Succession planning

Succession planning is a process for identifying and developing internal people with the potential to fill key business leadership positions in the company. Succession planning increases the availability of experienced and capable employees that are prepared to assume these roles as they become available. Taken narrowly, "replacement planning" for key roles is the heart of succession planning. Effective succession or talent-pool management concerns itself with building a series of feeder groups up and down the entire leadership pipeline or progression (Charan, Drotter, Noel, 2001). In contrast, replacement planning is focused narrowly on identifying specific back-up candidates for given senior management positions. For the most part position-driven replacement planning (often referred to as the "truck scenario") is a forecast, which research indicates does not have substantial impact on outcomes. Succession planning is a process whereby an organization ensures that employees are recruited and developed to fill each key role within the company. Through your succession planning process, you recruit superior employees, develop their knowledge, skills, and abilities, and prepare them for advancement or promotion into ever more challenging roles. Actively pursuing succession planning ensures that employees are constantly developed to fill each needed role. As your organization expands, loses key employees, provides promotional opportunities, and increases sales, your succession planning guarantees that you have employees on hand ready and waiting to fill new roles. Effective, proactive succession planning leaves your organization well prepared for expansion, the loss of a key employee, filling a new, needed job, employee promotions, and organizational redesign for opportunities. Successful succession planning builds bench strength.

Develop Employees for Succession Planning To develop the employees you need for your succession plan, you use such practices as lateral moves, assignment to special projects, team leadership roles, and both internal and external training and development opportunities. Through your succession planning process, you also retain superior employees because they appreciate the time, attention, and development that you are investing in them. Employees are motivated and engaged when they can see a career path for their continued growth and development. To effectively do succession planning in your organization, you must identify the organizations long term goals. You must hire superior staff. You need to identify and understand the developmental needs of your employees. You must ensure that all key employees understand their career paths and the roles

they are being developed to fill. You need to focus resources on key employee retention. You need to be aware of employment trends in your area to know the roles you will have a difficult time filling externally.

Real Life Story

Bob and Jesse (their names have been changed to maintain privacy) are brothers and co-owners of a manufacturing company. They are approaching retirement and want to keep the business in the family. Yet they're discovering that making the transition is not so easy. Bob and Jesse can't agree on when to retire, and they're not sure which of their children should take over the business , if any. It seems two children don't want to work in the business at all. Two others are only slightly interested and don't have great aptitude (although one of their wives is very interested and capable). Another of the children works in management firm, while one is in a senior management elsewhere. How can they all receive a fair portion of the business without causing resentment? The one thing Bob and Jesse do agree on is that they needed professional help to resolve their succession planning issues, and so they turned to The Mustard Seed Group for professional consultation.

Why succession plans are important

A succession plan outlines the way a business should be managed after the retirement of the current owners. It prepares the next generation of owners to carry on management effectively without conflict. Succession planning can keep the family's financial interests in a business, and by implementing tax-effective strategies, can greatly reduce the estate taxes that must be paid in the future. It's never too soon to consider a succession plan. We advise that as soon as a company begins to have value, it's time to think about passing on that value. Difficulties of succession planning By their nature, entrepreneurs are hard workers who prefer to do things for themselves. Usually, they are so busy with the daily management and operation of their company, they postpone succession planning. The reasons can be varied. They may not relish the thought of no longer running the business they worked so hard to establish. They may be reluctant to give up their business, since it may signal their own aging or infirmity. There may be strong emotional attachments to their business, or to the idea of giving it to a favorite

family member, regardless of ability. If there is no family member suited to taking over the company, the owner could be reluctant to discuss this, for fear of causing pain. The end result is succession planning is left until it's too late.

Succession Planning
Introduction:

Succession planning is one of the most critical functions of an organization. This is the process that identifies the critical and core roles of an organization and identifies and assesses the suitable candidates for the same. The succession planning process ramps up potential candidates with appropriate skills and experiences in an effort to train them to handle future responsibilities in their respective roles. Succession planning is applicable for all critical roles in the organization. The upper management of each practice or department is responsible of coming up with a suitable succession plan for each core position under his or her department.
Steps of Succession Planning

There are four main important steps in planning for succession.

Step 1: Recruitment and staffing This is one of the key steps of the succession planning. Hiring the right and skilled employees is the key to growing human resources in the organization. Sometimes, some companies require a paradigm shift in order to retain in the business.

In such cases, the organization requires to let go or redefine the roles and responsibilities of the portion of existing staff. Then, the organization hires the new blood in order to acquire the required skills and expertise. When it comes to succession planning, organization should always hire people who will have the potential to go up the corporate leader. Step 2: Training and development All the organizational training can come under two categories; skills training and management trainings. Skills training: Employees are trained to enhance their skills, so their day-to-day work becomes easy. Management training: A selected set of employees undergoes training where they are trained to take over management responsibilities. Step 3: Compensation and performance management Based on their performance, the employees who have the potential to become leaders in the organization should be appropriately compensated. These employees should be considered for fast track promotions and special compensation benefits. Step 4: Talent management Talent management is one of the key factors that contribute for succession planning. The right candidate will have the required level of skills in order to execute responsibilities of the new role. The upper management and mentors of the staff member should always make sure that the employee is constantly enhancing his / her skills by accepting challenging responsibilities.

Typical Activities in Succession Planning Succession planning has many activities involved. Some of these activities are sequential and others can be performed in parallel to others.

Following are the core activities involved in succession planning. Identification of the critical roles for the growth of the company. There are many tools such as Pareto charts in case if you need any assistance in prioritizing the roles. Identification of gaps in the succession planning process. In this step, the process of succession planning is analyzed for its strength. If there are weaknesses and gaps, they will be methodologically addressed. In this step, the possible candidates for the potential role will be identified. This will be done by analyzing their past performances as well and for some other characteristics such as age. All short listed employees for potential roles will be then educated about their career path. The employees should understand that they are being trained and their skills are being developed in order to fill critical roles in the organization. When it comes to training and developing people, they should be developed for the positions that exist in the company as well as the positions (roles) that will be introduced in the future.

Have a clear understanding of the timeline required for filling key roles. For this, an understanding of when key roles will be vacant is necessary.

Conduct regular meetings on the succession plans of the organization. Identify top players of every department and make necessary arrangements to keep them in the company for a long time. Review past succession that took place based on the succession plan and review success. If there are issues, make necessary changes to the succession plan.