Succession planning is a tool companies use to provide for the future by investing in current employees to take over for key positions in the event of retirement, death, or other departure of key management personnel.
The goal of succession planning is to identify key management positions within the organization and identify employees who can be “groomed” to fill those positions if there are no designated successors already in place. In other words, it is a long-term investment in human capital to prepare the future leaders of the organization for positions they may hold some time down the road.
Summary of requirements
Succession planning is becoming an increasingly important issue as the baby boomer generation retires. In fact, of the civilian employees working for the federal government, 34 percent are already over 50 years of age, and 1/3 of the workforce is eligible for retirement. The numbers will vary in the private sector, but the trend is clear: companies must prepare for the inevitable transition in leadership.
No company wants to find itself in the position of suddenly having to replace a key individual and having no one ready for the job. With a succession plan in place, the prospect of this occurring can be minimized.
Assessment. To develop a succession plan, employers must first perform an assessment to determine:
- Which positions are strategically “key” positions in the organization,
- What is currently available in their workforce in terms of high potential employees who might be able to step into these positions with training and development,
- What gaps there are, if any, in employee potential and future needs.
This assessment must take into account the vision of the future of the company — where it wants to be five or ten years down the road — in terms of what areas will be expanding and what skills will be necessary for future growth and viability.
Plan development. With the information gained from the assessment, a plan can be developed. The current required skills of key employees can be identified, and training and development plans can be set up to develop potential individuals.
Development may include
- Special assignments,
- Training in-house,
- Taking outside courses, or
- Working in another department to learn its functions.
Plan development should include frequent performance appraisals to track how the individual is meeting stated goals, including what additional training, experience, or education has been accomplished, and an ongoing assessment of the individual’s readiness and potential.
Undisclosed planning. Some employers feel it necessary to keep employee development plans for succession a secret, even from the employees who are being groomed. The reason for this may be to avoid causing discord in the workforce. When all employees know who is being groomed and who is not, it may cause those who are not being developed to look for opportunities elsewhere if they feel they have no future with the company.
However, there may be pitfalls with this approach. Perhaps a particular employee has no desire to move up to a certain level in the company for whatever reason. It would be beneficial for the employer to know this before committing time and expense into developing that individual.
There may also be other individuals who may not have been identified for development, but who have a great desire to climb up the ranks and would welcome such an opportunity. These individuals, if identified, could be included in the program. Also, if the succession plans are not known, key people might be lost who leave the organization for other opportunities, not knowing they were being developed for future positions. Each organization must determine this issue for itself.