The sudden and unexpected departure of a talented employee can seriously harm unprepared businesses. Companies immediately lose valuable expertise and knowledge, which can lead to increased costs as they scramble to find a replacement and maintain productivity. To break this challenging cycle, businesses can establish a system for filling positions as they become available, commonly known as succession planning.
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What is succession planning?
Succession planning involves employers actively identifying and nurturing internal talent to fill roles when employees leave due to absence, resignation, or retirement. While the strategy initially focused on preparing future CEOs and senior leaders, it has now expanded to include a broader range of employees across the organization.
Why should employers develop a succession plan?
Establishing a succession plan requires resources, but failing to do so can lead to a talent crisis. Consider these points:
- A suitable candidate can take six weeks or longer to find.
- Sourcing candidates with specialized skills poses significant challenges.
- Training existing employees typically costs less than hiring new employees.
- Implementing succession planning is easier than it seems, especially with technological support.
What is the succession planning process?
Companies can follow these steps to proactively prepare for employee departures and avoid skill and knowledge gaps:
- Develop a strategic roadmap that outlines talent goals and assigned responsibilities.
- Create comprehensive job descriptions to align talent with role requirements.
- Establish performance expectations by defining job competencies.
- Encourage employee development through lunch-and-learns, job shadowing, cross-training, and mentorship programs.
- Assess success using relevant metrics, such as retention rates, time to fill vacancies, and percentage of open positions filled from the internal talent pool.
What does an ideal process for succession planning look like?
Learn MoreBenefits of succession planning
Employers can strategically recognize and prepare high-potential employees for future roles, and be able to:
- Maintain productivity
- Preserve institutional knowledge
- Enhance employee retention
- Boost engagement levels
- Lower recruitment and hiring costs
Common mistakes in succession planning
Starting the succession planning process too late or inadequate preparation can lead to significant challenges for organizations, such as a lack of qualified candidates ready to assume key roles, which may disrupt performance. To counteract this, employers should prioritize workforce development by identifying and nurturing potential leaders through training and mentorship, ensuring a strong pipeline of talent for future positions.
Additionally, organizations facing immediate succession needs can benefit from temporarily rehiring retirees on a part-time or contract basis. This provides experienced support and continuity during transitions, as retirees often possess valuable institutional knowledge that can aid emerging leaders.
Best practices for succession planning
Broadening a succession plan to include more than just senior leaders can be complex. Here are ways to simplify the process:
- Leverage talent management technology to inform succession-related decisions.
- Ensure high-potential employees have access to the support and training needed to succeed in their future roles.
- Maintain transparency with potential successors about career advancement opportunities while being discreet to prevent workplace conflict.
- Conduct exit interviews and regular engagement surveys to identify factors influencing employee retention.
- Offer a retirement plan to allow employees to feel secure in retiring when the time is right.
Frequently asked questions
What are the five stages of succession planning?
- Establish objectives and define responsibilities for stakeholders.
- Create comprehensive job descriptions to align talent with the necessary tasks.
- Define performance expectations by specifying job competencies.
- Provide potential successors with the necessary training and educational resources.
- Identify the metrics that will be used to evaluate success.
What is a practical example of succession planning?
Family-owned businesses that pass ownership from one generation to the next serve as prime examples of succession planning. Simply assuming a child or relative will step in does not guarantee the organization's sustainability. The transition demands strategic discussions, training, and thorough preparation.
What tools are available for succession planning?
Employers often use talent management technology to identify potential successors for key roles, which can help assess:
- Departments facing high turnover rates
- Employees who may be likely to leave
- Employees with strong potential for advancement
- Skills and experiences required for current and future positions
Who oversees succession planning?
The responsibility for succession planning varies with the size of the organization; it may involve business owners, senior leaders, or HR professionals. Regardless of who leads the initiative, it's beneficial to involve potential successors in the process to ensure they feel prepared for their future roles and receive sufficient development opportunities.
How much does succession planning typically cost?
Succession planning generally costs less than replacing an employee, which can amount to the individual's annual salary. This estimate includes the cumulative costs of recruiting, training, and lost productivity that occur when an employee departs unexpectedly.
Learn More
Are you looking to strengthen your organization's future by developing a solid succession plan? Identify and nurture top talent to ensure a smooth transition and sustained success with ADP’s Talent Management Software.
Reach out to us to discuss how to build a robust pipeline of leaders and see how businesses like yours are benefiting from effective succession planning. Call 866-622-8153 or start a quote today!.
This guide is intended to be used as a starting point in analyzing succession planning and is not a comprehensive resource of requirements. It offers practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax advice or other professional services.
