Succession planning used to be something reserved for senior management. In recent years, however, more and more organizations have expanded the process to include greater numbers of positions and people as they look to leverage human capital to sustain competitive advantage.
Succession plans run the spectrum, from simple to complex, depending upon whether they capture a small population or a global talent pool. Plans are sometimes piecemeal, focusing only on specific divisions or operating units, but they can also be organization-wide. Even the most elementary succession plans are good, proactive measures for identifying back-up candidates for key positions and ensuring that they are appropriately developed.
What goes into a successful succession plan? Here are the key elements that many established organizations include in their succession plans:
Critical positions that require immediate and future backup are considered “key positions.” Many organizations create a database of middle- to senior-level management positions and individual contributor roles where market demand is high and supply is limited. The database should reflect both short-term and long-term organizational needs.
These are employees identified in anticipation of filling key roles in the long-term. The organization's pool of high- potential employees should prescribe development within a broad range of disciplines, such as finance and accounting, operations, and marketing. Organizations need to identify multiple high-potential employees for each key position, given anticipated attrition in a time period that exceeds three-to-five years.
Experienced employees who can be developed in three-to- five years are considered future replacements. Each key position should have multiple employees designated for future replacements, given attrition that could occur within that timeframe.
These are employees and managers capable of filling key positions immediately. An effective succession plan identifies each key position and ensures a minimum of one ready replacement, but preferably two to three.
Oftentimes, organizations lose employees who are in high demand and who also have less than five years of service with the organization. Such “at risk” employees require frequent monitoring to ensure that performance reviews are timely and development efforts take place as scheduled.
More and more people are retiring early these days. Employees and managers who are within five years of normal retirement should be monitored for such plans.
These are people who need further development, more suitable roles within the organization, or outplacement. They should be identified because they often block the progression of high-potential employees and others designated for future replacement.
This class includes women and employees of various races and ethnicities who have been identified as ready replacements or high-potential employees. It is important for succession plans to identify such individuals not only for the purposes of equal employment opportunity or affirmative action documentation, but also to address a segment of the workforce that typically has special development needs or faces unique organizational challenges.
These are employees designated for international assignments who may have special development needs, including cross-cultural coaching and specialized training in language proficiency. Most multinational organizations today have established pools of employees for potential international roles and maintain a record of various languages spoken or read, as well as corresponding levels of proficiency.
This portion of a succession plan identifies areas of vulnerability and provides the foundation for development plans for both future replacements and high-potential employees. It is critically important to construct detailed development plans as a basis for comprehensive analysis that will narrow the gap between key positions and designated replacements for both short- and long-term needs.
These bridge gaps in position requirements and existing skill sets of designated employees and managers. Organizations should manage succession planning just as they manage other key business processes – with plans that contain goals and objectives, measurement standards and metrics, and a process for periodic monitoring.
Knowing that good planning is essential to effective asset management, leading organizations typically manage succession plans the same way that they manage their strategic and operating plans – by frequently assessing progress and adjusting to changing priorities as needed.
In a knowledge-based economy, it is more important than ever to continuously respond to changing market conditions as a way of protecting both hard and soft assets. Organizations that view human capital as one of their few sustainable assets in today's highly competitive economy are considerably ahead of the curve and on the way to becoming employers of choice – if they aren't already.
Marilyn Blocker is a member of WJM Associates' executive coaching and organizational effectiveness faculty. Drawing upon over 20 years of experience with leading Fortune 500 and healthcare organizations, she specializes in coaching, succession planning, and large-scale organizational change associated with turnaround, consolidation, restructuring, and M & A integration.