What is succession planning? A key talent strategy for business

Succession planning helps businesses cultivate a pool of talented workers who are poised to take over leadership roles as the business grows, changes and develops.

What is succession planning? A key talent strategy for business
Getty Images

What is succession planning?

Succession planning is a talent management process that builds a pool of trained workers who are ready to fill key roles when leaders and other key employees step down. Organizations with succession planning programs in place foster a talent-oriented culture by recruiting skilled workers and top talent. Once recruited, businesses focus on developing these workers’ skills, expertise and knowledge so they are prepared to take on leadership roles in the event of organizational growth, talent loss or management turnover.

A change in leadership can be sparked by more than a resignation — an employee might retire, get fired, get sick, take leave or quit without notice. Succession planning ensures there’s a strategy in place for someone to step in, get promoted and take over that person’s duties without a loss in productivity and morale.

However, the goal of succession planning isn’t to prepare one person to take over a specific role. That’s called replacement planning, which is different. Succession planning relies on a large pool of talented workers ranging from entry-level to senior leadership who are being prepared for key roles. These employees have the right skills, energy and leadership qualities that will benefit the company across a spectrum of roles, departments and seniority levels. Replacement planning is linear — you are preparing a worker to take over or replace specific senior management positions; succession planning is about cultivating a flexible, large selection of talent.

Succession planning process

The process of succession planning is unique to each company, but there are general guidelines that you can follow to help your business create a successful succession strategy.

  • Identify the most important roles in the organization that would need to be filled quickly if that employee exits the organization.
  • Define the main responsibilities, competencies and requirements for each job, including what personality traits best suit the role.
  • Use the established criteria to assess candidates and to determine who has the potential to grow into a leadership position.
  • Establish a talent pool of workers who are qualified to eventually fill key roles in the organization.
  • Develop these employees through training and valuable work experience so they’re ready to take over leadership positions when the time comes.

Succession planning template

It’s important to create a template that outlines what succession planning will look like in your company. The goal is to create as seamless of a transition as possible and to avoid hurting morale and productivity. The template should reflect the specifics of your succession planning — whether you’re a business owner preparing for the day you pass the company onto someone else or an executive planning your future exit strategy. Some companies even publish their own templates online, which can help offer guidance if you’re struggling to create a template for your business.

Your template should at least include the following:

  • All relevant company information including the date the succession plan was developed.
  • A table of contents that can point readers to different sections of the succession plan.
  • An overview of the succession plan, what the organization wants to achieve with the strategy and any details
  • Any leadership or non-leadership roles that are vital to business operations or have a large impact on the company.
  • A list of roles that you can predict will be open within the next few years due to retirement. If you’re in an industry or area with high competition, consider potential losses from poaching.
  • A list of all potential candidates that are fit for future leadership or high-potential positions.
  • Training programs and career development efforts to train high-performing workers.
  • Any legal documents that need to be considered, including contracts, partnerships and other agreements.

Succession planning best practices

Succession planning is a great way to build your next generation of IT leaders. Your succession plan should take into consideration current and future business challenges, critical skills, future skills, all core and technical competencies and a strong plan for career development. Succession planning involves multiple steps but there are four core objectives that you’ll need to build a strong succession planning strategy.

  • Identify qualified candidates within the organization who will be able to take on more responsibility in the future.
  • Once you identify your top candidates, focus on developing their skills and expertise through training
  • Get leadership engaged in developing future talent and supporting those with high potential in the organization.
  • Create a database of workers so staffing decisions can be made quickly when key positions open.

For more on succession planning best practices, see “How to build the next generation of IT leaders” and “CIO succession planning in the digital age.”

Who benefits from succession planning?

Succession planning is as important in small organizations as it is in large organizations. For smaller companies, with less resources, smaller budgets and fewer employees, succession planning helps avoid disruptions in workflow. This is especially true for owner-operated businesses once the owner steps down or sells the company. In large organizations, succession planning is important because there’s a lot at stake and an unexpected loss can leave the business in chaos. With a complex organizational structure, there needs to be enough talent to go around so leadership and management changes can be addressed quickly.

Succession planning examples

At Apple, Steve Jobs founded Apple University to support succession planning by educating Apple employees and leaders to understand how he built the business and how to think like Steve Jobs. It’s highly secretive, but it’s designed to help keep consistency in the organization. Apple also demonstrated a commitment to succession planning when Tim Cook seamlessly took over as CEO after Jobs stepped down. Cook has since indicated that succession planning is still an important strategy for the organization, with a “deep bench” of successors poised to take over in the future.  

IBM demonstrated its succession planning strategy in 2011, when Samuel J. Palmisano stepped down. The company’s first female CEO, Virginia Rometty, was ready to take over in his place. Rometty worked for IBM for over 30 years, so she already had a deep knowledge of the company culture and business operations. It allowed for an effortless transition, so the company could continue working to its full potential despite the organizational changes.

The future of succession planning

A key component of succession planning is talent development. For key players that are identified as potential candidates for succession planning, it will be important to figure out how to keep them engaged and motivated. Currently, it’s millennials who are coming up in the workforce and are largely the target of succession planning.

Millennials comprise 38 percent of the workforce, according to Gallup, and they’re poised to take over leadership roles as baby boomers start to retire. The report points out that if organizations fail to meet millennial’s needs, they’re more likely to “function as free agents, always looking for fresh opportunities.” The survey found that 60 percent of millennials in the U.S. workforce say they’re “currently looking for a new job opportunity.”

According to a report from Gallup, employees used to care about salary, satisfaction, having a good boss, annual reviews, their weaknesses and their job. But today, employees are focused more on having a purpose, developing their skills and working with mentors. Employees are also less focused on annual reviews, and more concerned with maintaining ongoing discussions about performance throughout the year. These workers are also interested in cultivating their strengths and finding a healthy work-life balance.

The good news is that millennials are eager to learn and grow under “high-quality management.” They want to feel interested in their work, with a sense of purpose, and they want to know they have opportunities to advance. Understanding your employees will make it easier to develop their talent in the modern workplace, so they’re prepared as future leaders.

Succession planning tools and software

Succession planning is a skill that requires business acumen, communication skills, leadership skills and other hard and soft skills. But there are tools and software designed to help make the process of succession planning easier on an organization. Talent management is critical to succession planning, so tools that help manage employee training and progress will give you more insight into how talent develops in the organization. Here are some popular succession planning tools and software:

Succession planning training and certification

Succession planning requires collaboration, buy-in and effort from leadership in the organization. It also requires working across departments to understand and fill talent gaps, and then communicating those to HR and recruiters. If you want to get a better understanding of succession planning and how it will fit into your business, here are some training and certification programs you can choose from:

SUBSCRIBE! Get the best of CIO delivered to your email inbox.