Is Succession Planning a Nice to Have or Must Have?

We were working with a client on a leadership development program for their leaders when they asked us our thoughts about Succession Planning. Is it a ‘nice to have,’ like life insurance, or a ‘must have?’  They asked.  Of course, we are on the must-have, but the real question is, how formal is your succession plan? Most organizations have a leader in mind who could step into a CEO role if an immediate need arises. But that is not really a succession plan – more a casual backup vs a plan or program. If you don’t have a succession plan, your organization could be at risk. 

A formal succession plan ensures organizational success and continuity by mitigating risk or the loss of institutional knowledge. It also strengthens the depth of your leaders and ensures a smooth transfer with minimal disruptions. If you are considering developing a succession plan for your organization, below are some key components needed to build a successful plan. 

Don’t Stop at C-Level – Most think succession plans are only for the critical key C-suite positions. However, they can also work to identify high-potential employees to develop into future leaders. In the last few years, we have seen a large leadership gap (link to article on leadership gap). Organizations are losing their leaders and institutional knowledge with them. It is not uncommon for us to hear employees say they know more than their manager or have to train their managers. This is where a succession plan would benefit the organization throughout, not just at the C level. By incorporating the succession plan into your employee development; it can double as a retention plan and increase engagement. The organization gains high levels of engagement and retention by developing its top-level employees. This is what we call the Future Leader Phase of your succession plan. 

Evaluation for Technical and Leadership Skills—Some plans solely focus on evaluating and assessing potential successors based on their technical skills, experience, and competencies.  Core competencies need to cover technical and leadership skills. The higher up in the organization you get, the more you are working with people and less with the technical details. Ensuring you assess your candidate’s leadership capabilities and past track records with their teams is just as important.

Don’t Forget Knowledge Transfer—Losing a leader with a large base of institutional knowledge hurts the organization. Incorporating knowledge transfer well before executing the position transfer is key for your succession plan. This should happen along the way and as part of the development phase of your plan.  

Set Clear Expectations – One reason many people don’t like succession plans is that employees may feel entitled to a position instead of preparing and earning it. We never want a person to think they get the position because they are next in line; this is not a succession plan but a promotion by default. For this reason, we have seen clients call their succession plans Mentorship plans or just Leadership Development plans. Either way, when you set clear expectations and outline capabilities, core competencies, and needed leadership milestones, candidates know what it would take to be considered for a position. If the plan is monitored and reviewed, candidates will know where they stand and have an outline of what they need to do to be considered. Our goal is always a no-surprise approach on either side, and that takes a well-laid-out expectation and clear communication. 

Having a succession plan has many benefits, including improved engagement, retention, and continuity for the organization and a reduction in recruiting costs. It also allows the organization to be more strategic and have a solid leadership pipeline. Unplanned departures can be disruptive to an organization but, with a succession plan in place, it can be a smooth transition.