Keys to effective succession planning: Talent management special report

Keys to effective succession planning

Are changes in your market forcing a change in strategy that will demand new talent?

Have one or more of your long-time stars started thinking about moving to a competitor or retiring?

Or are you just trying to make sure the wheels keep turning for a few weeks or months if one of your top people gets sick or dies unexpectedly?

Succession planning is a talent management must-do for organizations of all sizes, whether a global corporation, a small non-profit, a mid-sized college or a family business with a dozen employees.

Long-term success depends on creating a plan for how you’ll keep your team moving forward when you lose a key player or encounter a skills gap that must be filled quickly.

It brings focus to the process of identifying top performers, employees with strong potential and the people that you need to push hard or push out.

For employees, the succession planning process translates into stretch opportunities that can help them learn new skills, advance their careers, increase their value to the team and boost earning power. All of those positives can translate into an increased commitment to your organization.

What are you planning for?

It’s important to differentiate succession planning from other strategic staffing plans, says William J. Rothwell in a Dale Carnegie white paper entitled The Nuts and Bolts of Succession Planning.

What it’s not is replacement planning, Rothwell says. That’s the process of identifying individuals within an organization, and often in the same division or department, who would be best-equipped to serve as backups for current employees.

While replacement planning is an important part of an organization’s overall operating strategy, succession planning takes a much broader viewpoint – it encompasses the total operation, rather than individual positions, departments or divisions.

As Robert E. Lewis and Robert J. Heckman put it in their oft-cited paper, Talent management: A critical review:

Consider the following question, If you were to begin the process of constructing a building how would you go about it? Would you assemble a group of the best professionals in each necessary craft (plumbing, electrical systems, carpentry, etc.) and let them define your building? Or, would you start with an analysis of the relationship between “construction practices” and some outcome you hope to achieve (building longevity or cost of operation)? Probably not. You probably would first meet with an architect to begin drawing a blueprint after considering a series of key questions such as, what do you hope to accomplish with this building? Will those goals appeal to the intended customers (tenants or shoppers)? What alternatives for orienting the building on its site best accomplish its purpose?

It is always important to be clear about the end-goal of any strategic planning effort and succession planning is no different.

The first thing to do is figure out your plan’s target and scope. To be effective, the succession planning process should be:

Formal. While a succession planning process needs to match an organization’s overall culture, whether buttoned down and hierarchical or more casual and egalitarian, everyone involved needs to understand that this is a well-defined process with support from top leadership and mission-critical outcomes at stake.

Comprehensive. It’s tempting to think of succession planning as applying only to senior leadership roles, but an effective plan will look at critical positions and people at every level of the organization.

Strategically Linked. Every aspect of your succession plan needs to support the organization’s overall strategy. That is the guiding star that will help to define the kinds of people and types of training you need to put in place as you build a talent pipeline to the future.

Linking Succession Planning to Your Strategic Plan

A paint-by-numbers succession planning effort is doomed to give you an uninspired and amateurish result. Only by matching your succession planning to your organization’s guiding strategy can you confidently identify the positions, skills and employees needed to succeed.

Whatever your organization’s size and your target, a succession plan should focus on four specific outcomes:

  1. Identify mission-critical positions and any current or impending talent gaps – based on the strategic opportunities you identify and how you create competitive advantage. Which jobs and skills are must-haves? Do those positions already exist or do we need to create them?
  2. Identify employees at every level who have the potential to assume greater responsibility advancing your organization’s strategic goals and how they fit together – what combination of A, B and C performers do we need and how do we attract and keep them?
  3. Encourage meaningful investment in a training and development program for high-potential employees – be ready to defend allocating resources to a given talent pool(s) or to talent in
    general rather than technology, marketing or other investments.
  4. What is the process for revisiting and revising your succession plan as conditions change?

With those factors in mind, how do you go about building and refining a succession plan? Here’s some help.

Building a team

You’ve committed to building a succession plan, now its time to think about who you need on the team who will do the work. You need to decide who will design the plan and also determine who will be responsible for implementing and evolving your plan when it’s in place.

You’ll want to include people with different skills and from a variety of functions when assembling the succession planning team.

Of course, in smaller organizations, team members are going to wear multiple hats.

Some of the needed skills include:

Organization and process-orientation. While the succession planning effort itself needs to focus on goals, you’ll want someone on the team who will keep things moving along during the plan development phase.

That person needs to have enough authority to give other members assignments and to get answers from various departments.

Organizational knowledge. The team needs to include someone with a solid handle on most of the organization’s existing job descriptions and insight into any new positions that might be needed to accomplish the goals you’ve set.

And at least one member of the team should have connections throughout the organization and know who they can approach to build support for the succession planning effort.

Effective communication. Like many other strategic initiatives, the information gathering phase of succession planning can create nervousness and give rise to rumors about job changes (often true) or massive job losses (often false).

Keeping the rest of your organization working productively while this is going on requires skillful communication to share enough information to keep a lid on any panic-button pushers.

If handled well, giving employees insight into the process can help reassure them that company leaders are preparing the organization for the long haul.

Identifying strengths and weaknesses

So, you’ve committed to building a succession plan and picked your team. What’s their next step?

It’s time to brainstorm. What are all the internal and external factors that your plan needs to account for? Here are some questions to consider:

  • Organizations face increasingly rapid changes in macroeconomic, industry and social trends — which ones can you anticipate and prepare for?
  • Competition can come from anywhere in the world. How will you keep an eye on — and respond to — new challenges?
  • Does your team have all the skills you’ll need? Can training fill the gaps or will you need to hire?
  • Boomers are retiring and the generational mix of your workforce will look very different soon. What do demographic changes mean for your organization?
  • The research is clear: companies with a diverse workforce outperform the competition. How will you leverage succession planning to increase diversity in your line organization and leadership team?
  •  Do you need to change your org structure and talent management processes to match these challenges?

Build or Buy? Finding the right people

The first phase of this part of the process is to identify key/critical positions, ideally at every level of the organization.  A position is determined to be key or critical under the following criteria:

  • Organizational structure — The position is a key contributor in achieving the organization’s mission
  • Key task — The position performs a critical task that would stop or hinder vital functions from being performed if it were left vacant
  • Specialized competencies — The position requires a specialized or unique skill set that is difficult to replace
  • Geography — The position is the only one of its kind in a particular location or it would be difficult for a similar position in another location to carry out its functions remotely,
  • Potential high turnover job classes — Positions in danger of “knowledge drain” due to impending retirements or high market demand for the skill set, and
  • Future needs — based on the SWOT analysis that launched the succession management project, positions that need to be created and defined.

Skillset analysis

Once critical positions and areas at risk of high turnover are identified, it’s time to look at the specific competencies required to do those jobs effectively.

The questions you need to ask during the skill set analysis are closely related to the strategic questions your team addressed in the first part of this process:

  • What are the external and internal factors affecting this specific position?
  • How will the position be used in the future?
  • What competencies or skillsets will be required?
  • What is the current bench strength?
  • How will you provide stretch opportunities to high-potential employees?
  • What is the path from where they are to where you need them to be?  and
  • What are the gaps (competencies or skillsets not possessed by current employees)?

At the end of this analysis you will have the answer to the most important succession planning question: “Can we develop our existing pool of internal candidates quickly enough or must we ramp up our search for strong outside candidates?”

The good news is you now have a clear idea of what you have and what you are still looking for and can move on to the next steps in the process, which we look at in other reports in our HR Morning talent management series:

  • designing the right training programs for each talent pool based on strategic importance, available resources and growth path
  • refining your recruiting plan to maximize your chances to get the most from your recruiting efforts, to use your time and energy wisely and effectively, and to pursue only the most likely paths to recruiting success and
  • retaining key personnel.
Tim McElgunn
Tim, a member of the HRMorning staff, is a veteran writer and editor. His background includes producing and managing publications for Bloomberg, Frost & Sullivan, Gartner Group and McGraw-Hill. Email: tmcelgunn@hrmorning.com