Effective Succession Planning In 7 Key Steps

Succession planning

Whenever you have an employee in a key position at your company leave, things change. There may be drastic consequences in the form of protracted, costly recruiting, in addition to the institutional knowledge and experience that goes out the door along with the team members.

In this kind of situation, the one thing you can do is to make sure that the loss of key employees does not catch you off guard. We call it ‘anticipatory workforce planning,’ often referred to specifically as succession planning.

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First things first, it is important to recognize that some employees are almost inseparable from a company’s success. For example, a boss who has managed her family business for many years.

Or, perhaps a top IT specialist who has developed a company’s entire software. It could also be a sales manager who maintains personal contact with a company’s key accounts.

If these employees leave without clear succession planning in place, it can cause significant disruption or, worse yet, a downturn in the business. That’s why HR departments need to plan ahead if companies are to flourish even when key employees leave the organization.

What Is Succession Planning?

Succession planning is the process by which organizations plan for key personnel departures. Instituted as an HR policy tool, it helps ensure that key positions within a company do not remain vacant and that they can be filled quickly, and successfully, in the event of a departure. It’s essentially a way for companies to remain agile when it comes to what is at times their key competitive advantage: talent.

Over the coming years, an entire generation of baby boomers will gradually retire. As a result, it will become a mammoth task for companies to find qualified employees to pick up the baton. Succession planning allows companies to preserve key qualifications, avoid disproportionately protracted, and costly, recruiting processes while putting people first.

In short, succession planning is essential for companies now, and into the future, in order for them to remain relevant even when a seemingly irreplaceable employee leaves.

Succession planning comprises a range of steps, including:

  • Identifying key positions within the company
  • Assessing the risk of certain positions becoming vacant at particular points in time, taking into account fluctuation rates, retirement dates, etc.
  • Identifying talent within the company
  • Managing internal talent and developing existing personnel
  • Building up a strong talent pool (click here for more on talent pools)

The importance of succession planning is often tied to how much its success relies on specific abilities or people.

It’s worth noting, though, that succession planning is not only relevant for large or medium-sized companies. Even small family businesses need to engage with systematic workforce planning when it comes to ensuring business succession.

Succession Planning in 7 Easy Steps

Here are a few well-coordinated steps to help ensure that key positions can be filled successfully…

1) Identify Key Positions

Find out which qualifications are essential for your company’s success and document these in initial job profiles.

2) Identify Needs

Establish which key positions may become vacant in the near future: Which employees are about to retire? Which employees are pregnant? And what is your fluctuation rate? Also include the financial resources you’ll need for the recruiting process as part of this step.

3) Develop Job Profiles

At this step, you should, of course, consider both the tasks and qualifications of employees currently in key positions. However, you should also think about how the positions may evolve in the future and whether they will require additional skills.

4) Implement Recruiting Initiatives

Succession planning works best if you approach it from several different angles at the same time. Useful initiatives include building up a talent pool, implementing an employee referral program, or providing targeted upskilling programs for current employees as part of your company’s talent management.

Tip: Define milestones for succession planning. You might, for example, want to set deadlines for having found a suitable candidate or completing the handover period.

5) Appoint A Successor

There are different ways to find the right candidates apart from interviews. You can work with assessment centers, case studies, or work trials, for example. However, make sure that you look beyond specialist qualifications and also examine how well candidates fit in with your teams and corporate culture.

6) Hand Over The Job

Introduce the new employee gradually to their new tasks and make sure that the predecessor shares existing knowledge. The handover period shouldn’t be too short, especially where employees take on complex tasks. However, if handover periods are too long, there is a risk that the successor won’t be able to develop an autonomous profile.

Tip: Make sure that core knowledge is not hoarded by individual employees. Offer opportunities for sharing knowledge instead, for example, by providing confluence pages or creating wikis.

7) Document The Transition

Document where you were able to fill positions seamlessly and which processes did not run smoothly. This will allow you to address weaknesses specifically in the next recruiting process.

Smart Planning for Success

Simplified, clearly structured processes are key for successful succession planning. That’s why Personio supports you at key points of HR processes, including recruiting, onboarding, and internal staff development.


How Do You Identify Key Positions In A Company?

Ask yourself a few specific questions to find out which positions are essential to your company. The following guide, which is based on Dr. Gunnar Kunz’ approach to talent development, provides you with a framework for assessing the relevance of individual positions:

  • Are the decisions made by the person in the position of particular significance for the company? Do they also affect other business units?
  • Does the employee have a leadership role and a (large) number of team members reporting to them?
  • Does the position require specialist knowledge?
  • Are the tasks performed by the employee particularly complex?
  • Is there a high risk to the company if the employee were to go to work for a competitor?
  • Would the process of filling the position be protracted and costly?
  • Is it going to take a long time to train a successor?

These questions should make it clear that succession planning is very useful not only for filling senior or executive positions within a company. A position can be key even if some of the above questions do not apply to it.

For example, an IT specialist may hold a key position within your company if they are competent in a programming language that is important for your business.

Should You Fill Key Positions Internally or Externally?

Advantages of filling positions internally

  • No or only a short recruiting process, as the employee’s skills and qualifications are already known.
  • The employee can be provided with specific training to develop key skills before they take on the new role.
  • Short induction phase: The employee is already familiar with the company and its processes.
  • Investing in staff development fosters employee loyalty.
  • Developing internal staff has a positive effect on the motivation and loyalty of other team members.

Advantages of filling positions externally

  • Newcomers bring in fresh ideas, drive innovation, and help counteract blindness to the company’s failings.
  • External candidates provide access to new networks.
  • Newcomers are objective and disinterested in previous conflicts within the company.
  • External candidates may enjoy greater acceptance, above all in leadership positions.
  • New employees contribute additional skills and knowledge.

Speed up Your Recruiting Process

Save candidates’ information and documents centrally in Personio, tag their strengths and weaknesses, and access feedback collected from the various colleagues involved at any time.

Please Avoid: Two Serious Mistakes in Business Succession Planning

Good succession planning is crucial when it comes to the most important of all key positions, i.e. the CEOs, and in most cases CEOs don’t retire from one day to the next. However, one in ten successions is unexpected. You’ll need to have a set of specific steps prepared for this scenario.

Make sure you don’t fall into either of the following two traps in succession planning.

1) Don’t underestimate the time you’ll need

Start the succession planning process early – ideally five years ahead. Develop specific steps and processes for finding the ideal succession candidate and managing the transition.

Consider that this is about more than just the right legal basis such as company ratings, contractual negotiations or the transfer mode. Finding and developing the right candidate takes a lot of time and effort.

2) Make sure you have a contingency plan

If a key person leaves a company unexpectedly at short notice, their position may remain vacant for some time. That is if you haven’t actively planned for their succession well ahead of time.

But certain positions need to be filled quickly to make sure the company stays on track. In exceptional situations, you shouldn’t wait until you’ve found the right candidate – work with interim management instead.

In these cases, HR consultants will usually provide an experienced manager for a temporary deployment at short notice until a permanent successor has been found.

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