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.
Companies that are well known for their succession planning and executive talent
development practices include: GE, Honeywell, IBM, Marriott, Microsoft, Pepsi and Procter
& Gamble.
OBJECTIVES OF SUCCESSION PLANNING:
Maintain Organizational Performance
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Succession planning can help an organization maintain its performance during

uncertain times. Organizational performance is dependent on the realization of the
long-term strategic business goals of a company. These goals can only be achieved
through proper planning for business continuity in adverse situations. Such situations
may include a natural disaster, a sudden death of an executive or a terrorist act.

Handling Voluntary Separation

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Most employees are free to leave their current job and pursue career options
elsewhere unless they have signed a contract that binds them to work with their
current employer for a certain period. When an employee decides to take another job,
it is one form of voluntary separation. Companies need to be prepared for such
scenarios, where an employee or many employees may take voluntary separation from
the company. To handle this situation the company needs to train staff that can back
up current employees and help the business function smoothly.

Help Employees Realize Their Career Plans

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Succession planning also helps employees realize their career plans for the
future. This objective is achieved by training junior employees for managerial
positions and to help them assume different roles once those positions become vacant.
This provides every employee with a sense of direction regarding where he is going in
the near future. Every individual has set goals for his career over the next few years
and succession planning mechanisms help employees achieve their goals within the
same company.

Improve Employee Morale

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A major source of motivation for employees is planning for their future and
knowing that they are on the right track. Succession planning is a popular tool used to
enhance employee morale and to motivate them to perform better on their current
jobs. Many companies identify various positions for which current employees of the
firm are eligible and train them as a contingency plan. Succession training may
include rotations in various departments; this means the company needs less
employees to back up more positions and the employee gets a higher chance of being
promoted early.

To Build Leadership Potential

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Organizations tend to build leadership potential through the succession

planning process. Leadership potential can be identified during on-the-job training
where many senior managers get to interact with managers and employees. This leads
to identification of the individuals that exhibit leadership qualities and potential.

PRINCIPLES OF SUCCESSION PLANNING:

While there are several theories on succession planning all contain the following core
principles:

the culture of the business must support succession planning

the succession plan must be customized to meet the needs of the business

succession planning must focus on all aspects of employee development

successful succession plans must have a clear and realistic time frame

the succession plan must consist of a simple process which is both fair and ethical.

PURPOSE OF SUCCESSION PLANNING:

Succession plans help corporations, academic institutions and militaries to create a pipeline
of talent. Solid plans are effective business continuity instruments. They keep an
organization's critical functions operating at top levels when key personnel exit the firm or
are promoted into more senior positions.

IMPORTANCE OF SUCCESSION PLANNING:

Succession planning focuses on these key areas:
Succession planning addresses the needs of the organization as senior management gets
older.
Many leaders of organizations spent countless hours and years developing key components of
the organization. Unfortunately, the organization frequently fails to fully develop individuals
that are prepared to move into leadership roles. This is especially the case within small
companies, which often times struggle to keep the doors open after a CEO or founder leaves
the organization. Family businesses are always at risk, and very few of them make it into the
next generation. Early planning removes that obstacle.
Succession planning prepares an organization for an unexpected, undesired event.
Who is prepared for the death or sudden illness of a key leader in the organization? Key
members of the leadership team are not immune to the sudden events that life sends their
way. They struggle with car accidents, diseases, relationship issues and by other events that
take them away from their roles within the organization. These events cannot be predicted,
but it is entirely possible to have a plan that highlights who is capable to take over if a key
person is lost.
Succession planning ensures an organization has the right people in place today, as well
as into the future.
What more can be said? While many organizations look at succession planning as a means to
define who will take over the role of CEO or President, the reality is that all organizations
should use this planning process to determine who has developed the capabilities and
competencies to take over for a manager or supervisor within the organization. It helps
organizations measure the strength of their pool of talent and also understand where there are
gaps in that talent.
Just for a minute, think about our military. They have significant experience with succession
planning as a tool to develop, maintain and even motivate talent. They prepare for the
possibility of losing a key person by assessing and understanding the strengths and
weaknesses of each individual team member and by defining their roles and responsibilities.
When someone is lost, the leadership knows exactly who will take over. They are always
prepared.
Succession planning is a means to support the current culture.
Culture is so important to the stability and success of an organization. An organization
cannot afford to leave positions open when they lose key leaders. It is not uncommon for it
too take several months to even a year to fill key roles within an organization. Employees
need to feel comfortable and secure, but that can quickly change if a key position is not
filled.
Succession planning ultimately helps define business strategy into business and
organizational goals.

Companies regularly commit time and talent to developing their yearly strategic plans.
Unfortunately, these plans are too often focused on how the company can meet its financial
goals through more production of products of services. Rarely do these plans take a look at
how people impact the strategic goals of the company. Succession planning is an important
part of the overall plan because it helps to define the types of high level skills that will be
needed by the organization. It is also clearly indicates how losing a key person will impact
the financial picture of a company. You figure it out...how much does it cost your company
when a key person leaves? What does it cost to advertise for the position, to hire an
executive search company to do the work, and to interview possible candidates? What does it
cost your business in terms of a drop in performance while the position remains open? Are
there other hidden costs?

TYPES OF SUCCESSION PLANNING:

Role Based
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Role-based succession planning focuses on finding potential replacements for

each middle- and upper-level manager in an organization. This is especially helpful
for positions that are critical to the organizations success or positions that the
organization might run into trouble filling. Planners start with replacement planning
for the CEO, then for each manager who reports to the CEO and finally for each
manager who reports to those managers. That allows them to follow several paths.
They can identify the qualities they want in replacements for those positions, or they
can identify individuals within the organization and begin grooming them for those
positions. In addition, they might begin recruiting people with those qualities to come
to work for the organization ahead of when they think they will need them for that
particular position.

Individual Based
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Individual-based succession planning involves first identifying people already

working for the organization who have a high potential for advancement. After
identifying an individual, the organization focuses on helping to develop that person's
skills. Part of that involves allowing him to take on tasks that help him to gain
experience in using new and more complex skills. In addition, the organization needs
to focus on retaining talented individuals with potential for advancement.

Pool Based
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A third type of succession planning organizations use is pool based. It focuses

on a large number of people, or groups of people, with the potential to move into
several or all of the management positions. There are two types of pool-based
succession planning: internal and external pools.

There are several reasons that many organizations favor developing the internal talent
pool of candidates. One is that it avoids the problem of employee resentment that
often comes from not considering people already inside an organization for
advancement. Another is because of corporate culture. Different organizations have
different cultures. So it helps if middle and upper managers are already familiar with
that culture before they begin making decisions in their new jobs.
External pools can also bring in people with skills and knowledge that the
organization lacks. Examples of sources of external pools of potential candidates
include an organizations competitors, distributors, suppliers, or other people the
organization can bring in with short notice because it has already identified who they
are instead of having to advertise a position and wait for applicants.

ELEMENTS OF SUCCESSION PLANNING:

Identifying Need
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While it is important to have contingency plans for all important positions in a

company, it is best to identify the most integral positions to a company's future
success. Evaluating which senior or middle management positions is an integral
element of succession planning. Once these positions are identified, a company can
begin to identify the best potential candidates for succession. These candidates can
then begin to receive career development training.

Developing Leadership
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An important distinction to understand when engaging in succession planning

is the difference between a leader and a manager. Most employees can manage their
responsibilities and possibly take on additional tasks. A capable manager can deal
with complexity, planning, organization and problem solving. A leader must have
additional qualities, however. A leader must develop a vision, deal with change,
motivate and inspire. Training future leaders means developing these leadership skills.

Evaluations
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When developing a company's future leaders, the honest evaluation of those

employees is imperative. Closely monitoring the ongoing professional development of
an employee helps a company identify the employee's strengths and weaknesses and
determine what further skill development is needed. The employee also gains

confidence in her ability to move into a more responsible position within the
company.
Timetable
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A strong succession plan must continually assess how far developing leaders
are from taking on more responsibility. A succession plan might divide future leaders
into categories, such as successors ready to lead within one year, successors ready to
lead in one to two years and successors ready within a five-year period. As some
employees retire and others develop into leaders, this schedule will be adjusted so a
company can always determine where it stands in regard to succession.

Moving and Shaking

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One common strategy in succession planning is to assign managers to several

different positions. General Electric company is one company that prepares its leaders
by assigning them to a variety of positions in multiple geographic locations. The helps
an employee prove his ability to adapt and grow and expand his particular skill set.

ADVANTAGES AND DISADVANTAGES OF SUCCESSION PLANNING:

Develop a strategic Leadership Human Resource Plan that includes comprehensive

position descriptions, needs analysis and plans to bridge the gaps

Build relationships with and carefully study the performance and behavior of
successors over a long period of time

Provide a sense of direction, stability and expectations for all key stakeholders:
employees, customers, shareholders and vendors

Retain a critically important employee who might otherwise leave if not formally
recognized as the successor

Its difficult to think that there might be disadvantages to succession planning but here are
some things to consider:

Appointing the wrong person can lead to a variety of problems that result in poorer
company performance and turnover

Pulling the trigger too quickly to appoint someone only to have a better candidate
appear later on

Engaging in succession planning when the business is immature may lead to

erroneous conclusions about leadership needs

A poorly conducted succession planning process will lead to poor decisions,

disharmony and ultimately poor company performance as well