As a part of the management, you may be looking at the 10 and 20 year goals for your organisation. However, a change in leadership in even one of the departments can disrupt the flow of your business.
To counteract this, it is always wise to have a succession plan. As per Harvard Business Review, having a well-structured succession plan can increase a company’s value by 20%. Further, it has the capacity to positively impact investor returns by 25%.
To ensure that your development objectives are in line with the company structure, prepare a well-organised succession plan.
Understanding Succession Planning
It is not unusual to have transitional changes in management. However, these tend to create a lull at the very least when it comes to business operations. To make sure that the development objectives are being met, it is essential that the successors are well trained.
At the core of it, a succession plan ensures that you
- Identify employees with leadership potential
- Fulfil their training gaps
- Make them management-ready
Why is Succession Planning Necessary?
While theoretically we can say a lot about the correlations between succession planning and keeping up with development objectives of a company, let’s review some data to support the findings:
- Companies spend a significant sum, amounting to about 370 billion dollars on succession planning
- For 94% of employers having a succession plan in place has proven useful
- 86% of the people in leadership positions are aware of the need for succession planning.
However, a meagre 13% state that their succession plans and associated programs are effective.
Currently, established tools are available that can help identify people whose goals align with the company’s development objectives. These people, who have necessary leadership skills, are best suited for succession plans.
How Does Succession Planning Help Your Operations?
Let’s explore the reasons why each organisation needs a sound succession plan:
- Helps map out a suitable career path for those with leadership capacity.
- Ensures continuity during leadership transitions
- Identifies the talented and deserving
- Creates suitable training programs
- Decreases turnovers
- Improves morale
- Increases productivity and engagement
- Improves the quality of work delivered
- Helps form a sound response to market fluctuations and adversities
- Creates an inclusive and diverse work environment
- Incentivises achievements
With a proper succession plan to suit the office dynamic, companies can train their employees to step into leadership positions when needed.
Understanding company goals and development objectives
To chalk out where the company wants to be in the next 5 years, 10 years and so on, it needs a plan of action. This is where development objectives come into play.
In essence, they should involve SMART goals, i.e., goals that are:
- Specific
- Measurable
- Achievable
- Relevant
- Time-bound
Additionally, to be successful, the focus area, long and short term objectives, and targets should be clear. These can involve:
- Increasing year-on-year profits
- Making operations productive
- Turning customer service into an experience
- Reducing turnovers
- Creating a positive work culture
Having clear-cut development objectives not only ensures that the company goes in the right direction, but also drives cohesiveness. Additionally, it helps a company reach the targets it set out to achieve.
Tools for Evaluation and Succession Planning
HRs can use a number of methods and tools to evaluate employees.
To name a few, these are:
- Success Circles: We have built a method for peer groups to facilitate learning. This helps understand employee values by accounting for:
- Development
- Performance
- Culture
- Teamwork
- Communication
- 9 box grids: performance vs. potential matrix
- Alternative grid numbers: 16-box talent matrix
- Performance-Values grid: designed by Jack Welch, this method sorts people into
- Top contenders
- Violators
- Solid employees
- Non contributors
- Individual development plans: uses a personalised approach tailored to suit the worker
- Combining performance with skill development and employee engagement
- Having scorecards and checklists: using a list of target and key indicators to gauge performance.
- Personal succession planning: evaluating select candidates as opposed to an entire talent pool
- 360-degree feedback: using a combination of peer reviews, manager feedback, and self-evaluation to understand an employee’s true potential
- Strength-based development: this aligns a person to a role well suited to their strengths
- Using behavioural, team based, and individual assessments
Not only should the method adapted be objective and bias free, it should also suit your workforce. Considering most workers are Gen Z, their thinking might not suit your evaluation process.
However, both the business and the market are going through rapid evolutions to keep up with times. The best method to keep up with times is ensuring a free, fair, and transparent process.
A Word About Success Circle
While the 9-box grid was an effective system 50 years ago, it is not up to par when it comes to keeping up with employee demands. This called for alternates. When one wasn’t readily available, we designed Success Circle.
Not only does this make it easy to develop succession plans, it creates a fair, transparent, and detailed system for evaluating workers. During an employee’s timeline in the company, Success Circle evaluates:
- Tasks completed
- Awards and recognitions
- Feedback
To this, it adds performance, development, and employee engagement. With these inputs, it condenses the data, creates a visual analysis, and generates a personalised unbiased report.
At a glance, each section of the Success Circle shows an employee’s potential and performance. These are classified as:
- Development
- Performance
- Leadership
- Culture and brand
- Communication
Over time, these sections grow with the help of multiple inputs. Managers and team leaders can view these whenever they want to check on an employee.
With Success Circles, getting a real-time view of progress and achievements is simplified.
Best Practices for Succession Planning
When implementing a succession plan, make sure that it does the following:
- Select employees based on skill
- Is in line with development objectives.
- Takes a proactive approach during training
- Incentivises performance
- Warrants a transparent, objective evaluation process
- Feedback provided should be beneficial
- All stakeholders should be involved at some stage of the evaluation
Did you know that according to Gallup, with proper appraisals, you can reduce employee turnover by 14.9%? However, is your system up-to the mark?
An additional step can be to set a post appraisal interview to ensure that the employee receives proper guidance, has clarity on targets, and builds trust.
How to Pick a Good Succession Planning Software
Most daily tasks are made easier with AI and machine learning, and creating a succession plan is not an exception.
- Use a software that offers scalability
- Make sure it’s customizable and user-friendly
- Use definite, measurable parameters
- Should be efficient in the long run
- Check client feedback
- Cross-check the data safety and related policies
- It should be compatible with existing systems
- 24×7 customer support is a definite bonus
- Pick one that fits your budget
Once you use the company’s development objectives to define your succession planning program, use the criteria used to identify a software best suited to your company.
To Conclude
Being included in the succession plan can act as a definite motivator. Not only will that boost performance, but also reduce employee turnovers.
Use the necessary evaluation tools to identify your best performers, train and incentivise them, and ensure employee retention. Further, this makes for a healthy work environment in line with a company’s long term plans.
