5 Steps to Creating a Succession Plan for a Key Leader in Your Organization

Something unexpected happened when the pandemic forced us to work remotely—if possible—and stay home. It was a collective wake-up call to reevaluate our lives and the things that are most important to us. Some called it the Great Resignation, with an estimated 4.3 million leaving their jobs in December 2021 alone. Others dubbed it the Great Reprioritization.

It was also a red flag for organizations to put succession planning on the front burner. No longer can management expect employees to stick with one company for the long haul. According to the 2021 Gallup State of the Workplace report, over 50 percent of workers are looking for greener pastures. It’s one thing when an entry-level individual is a flight risk. It’s another matter if it’s a critical position.

Definition of Succession Planning

Business succession planning differs from replacement hiring, which involves filling all positions in an organization. Sometimes, you lose staff unexpectedly, or perhaps someone has decided to move or retire. Succession planning is the proverbial safety net that minimizes disruption when a senior manager or C-level officer separates from the organization. Ideally, it’s a seamless transition with no hitches.

The process involves identifying possible successors and grooming them for these positions. It’s a three-stage procedure involving planning, preparation, and implementation. Five crucial steps provide a structured approach for minimizing the organization’s risk during the change of leadership. They include:

1. Identifying critical and vulnerable positions
2. Establishing criteria for each role
3. Pinpointing potential talent pipelines
4. Creating an action plan for training and development
5. Evaluating the results.

Why Succession Planning Is Essential

The succession planning process is about preparing for your organization’s future and maintaining its legacy. As the pandemic taught us, things can change on a dime. It behooves management to work out a blueprint for the inevitable what-if situations. The aim is to give your business room to grow. The chances are it won’t be the same organization a decade from now or even five years.

Therefore, it’s imperative to think about where your company is headed and what competencies are essential for its continued success. Undoubtedly, it relies heavily on the objectives and key results (OKRs) and key performance indicators (KPIs) that guide your current business model. Succession planning looks at the individual paths fueling your success.

Succession Planning: Planning Stage

Arguably, the planning stage is the critical part of this procedure. It sets the direction for the entire process. It’s vital to include input from all management levels. Succession planning requires non-biased reasoning. It’s human nature to gravitate toward the familiar. However, this process involves thinking out of the box. You can look at it as an opportunity to reassess its strengths and areas of improvement.

Step 1. Identify the Critical Positions in Your Organization.

Onboarding new hires isn’t cheap, with estimates that it costs about $4,000 per employee. Of course, that amount will vary depending on the position. Therefore, your first step involves risk assessment. The objective is to identify the critical roles in your organization. Gauge the current known vulnerability of change for each one. Finally, determine the impact of each loss.

It’s essential to keep your focus on the job role instead of the individual in that position. Think of the duties that person performs and how mission-critical they are. This process can guide succession management and set the pace. Of course, you should start with the positions with the highest risk and vulnerability to maintain the status quo in your organization. 

Step 2. Establish What Skills Are Vital.

Again, the aim is to focus on the position, although input from that individual is vital. Consider what abilities, skills, and competencies are necessary to fulfill this role as if you were trying to fill it today. Bear in mind that many employees take on tasks in that nebulous other-duties-as-assigned category. Make sure these things are part of your criteria if there isn’t an obvious successor for some tasks.

It’s just as important to identify the measures of these competencies as it is to figure out which are necessary. It’s the only way you’ll know if you’re on the right track. However, the luxury of planning is that it gives you the time that the process demands. You’ll likely find that succession planning is a work in progress that will evolve as you work through the finer points, including the individual’s exit strategy.

Step 3. Determine Potential Candidates Within Your Organization.

The chances are that you may have specific individuals in mind for some positions. They may already have the appropriate skill set and mindset for the job. All they need is some coaching. Nevertheless, we suggest approaching this part of the process carefully. It’s worth noting that the top three reasons former employees cited for leaving a position include:

• Inadequate pay
• Lack of advancement opportunities
• Feeling disrespected

Remember that the goal of succession planning is a seamless transition with minimal disruption. That includes keeping your staff happy.

One way you can access your team member is using a tool such as the 9-Box Grid. The beauty is in its simplicity. It uses a low-moderate-high grading system for assessing an individual’s performance in their current role and the potential for promotion. It helps you identify the future leaders among your employees. You can use it to set personal goals and career paths for those interested in advancing.

The Argument for Hiring From Within an Organization

The other caveat worth exploring is the decision to hire a leader from outside of or within an organization. The reasoning for the former is that it brings fresh thinking and a non-biased perspective to a company. That can be a wise decision if a significant turnaround is in order. A new set of eyes on a situation often can help facilitate this adjustment. However, it doesn’t always work as expected.

Some employees are reluctant to accept the change that inevitably accompanies bringing in a manager from outside the company. Losing someone in upper management is often a high-risk situation for an organization’s stability or culture. A joint study by the Massachusetts Institute of Technology and Harvard University found that outsiders don’t always bring the value that a company needs at these times..

Part of the reason is the degree of change. Individuals outside of an organization are more likely to introduce dramatic shifts, whereas someone within a company tends to keep things on a familiar course. That’s particularly true if the successor has been with the organization for a while and already understands its culture. It will also calm any feelings of job insecurity in other team members.

That’s not to suggest that an external hire isn’t a good thing. Sometimes, it is just what a business needs, especially if things—and morale—have been stagnating. The glaring issue is the loss of the knowledge and experience of the departing leader. Inevitably, no matter how thorough the business succession planning is, something may fall through the cracks. That puts the onus on the next stage.

Succession Planning: Preparation Stage

It’s critical to keep an open dialogue with the person currently filling the position to tap into their expertise. That can create the foundation for the necessary work in the preparation stage and developing the individual’s exit strategy. 

However, leadership development is a long process. It isn’t just about the hard skills of tech, statistical analysis, or software proficiency, however helpful they are for meeting the work requirements. It also involves the things that are learned from experience on the job, such as critical thinking, open-mindedness, problem-solving, and conflict resolution. 

Legal matters are another element of the preparation stage that you shouldn’t overlook. It involves factors such as insurance policies, buy-sell agreements, and other contingencies of an owner leaving the organization. We recommend contacting an insurance consultant and an attorney to guide you through these legal matters. 

For your succession plan, the next task is figuring out how to develop and nurture your potential candidates with an action plan that focuses on building their strengths and bolstering their weaknesses. Focus on filling any existing gaps that exist between the successor and the current leader.

Step 4. Create a Training and Professional Development Plan for the Successor.

This step makes a strong case for fulfilling a critical position within an organization, particularly if they have worked their way up the corporate ladder. It’ll save time and money on onboarding. It’s less likely to be as disruptive as bringing in someone from the outside who is starting at ground level.

Of course, this action plan doesn’t just include seminars and coursework. It also consists of mentoring and coaching a candidate in this relatively safe setting before taking over the reins. It can provide invaluable on-the-job training that one can’t get from a textbook. The best succession planning process incorporates these aspects as part of a candidate’s career development.

This process offers an opportunity for leaders to adapt to the changing workforce and their needs. For example, a candidate can spend time working in a department outside of their usual role. It’s an excellent way to foster empathy, something over 90 percent of employees wants from management. Over 60 percent of HR personnel believe it can be a learned skill.

Succession Planning: Implementation Stage

Ideally, succession planning is a long-term process that will prepare the successor as thoroughly as possible. However, it’s not set in stone once you’ve gone through all the steps. You may need to adjust it with changing markets and the economy. Your organization undoubtedly won’t remain static, either. That’s why it’s critical to bake revisions into the process.

Step 5. Monitor the Process, Revising as Necessary.

One of the best takeaways of succession planning is the indirect benefits your organization may realize. As you investigate training opportunities, you may find new and perhaps better ways to educate your team members. One way you can gauge the success of your plan is by evaluating your company’s performance before and after you have implemented it. Some key metrics include:

• Job satisfaction
• Employee turnover rate
• Reductions in vulnerabilities and risks
• Revenue
• Downtime

Dealing With Potential Obstacles

Things don’t always go as planned in work or life. That makes identifying potential problems a vital task for adding solutions to your playbook. The pandemic left most of us scrambling for answers, whether it was trying to set up an e-commerce site seemingly overnight, dealing with supply chain issues, or transitioning to a remote workplace. Let’s discuss some roadblocks you may encounter.

Organizational Changes

We cited the pandemic as a textbook example. It showed how external factors could upset even the best-laid plans. That can happen with a succession plan. A shakeup in management may eliminate a position altogether. The best solution is to keep the candidate in the loop. After all, it’s their career development path, too. It’s one reason that monitoring and revising are essential pieces of the process.

Disrespect at the Management Level

We discussed some of the causes of employee turnover, with disrespect high on the list. Resentment over being passed over can create a domino effect and bring down morale. That’s why it’s vital to have an open-door policy. If the individual has potential, engage them and solicit their feedback. Perhaps, you can find another opportunity for them that would make better use of their skill set.

Not Interested in a Change

Some employees perform well at their jobs and appreciate the stability and the routine they offer. It’s no secret that management positions are more demanding and may upset your work-life balance. Therefore, it’s easy to see why some individuals may prefer leaving work at the office and not bringing it home. The best plan is to keep them content in their roles and go back to your talent pipeline.

Final Thoughts

A succession plan is a necessary procedure for an organization that will allow it to continue to grow if a key player leaves a company. It’s an insurance policy that will keep things running smoothly despite the inevitable change at the workplace. It’s critical at all levels and particularly for the culture. Organization change stress is certainly something you want to avoid during this time.

You’ll likely find that your staff will appreciate your forward-thinking. It will encourage feelings of job security that we all need in these days of uncertainty. However, if the prospect of creating your organization’s succession plan seems too daunting, the professionals at Kutsko Consulting can help. 

We offer leadership training, team health assessments, and more. Let us help you make this transition successful with the care and attention it deserves to unify your staff during this journey to its next chapter. Contact us today to start your plan.