time arrangement for better work life balance

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iii. Involuntary departure from the organisation

iv. Retirement

v. Serious illness

vi. Death.

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vii. Voluntary departure from the organisation to pursue a career elsewhere.

Organisations that fail to plan for the timely and effective filling of such leadership roles can be caught off guard, with the consequent disruption to normal business activities and the loss of market share.

Succession planning is the pre-emptive process of identifying significant leadership positions that could put the organisation at risk if left unfulfilled, targeting current employees that could move into such roles and grooming them for succession. Managing leadership succession effectively requires a structured approach that is agreed, understood and followed by everyone involved in the planning process.


Succession Planning – Need

Organisations exist as on-going concerns while personnel come in and go out on regular basis. Therefore, the continued existence of an organization over time requires & succession of personnel to key positions. These key position holders decide the prospect of the organization. Succession planning ensures that only right personnel fill the key organizational positions.

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Succession planning ensures this in the following manner:

1. Through succession planning, an organization is able to identify the persons who are likely to fill up key positions in future.

2. Succession planning helps an organization to groom the successors for key posts so that there is high level of match between the role requirements and personnel abilities.

3. When succession planning is undertaken effectively and overall suitability of personnel is worked out an objective criteria, organizational personnel develop a feeling that the merit has a worth in the organization.

Succession planning is needed for the following:

(i) Continuity – It is not a year-end process, but a continuous one. Potential replacement can be planned regularly for the continuity of the organisation.

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(ii) Long-term Perspective – A ready pool of talent should be available for immediate replacement. This is to ensure continuity.

(iii) Organisational Need Perspective – Organisations should hire talents from outside whenever needed, but this should be accepted by internal employees, to avoid confusion and frustration.

(iv) Turnover Management – A normal turnover rate ensures a free flow of work power in the organisation. Appropriate plans help in avoiding positions being blocked.


Succession Planning – 6 Main Objectives

The growth and development of an organisation requires a succession of people to fill various important positions in the organisations. The objective of succession planning is to identify, develop and make available people ready to occupy higher positions in the organisation. The vacancies may arise due to retirement, resignation, death, creation of new posts and new assignments.

Business organizations that are well-known for their succession planning and executive talent development practices include – GE, Honeywell, IBM, Marriott, Microsoft, Pepsi and Procter & Gamble. It is only perfectly logical to agree that well-laid down objectives become a pre-requisite to successful succession planning.

The various objectives of succession planning are:

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i. To create organizational data that can be used for staffing decisions.

ii. To identify employees with high potential so that they can be trained to undertake higher responsibility

iii. To provide assignments and opportunities for high potential employees so that they get the necessary exposure to groom themselves

iv. To involve senior leaders of the organization in grooming these identi­fied employees

v. To improve employee loyalty and engagement

vi. To cater to the career development expectations of the workforce and thereby enhance their commitment to the organization.


Succession Planning – 4 Important Activities

Some of the important activities of succession planning are described as under:

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1. Top management support – HR manager along with heads of the departments should discuss the plan and obtain support from top management for initiating succession planning activities.

2. Identifying potential successors for critical positions based on consistent performance over a period of time. This information can be collected from performance appraisal forms, feedback from senior managers and extensive assessment centre programmes.

A Replacement Chart is prepared and it gives the list of existing key executives and brief reference to their possible successors. The replacement chart shows who will replace whom as and when there are job vacancies at higher levels in the organisation.

3. Grooming the potential successors – They should be given challenging and demanding assignments which will stretch their competencies and provide rich experience. Regular feedback will enable them to compare their progress again plans. Mentors and coaches could guide the bright people.

High Potential Employees are those individuals who are recognised as likely future leaders within the organisation. They show high level of performance and have potential to assume greater responsibilities. Many companies develop programmes for such select group of employees to enable them to move faster and take higher positions in the he organisational hierarchy. Examples: High Potential Employees Programme, Fast Track Employee Programme etc.

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4. The company should develop policies, procedures and practices to take decisions in the following areas as a part of succession planning process-

(a) Should be develop internal candidates or recruit competent people from the market?

(b) Should we go by candidates’ potential or performance or both while preparing succession plans

While succession plan is required by all companies, most managers and private companies do not take much interest in succession planning and developing people in advance for key organisational posts. Many public sector undertakings, nationalised banks and financial institutions remain without chief executive officers for a long time due to political interference.

In owner- managed private companies, the family members occupy top positions even though may not have the expertise and experience in running the business. The situation is changing and in many cases (Example- Bajaj, Ranbaxy, Birlas, Apollo Hospitals etc.), the sons and daughters undergo management training and also get trained inside the organisation before taking up board level positions.


Succession Planning – 6 Steps Involved in the Process

Succession planning requires steps to obtain leadership guidance, collect relevant information, make key decisions, and execute succession and development actions. If undertaking this activity for the first time, you should consider creating a process that is “separate” from other, related activities such as – performance management and development planning. Later, after you have executed your process a couple times, you may take down the special elements and start to integrate it with these other activities.

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The steps below outline such a stand-along process:

Step # 1. Define Purpose, Goals, and Scope:

The top leader of the organisation outlines the purpose, goals, and scope of the succession planning activity.

Step # 2. Assemble an Oversight Committee:

The committee’s role is to establish a succession planning process that can fulfil the purpose, goals, and scope outlined by the top leader, and to govern over the process until most of the major questions and issues have been resolved.

Step # 3. Set Policy:

The oversight committee creates policy around such issues as data security, assessment, succession nominations, communication and development.

Step # 4. Define Operational Parameters:

Again, this is the purview of the oversight committee. Operational parameters include; positions for which successors will be nominated, the scope of the pool of succession nominees and the rating scales used for assessing contribution and potential.

Step # 5. Develops and Conduct the Assessment:

The assessment is essential for comparing succession candidates and slotting them against specific succession positions. The assessment data, generally provided by direct managers of the succession pool, should be reviewed for equity in the rating and for consensus in the nominations.

Step # 6. Compile and Organise the Data:

The voluminous data that is collected must be compiled into the kind of information needed by leaders to make key decisions. Some of the compilations include – coded organisation charts, a “contribution-potential matrix,” reports of any “at risk” positions or individuals, and profiles for all individuals and positions. A spreadsheet or dedicated tool for organising and displaying such information is recommended.

Step # 7. Conduct Organisational Reviews:

Starting with business unit/functional heads, the succession plan and reports compiled are reviewed and key decisions made. These decisions could range from developmental opportunities for future leaders to actual leadership appointments. The business unit/functional level reviews are followed by reviews at the highest level – with correspondingly higher level decisions.

Step # 8. Implement Development Plans:

While succession decisions may be executed immediately after the reviews, the developmental opportunities must be pursued over the following weeks and months. For future leaders to realise their potential and be better positioned to “step up” when the time comes, these development opportunities must not be allowed to languish once the spotlight is off the succession planning process.

Step # 9. Assess Process Effectiveness:

Like any other business process, your succession planning process will need to be improved, streamlined, integrated with other human resources processes and possibly expanded to accommodate additional participants. While the experience is fresh, take a moment to gather feedback and assess process effectiveness – then set and achieve the most critical improvement objectives.


Succession Planning – Difference between Succession Planning and Career Planning

These two terms are not synonymous, but they are similar as far as the objective is concerned. Succession planning is required for key positions while career planning covers all executives and employees in highly skilled/operative positions. Career planning includes succession planning and both are interdependent.

Difference # Succession Planning:

1. Succession planning is the important process which involves identification of individuals or employees as the possible successors to the key or very senior positions in an organisation in which such position become vacant. Thus, in short, succession planning focuses on the identification of vacancies and locating probable successor.

2. In succession planning, the focus of attention is the persons who can occupy the vacant post.

3. Succession planning is essential for all those who operate in key functional areas and also for key managerial cadres that are likely to become vacant.

4. Succession planning is usually for 2 to 5 or 2 to 7 years period for an individual but it is a continuous exercise for an organisation.

5. The important objective of succession planning is to identify the most suitable, potentially qualified, efficient, skilled and experienced employees or individuals to occupy or succeed to key positions when they become vacant.

Career planning and succession planning are very important from the viewpoint of an organisation and its employees. Career planning helps to integrate the employee’s needs, aspirations with their organisational requirements. Perhaps, it is one of the important challenging task which has assumed great importance in the present century since organisations are becoming keenly interested in attracting, retaining and utilizing the potential of highly talented, efficient, technically specialized, professionally trained and well experienced experts.

It is also found that some organisations also think properly and pay attention to succession planning wherein those executives possessing the desired skills and potentials are systematically identified and efforts are made to develop the appropriate executives to hold the position in future. Career Planning and Succession Planning, though are different, act as one of the important tools for harnessing the human potential in which top- management, Human Resource Managers have a major role to play.

Difference # Career Planning:

1. Career planning is the process or activities offered by an organisation to the individuals or its employees to identify their strengths, weaknesses, specific goals and the jobs they would like to occupy. Through career planning, the employees and individuals identify and implement steps to attain their career goals.

2. In career planning, an organisation is concerned with strategic questions of career development.

3. Career planning is a must for all managerial cadres and posts.

4. Career planning’s basis is long-term till the retirement of the employment contract.

5. The important objective of career planning is to explore the opportunities to enable the individual employees to grow and to develop and also to encourage or motivate them for self-development.


Succession Planning – Top 6 Advantages

Succession planning are advantageous in the following ways:

i. It is an effective way to connect the organization’s vision, mission and corporate objectives to the human resource strategy and plan

ii. It is an effective way of ensuring that the organization is prepared in case of any planned or unplanned exit of employees at senior levels.

iii. It ensures that there is a process to prepare employees for higher roles

iv. It demonstrates the organization’s commitment to career management of its employees

v. It helps the organization in choosing the right set of candidates that will fit into not just current job roles but also from a futuristic perspective

vi. It expresses a sentiment that the organization cares about its employees and about their careers.

Without a succession plan, it is difficult for an organization to sustain its business effectiveness. Only with a succession planning process, it is possible for a business enterprise to ensure that all core processes of the organization are sustained beyond the persons driving them.


Succession Planning – 10 Major Challenges Pertaining to Succession Planning

Challenges pertaining to succession planning include the following:

Challenge # 1. Target Group:

Some organizations focus all succession planning efforts only on those employees whom the HR department has identified as having high potential while others extend it to all employees. There is a risk involved in both of these decisions. If you only include high pots in your succession planning endeavour, then majority of the workforce (who are outside the high pot list) are likely to feel left out and neglected.

This will have both short-term and long-term impact on their perfor­mance. Short-term productivity may drop due to dip in their morale and long-term retention of these employees may prove to be a challenge. The problem with extending the succession planning process to all employees is a criminal wastage of organizational resources.

Preparing workforce for higher roles includes investing lot of organizational resources such as training, coaching and other special assignments to groom the candidates. Investing organizational resources such as time, money and energy to groom all employees may be a daunting and wasteful endeavour.

Challenge # 2. Make or Buy Decision:

Make refers to developing leaders internally and buy decision refers to hiring candidates from the external market. Succession planning does not always mean grooming people within the organization. Sometimes the organization may also decide to hire externally. It is interesting to discuss both these possibilities. While succession planning through internal sources seems more advantageous to the organization from employee motivation, employee engagement and employee career management perspective, sometimes, it may not be the best decision.

When an organization needs to challenge its current way of thinking, push people out of comfort zones, enter new markets and domains. It is usually more beneficial to hire external leaders than to groom internal talent for taking on high level positions in the organi­zation.

Challenge # 3. Role of Diversity:

It is human tendency to seek people who are similar to us in matters that are important such as religion, community, case, language or profession for that matter. Leaders often instinctively choose to mentor employees who are like themselves which often leads to a group of ‘similar’ executives leading organizations.

If organizations can consciously play down this tendency, it will lead to more diverse and rich talent getting more opportunities for advancement and career develop­ment. For example, most organizations now have mandatory targets for certain percentage of board to be represented by women executives.

Challenge # 4. Top Management Commitment:

A fantastic career development initia­tive by the HR department can go down the hill if it does not have the necessary top management support and commitment. To maximize the possibility of obtaining top management support, HR department can use strategies such as using influence tactics to discuss about the process in semi-formal and informal forums, using political tactics to get their buy in and building and presenting a business case for succession planning.

Challenge # 5. Sizes of the Organization:

Some firms are small in size and hence may not afford ample opportunities for career advancement for all employees. Typical problems associated with such companies are that talented workforce exits the organization early in career as they sense lack of career opportunities within the set up. Many family run businesses may experience this situation.

Challenge # 6. Strain on Financial Resources:

Succession planning is a costly affair as it involves training of the identified employees on specific business skills and otherwise. Training comes at a cost. Succession planning puts a financial pressure on the company not just by training costs but also opportunity cost of mentoring and coaching the identified employees by existing senior leaders of the organization.

Challenge # 7. Difficulty in Identifying the Right Set of Employees:

The organization may identify employees for succession planning based on their current levels of performance and current levels of competencies. They may plan a career development intervention focusing on raising the person’s level of skills and knowledge. Enhancing one’s competencies does not necessarily increase one’s level of interest and personal motivation. It is easy to identify skill gaps but extremely difficult to identify interest levels of employees. Also, interest levels may change over time and the entire endeavour might eventually become futile.

Challenge # 8. Appropriate Timing:

Since some separations such as retirement can be planned while others such as death, resignations, terminations cannot be perfectly planned. There is a lot of uncertainty about the availability of high posts for identified and ready employees to take over. Thus the exact timing of the same cannot be predicted. This becomes a major issue impacting success (or failure) of the succession planning process as once the employee is ‘made ready’ (s)he may not have the patience to wait for too long, leading to talent loss to the company as the person may look for greener pastures.

Challenge # 9. Communication:

One very important and often overlooked aspect of succession planning is explicit and clear communication. Some­times when senior leaders observe the effort at grooming second in command employees for higher roles, the senior leaders sometimes feel insecure about their positions. The entire purpose, objective and intent of the succession planning drive have to be communicated both formally and informally to the senior leaders, so that communication gaps do not create more chaos than benefit.

Challenge # 10. Psychological Impact:

At the end of the day, it is the psycho-social drive and personal energy of employees that impact their performance at work and their decision to stay or leave. If employees are geared up for higher roles and if they are not given those assignments within a reasonable frame of time, it may lead to a negative psychological impact leading to high attrition that too of very talented employees.


Succession Planning – 4 Practical Ideas on How you can get more Impact from your Organisation’s Succession Planning Efforts

One of the most common leadership development questions that I hear from executives is, “Why does succession planning feel like such a waste of time?”

Many of the CEOs we talk with these days express concern about the lack of bench strength in their companies. They are very worried that they lack sufficient “ready now” candidates to replace planned & unplanned losses of key leaders. As a result, the future continuity and performance of the business is at risk.

These same executives also tell us that their companies have been doing succession planning for years. On average, the executives we meet give their succession planning process a grade of C+ and they give their execution of succession plans a grade of D. If you are among the companies who are not happy with the impact of your succession planning process, you have plenty of company.

Here are four practical ideas on how you can get more impact from your organisation’s succession planning efforts:

1. Change the Name of the Process to from Succession Planning to Succession Development:

Plans do no develop anyone – only development experiences develop people. We see many companies put more effort and attention into the planning process than they do into the development process. Succession planning processes have lots of to-do’s – forms, charts, meetings, due dates and checklists. They sometimes create a false sense that the planning process is an end in itself rather than a precursor to real development.

Many humans fall into the same trap regarding physical fitness. We have may fantastic plans in place to lose weight. We may be very proud of our plans, which include detailed daily goals for diet, alcohol consumption, and exercise. And if our execution were half as impressive as our planning, we would be very svelte. Our focus should be on weight loss, not planning for weight loss.

2. Measure Outcomes, Not Process:

This change of emphasis is important for several reasons. First, executives pay attention to what gets measured and what gets rewarded. If leadership development is not enough of a priority for the company to establish goals and track progress against those goals, it will be difficult to make any succession planning process work.

Second, the act of engaging with senior executives to establish these goals will build support for succession planning and ownership for leadership development. Third, these results will help guide future efforts and mid-course corrections.

The metrics a company could establish for Succession Development might include goals like the percent of executive level vacancies that are actually filled with an internal promotion vs. an external hire, or the percent of promotions that actually come from the high-potential pool. Too often, we find companies measure only the percent of managers that had completed succession plans in place.

3. Keep it Simple:

We sometimes find companies adding excessively complex assessment criteria to succession planning process in an effort to improve the quality of the assessment. Some of these criteria are challenging even for behavioral scientists to assess, much less the average line manager. Since the planning process is only a precursor to focus the development, it doesn’t need to be perfect. More sophisticated assessments can be built into the development process and administered by a competent coach.

4. Stay Realistic:

Following are two classic examples how succession plans may lack realism:

The head of engineering is a high performing leader who has the potential to be COO. She has always been in an engineering role. If she had sales experience, she would be even more ready to be the COO so her development plan is written to include a job move to be head of sales.

However, this company would never take the risk of putting someone without sales experience in the top sales job – so her development plan perpetually says, “move to a sales job” even though that will never happen.

The CFO is a high performing leader who has passed ail the assessment criteria to be a high potential, ready-now candidate for the CEO job. He is told he is the top candidate. However, the CEO can’t stand the guy, and as a result, he will never get the job as long as that CEO has a say in the matter.

While development plans and succession charts aren’t promises, they are often communicated as such and can lead to frustration if they aren’t realistic. Bottom line, don’t jerk around high performing leaders with unrealistic development expectations. Only give the promise of succession if there is a realistic chance of its happening!

We believe the four suggestions above can help shift your organisation’s focus from planning to development – and achieve increased depth in your bench strength.

Please send us your suggestions on succession planning and how the process can be improved. Any of your personal examples are welcome.