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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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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.
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.
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.
While there are several theories on succession planning all contain the following core
principles:
the succession plan must be customized to meet the needs of the business
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.
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?
Role Based
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Individual Based
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Pool Based
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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.
Developing Leadership
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Evaluations
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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.
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