The Three Key Components of Succession Planning

March 9, 2018 | Iowa's infrastructure: State provides many transportation options for businesses Rowena Crosbie, President, Tero International Wealth Management,

More and more companies are asking the question: Do we have qualified people ready to fill key positions in the short term (three to five years) and in the long term (five to 10 years)?

With a keen eye on the future, many organizations are seeking to identify candidates for a succession pool and provide leadership training to ensure the next generation of leaders is equipped with the skills, knowledge and competencies to successfully guide the business in the future.

Succession planning is the process where one or more successors are identified for key positions, or when top-performing individuals are placed in a succession pool of candidates for future leadership positions. Each successor is individually developed for their future responsibilities. More simply put, succession planning is a highly specialized form of employee development that ensures future growth and security for the company.

Succession planning is more than just having a plan to promote employees from within the company. Likewise, it is more than an employee development initiative. While both areas play a key role, successful succession plans have three key components.

1. The first component is the development of a succession plan. This step involves the following elements:

  • Succession pool criteria (competency model) are determined.
  • Candidates for the succession pool are identified.
  • Gap analysis is performed to determine development needs.
  • A development plan is designed to build a strong succession pool and address any competency gaps that may exist.

2. The second component is leadership development. This includes:

  • Internal communication of the needs and expectations of the business.
  • Training programs and executive coaching.
  • On-the-job development opportunities for candidates in the succession pool (i.e., cross-training, lateral job transfers to build breadth of business knowledge, specialized project responsibilities).

3. Finally, the third component is to make the process ongoing with frequent attention to the changing needs of the business and the associated implications to the succession pool. Measurement and analysis are critical elements of this component.

Having a succession plan in place is financially beneficial for a company. The results of the implementation of a successful plan include:

  • A strong, prepared source of future leaders.
  • Reduced employee turnover.
  • Less reliance on external placement companies.
  • Fewer training and retraining needs.

With all the obvious benefits, why don’t more companies invest in succession planning efforts? Because it is not easy. It is challenging and takes time. It requires support. There is resistance and it requires vision. While the leaders of the organization drive the process and have a key role to play, the ultimate success of the process depends both on process champions within the organization and expert facilitation by individuals who bring best practice knowledge and a detached perspective not normally available to professionals internally.