The Succession Planning Process: Why is it important?

Succession planning is the strategic process of identifying business-critical roles and then proactively developing a talent pipeline to fill them; ultimately preparing your organisation for future skills required. The main objectives are to ensure leadership continuity, develop and retain of talent in line with business goals, and mitigate risks from loss of knowledge or skills. This process enables businesses to remain flexible and resilient in the face of resignations, retirements, promotions, internal re-organisations and more.  

Whilst succession planning is more commonly associated with an organisation’s potential to fill future key leadership positions, it is no longer exclusively used for that purpose. It is particularly useful for organisations with ambitious growth aims, those that are looking to diversify, industries affected by automation or technology advancements, or where there are skills shortages already.  

In addition, whilst mostly undertaken in large organisations where there are more business-critical roles to consider, as well as the resources to put plans in place, some level of succession planning should also be considered by smaller organisations where the loss of critical talent could have a significant business impact.  

The general succession planning process can be broken down into four stages, though this is subjective, and more steps are sometimes included for more complex organisations looking to break down the process even further. Rather than a linear process, the stages of succession planning should be seen as a continuous cycle of activity to ensure business continuity. The four stages include but are not limited to: 

• Identifying critical areas, positions and responsibilities that the business would not be able to function without. 
• Assessing internal capabilities and building a talent pipeline to develop future talent for succession. 
• Developing and implementing succession plans so knowledge can be transferred and career development can be managed. 
• Evaluating succession planning effectiveness and take key learnings on board, adjusting plans as needed. 

To make each stage a success, some key inputs will be needed. Reliable data is fundamental – it will be needed at each stage to make plans and monitor effectiveness. Senior level support for succession planning will be essential, as they will need to feel confident in plans and truly get behind them. Though many leaders understand the importance of having succession plans, few actually have them in place. For those HR leaders that understand their importance, it can be difficult to build the business case to secure the time and resources to invest in their plans. In fact, around 70% of succession planning initiatives fail within two years because they lose support from senior management. Building a strong business case to advocate the importance of succession planning will be important to gain buy-in.  

Identify critical areas, positions and responsibilities

This phase will require lots of information gathering before assessing and distilling it down into the key areas, positions and responsibilities of focus. It will require consultation with business experts who know the core responsibilities of their departments and understand their inner workings.

The focus will become narrower as the identification process continues. Start broad, with non-negotiable business goals. Then take a birds’-eye view of the organisation and break it down into departments or areas. Next, narrow it down to the positions needed in each area to drive business functions and achieve identified goals. What do the people in these positions do and what are their essential accountabilities? Answering this question will reveal the responsibilities that need to be baked into succession plans. From here, a useful step can be to turn these requirements into job profiles or descriptions. Include details such as necessary business knowledge, qualifications or licenses needed, soft skills and anything else that is essential to the success of the position.

It's also important to consider attrition rates and understand the likelihood of certain positions becoming vacant. Higher attrition rates may indicate the need to ramp up succession planning to mitigate risk. Succession is most successful when plans are already in place, so if a critical employee announces retirement, leaves a role or goes on parental leave, backup is available.

Assess internal capabilities and build a talent pipeline

This is the evaluation phase, where high-potential, talented employees will be considered against the core competencies needed for business success. This is how a talent pipeline is formulated, ensuring there are candidates available to fill essential roles in future. To simplify the process, succession management tools will often be available as part of an HR software package. The Access talent management module provides a nine-box matrix specifically designed for succession planning, helping to dissect data and assess the risk of talent leaving before making appropriate provisions. 

High-potential employees need to be directed through the pipeline so they are ready to take on new roles as required. Succession planning is closely related to talent management, with many of the goals overlapping. Once employees have been identified as part of the succession talent pipeline, their career goals and development objectives can be adapted to reflect this. 

Develop and implement succession plans

This phase focuses on knowledge transfer, providing identified talent with everything needed to be successful. As discussed, career development will need to move employees in the right direction so their learning, goals and training should be tailored in line with the succession strategy, ensuring vital business knowledge is not lost. More than 74% of leaders report they are unprepared and lack the training for the challenges they face in their roles. The time to start training them is before they become leaders, so they have time to adapt, grow and learn. 

If talent gaps are identified, plans must be put in place to fill them. This will require collaboration with HR and internal recruitment teams to develop a suitable future talent pool, so consider the financial resources required and how the work will be funded by different departments.  

Measure the effectiveness of succession plans

Plans will need to be evaluated and monitored to keep them on track, allowing positions to be filled quickly when needed and helping successors to be more effective in less time. Succession plans should be developed flexibly as business priorities shift. As with most people processes, succession planning is not static; it will require ongoing reflection and talent assessments, and there will be learnings to take away from prior implementations.  

To measure the success of succession plans, ongoing cooperation is needed across business areas to pool and analyse data. This does not just mean departments where successions are being planned – it also includes HR, recruitment, learning, engagement, finance and any other parties involved. HR departments will be able to leverage software to provide data around key metrics including:

• Turnover rates 
• Retention rates 
• Cost per hire 
• Time to hire 
• Planned positions filled 
• Talent pools 
• Learning and development undertaken 
• Engagement 
• Talent pipelines 
• Roles filled internally 

Decide on metrics that will be monitored and how data will be used ahead of time to ensure ongoing success.  

Why is a succession plan important?

A succession plan is important to ensure business continuity and growth by helping ensure critical roles don’t remain unfilled. Not having a succession plan can hurt business performance and dent long-term plans, strategies and revenue.

What are the benefits of succession planning?

The benefits of succession planning include: 

• Business continuity: essential roles are filled in a timely manner, rather than becoming vacant for long periods of time 
• Reduced recruitment costs thanks to a pre-developed talent pipeline 
• Employee development and upskilling to facilitate future leadership or fill skills gaps which can help drive employee motivation and engagement, and in turn, retention 
• Futureproofing and risk management to avoid sudden employment gaps or loss of knowledge 
• Minimise attrition costs 

What is the difference between talent management and succession planning? 

Succession planning identifies business-critical roles and plans how to fill them. Talent management refers to the hiring and engagement of talent. While the two are not the same, they are closely linked because a successful succession plan will involve managing, retaining and developing talent to fill future leadership roles.  

For both talent management and succession planning, HR should be fully involved, along with learning and development teams to support the upskilling and transfer of knowledge to build an internal pool of talent.  

What types of organisations can benefit from succession planning?

Succession planning is beneficial for a wide range of organisations, and particularly those with complex leadership structures, ambitious growth aims and where specific skills and qualifications are required.  

Specific sectors where succession planning is particularly useful for these reasons include: 

• Government and public sector 
• Education 
• Healthcare 
• Technology 
• Engineering 

Large organisations with more complex leadership structures will require robust succession plans to help ensure a smooth transition for future leadership positions. However, small and medium sized businesses (SMBs) can benefit from identifying gaps and preparing for the future skills and positions required to fill them to ensure sustainable growth and continuity. 

HR departments are an essential driver of succession planning. They can oversee and refine the process, providing the structure needed to keep departments aligned with business goals. By taking impetus from HR, businesses can avoid the trap of diving into minutiae, which often makes it impossible to find talent matches. The purpose of succession planning is to identify high-potential successors who can be developed and prepared for future roles; they do not have to fit the profile perfectly right from the start.  

HR will also need to provide vital metrics for decision making, which can be derived from and processed by the HR software they are using. Tools such as talent management software and the nine-box matrix for example, can be useful to visually map talent and succession plans. 

To carry out an accurate, data-driven succession planning process, HR software will play a critical role. It will need to underpin and inform:  

• Proactive talent management 
• Performance management and appraisals 
• Learning and development plans 
• Evidence-based decision making 
• Overarching strategy 

HR software ensures these tools are integrated and aligned, supporting the succession planning process and demonstrating success.