Succession Planning Tutorial | A Complete Guide with Definitions

Challenges of succession planning:

What are the challenges of succession planning?

Succession planning is a business strategy to find and nurture future leaders to fill roles identified as critical within the organization.It is a process of ensuring that they have successors for all these critical roles when the want to fill the positions arises.In some organizations, succession planning focused on C-level and senior manager-level roles.In others, it involved a wider range of positions the company considers strategic to the business.The goal of succession planning is very easy but vitally important. It helps ensure that an organization has:

• Continuity of an operations
• High-quality leaders in the place
• A correct understanding of which roles are vital to the bottom line

Why is succession planning difficult?

The challenges and how to tackle them While a majority of organizations consider succession planning important, only 13% of companies say that they are excellent at developing leaders at all levels.There are more reasons why effective succession planning is challenging.Let’s look at a few of the common succession planning challenges and how to tackle them.

1. Tapping into the long-term perspective:

• Identifying roles that are critical to the company is the first of the significant succession planning challenges.
• More organizations focus on the critical roles of today rather than on the positions that will be key five to ten years from now.
• To plan well, you need to understand an organization’s long-term strategy and goals and the roles and skills that will need to get there.
• Companies like Netflix that engage a long-term perspective through scenario planning have a competitive edge when it comes to meeting and exceeding financial targets.
• CEO Reed Hastings mentored his newly appointed co-CEO Ted Sarandos for a year before finalizing the decision.
• What’s more, choose a candidate who has a proven track record of identifying, tracking, and responding to the most likely marketing trends.
• Reed attributes much of the company’s ongoing success to the revolutionary content approach that “Ted spearheaded,” which was decades ahead of its time.
• HR can help to facilitate that scenario planning by using potential labor market trends to develop a dynamic group of succession candidates.
• These people should be well prepared to address both the current and future needs of an organization.

2. Strengthening potential via the collection, analysis, and combination of data on potential and performance:

Human resources experts and corporate management often have a solid understanding of an employee’s performance thanks to data gleaned through regular performance evaluations.However, while selecting the correct personnel for a succession plan, it should also think about the future.Measuring potential and combining the results with the performance data can give a good idea of where to focus on efforts. The popular 9-box grid is a good starting point for measuring potential and identifying future stars who will mentor and develop in the succession pipeline.However, to overcome the “one and done” critique of this method, it’s important to diversify the data points.A High Potential (HiPo) candidate has aspirations and ability to handle the executive-level functions.They also have the willingness to engage with the company’s succession development plan.Here are a some ways to gather potential data:

• One-on-one conversations and personality profiles can help to identify an employee’s aspirations and opportunities for development.
• Special assignments, like opening a new office, and manager, peer, and customer feedback can help to identify the executive ability.
• Input from leadership development plans by surveys, mentor critiques, committee performance evaluations, and software tools can help to identify employee engagement.
• The feedback loop between the learning development and identification of key talent helps to discover candidate strengths that are relevant to the organizational needs.
• Goal setting systems like SMART goals (Specific, Measurable, Achievable, Relevant, Time-Bound) and OKRs (Objectives and Key Results) bring an organization to a HiPo evaluation process.

3. Tracking relevant succession planning metrics:

Organizations often don’t maintain a good trace of how their succession plan is doing, what they’re doing well, and what is not going so well. The struggle to find what exactly to measure is one of the general succession planning challenges.The important point to maintain in mind when implementing the successful succession metrics is to measure the outcomes of the succession plan rather than the process itself.Examples include:

• The number of high-potential employees (HiPos) identified for each critical role – Ideally, want to have at least two successors for every key role.
• Bench strength – This metric helps to assess an organization’s ability to fill the critical positions internally.
• % of open critical positions filled from within vs. % filled externally – With this metric, that can gauge an organization’s ability to develop internal talent and how well a succession plan is working.
• According to the Harvard Business Review analysis, poorly managed C-suite transitions account for a whopping $1 trillion in S&P 1500 market value are losses.
• Microsoft was almost one such example.
• In 2013, it put aside a “golden metric” of successful succession management – the percentage of critical roles filled internally.

4. Fighting bias:

McKinsey’s Diversity Wins study found that the companies with the most ethnically and culturally diverse executive leadership are up to 36% more likely to beat their competition in profitability. Gender diversity also positively correlates with greater profits. Top performing companies have 7-18% more female executive staff members than their lesser performing peers.Recognizing and overcoming the bias during the succession planning process helps to bring in diversity to grow the bottom line. Here are5 types to be on the lookout for The contrast effect- is when ratings are given based on how someone stacks up to other candidates rather than on that person’s own track record.

Cognitive bias – is when leaders promote members of the leadership pool based on their personal feelings.

Conformity bias – is when managers permit their opinion of a candidate to be swayed by the others on the selection team to “fit in” with their peers.

The halo/horn effect- is when first impressions of the candidate’s likeability are correlated to how they will perform on a job.

The leniency effect- is when a candidate is rated very high because of a context bias. such as the manager not needing to negatively impact the working relationship.A diversified review and selection process for the succession plan is effective in fighting bias.

For example:

• Paul Ramsey, a former employee at Atrium Health, says that they teach managers the 360-degree approach to permit for multiple perspectives during the review and selection process.
• Directors of various units meet to give feedback on the candidates’ work performance.
• which allows for “healthy discussion where the people can push back,” Ramsey says.
• Deloitte developed a succession planning tool that combines various sources of data to identify suitable successors.
• The data included historical succession decisions as well as real-time data on workforce skills and competencies.
• With such insights, companies are able to build a high-performing, diverse talent pipeline.

5. Following through on development plans:

Employees and managers are caught up in their day-to-day responsibilities and do not always have the time to follow through with the development plans laid out for them. That’s why finding ways to support potential successors to continuously learn and grow is too important.Job rotation and special assignments with set milestones for achievement help maintain development on track.

For example:

• a candidate’s task might be to analyze which predictive technologies are integrated best into the existing company platforms.
• The next milestone might be to present a report on the findings to a CTO.
• Motivating executive-level leadership to meet their goals and also means integrating “action learning” into their schedule.
• This is learning combined with real-life scenarios.
• It involved a group of talented employees brought together to help solve organizational problems.
• Medical research firm Eli Lilly’s biannual six-week action learning program includes 18 employees identified by HR and their line managers as having executive-level potential.
• The CEO offer a problem that needs solutions, and the team made recommendations.
• In 2000, a group suggested appointing an e-executive and providing funding for the e-business growth initiative they were given.
• The CEO immediately accepted both of these suggestions.When combining learning with real-life scenarios that help to solve organizational problems, the motivation to follow through is high because candidates can see tangible outcomes to their efforts.

6. Keeping the succession plan up-to-date:

Succession planning is not a one-and-done, even though it is often treated as such. Should set regular intervals for reviewing, evaluating, and updating the succession plan based on the modify within an organization.The changes that trigger a need to update the succession plan will vary from an organization to organization and can include:

• The generate of a new department
• Turnover in the succession talent pool
• A senior manager or C-level executive leaving an unexpectedly
• The business restructuring to meet a real-world challenges, such as a pandemic e-commerce shift

Even without major organizational changes, should consider a plan dynamic and review it at regular intervals. As people move through the professional development process, re-evaluate the readiness to take new roles.Likewise, as individuals join an organization, find if they have executive potential and update the plan accordingly.

7. Managing employee morale:

• One of the often overall succession planning challenges is managing employee morale.
• Some employees might be disappointed that they are not a part of the plan.
• Others may feel that they are adding to their responsibilities with an uncertain promise of promotion.
• Need to be clear about how succession planning works.
• Communicate the criteria to become a part of the talent pool and the development expectations for receiving a promotion.
• This transparency helps to ensure that an employee understands why someone is a part of the plan or promoted while someone else is not.
• Don’t forget to reiterate to the candidates that they are part of the plan.
• That way, they are more likely to pursue the learning and development and stay at organization over a long term.
• Can manage the expectations of those being prepared for the promotion by communicating timelines.
• Let employees know when to expect the critical role to be vacated and how long the mentoring process will be.
• Finally, it’s necessary to maintain a balanced number of candidates for every critical role.
• Too much competition may cause a top talent to take the chances elsewhere.
• When engaging in a few key best practices to manage company morale, reduce turnover rates and maximize the efforts have been put into the succession plan.

Conclusion:

Overcoming succession planning challenges and putting a solid plan into place is crucial to the business continuity.This will help to keep employee morale high and leadership talent turnover low.In other words, making sure that they are filling the roles that are truly critical to an organization with the best candidates and are building a future-ready organization.