Succession Planning: How to Get the Most Out of Your Training Program

Your company/team needs leadership. There must be a hand on the wheel if operations are to continue without disruption when the people at the head must step aside, step down, or become unavailable. Whatever the trigger (sickness, retirement, family issues), business progress and ownership must continue, or the consequences may destroy opportunity and undermine operations.

In general, the more senior the role, the greater the importance of succession planning. But really it applies at all levels in which the skills, contacts, and experience are unique in your team. Disruption is easier to handle at less-senior levels, but the same rules apply. A succession plan allows roles to be transferred smoothly when required—with the essential handover aspects already prepared and/or completed. This allows for both planned and unplanned changes in staff—with specialist knowledge codified and secured, as much as possible. Training staff in roles that are not their normal area of expertise provides continuity of skills. The planning must be both strategic and agile, ready for disruptions.

Succession planning not only requires a record of strategies, actions, and decisions. it should be a living part of any business, so the sharing of knowledge, skills, and tasks is ongoing.

Staff development and training are the primary tools of succession planning. It is a quiet process whereby key roles and capabilities are duplicated across potentially multiple team members, to allow for quick transitions, and can be effective even without handover. Additionally, shared CRM spaces, transparent working practices, and rigorous record-keeping makes a new-face handover of workload much easier.

A board of directors has a crucial role to play in succession planning. These are some of the primary board responsibilities in this process:

1. Setting Strategy: Sets the overall strategy for the organization and ensures that succession planning is integrated into that strategy.
2. Supervising and Managing the Process: Oversees the succession planning process and ensures it is aligned with the organization's goals and values.
3. Approving the Plan: Approves the succession plan and ensures it is in line with the organization's needs and objectives.
4. Identifying Potential Successors: Works with senior management to identify potential successors for key leadership positions and ensures that the talent pipeline is robust.
5. Developing and Implementing a Leadership Development Program: Helps to develop and implement a leadership development program to train and develop future leaders.
6. Monitoring Progress: Regularly monitors the progress of the succession plan and ensures it is aligned with the organization's changing needs and goals.
7. Regular Review: Regularly reviews and updates the succession plan to ensure it is current and effective.

More-senior roles can be hard to cover, but a capable board or partnership will establish strategies for a wide range of eventualities:

1. Skills gaps and lack of duplication.
2. Inheritance and ownership guidelines and methods such as pre-agreed buyouts from a deceased business leader’s estate, and equity alignments at retirement. This can apply to shareholders and staff, as uncontrolled inheritance can trigger crises.
3. Divorce settlement clauses may prevent a transfer by enforcing a buyout.
4. Transparent relationship sharing, to allow key outside parties to have multiple points of contact.
5. Cross-purchase agreements, whereby each partner buys (or the company buys) life and incapacity insurance that funds the other partner(s) or shareholder(s) to buy out the holding of the exited or deceased partner/key shareholder.

A company that is suffering 20% or more turnover should look hard at either recruitment or retention policies. This is because high turnover makes succession policy impossible and presents a steady flow of disruptions in team performance and stability. An organization’s key target is to recruit multi-skilled, flexible multi-taskers who will stay with the company as they and the task grow. 

Organizations need to recruit, pay, and train with retention in mind to reduce succession stress and maintain stable team function. The best senior team members are often the ones who know the business inside and out and have performed multiple roles within the company—so recruiting and retaining great staff allows you to “grow” the replacements for key members of your team in a seamless and painless way.

Conversely, if the team isn’t growing and there’s very low staff turnover, the business atmosphere can become stale and underproductive. Refreshing team members' roles and expanding their business horizons can help keep key staff in place, without becoming complacent. This increases the cross-fertilization and knowledge integrity of the team, with low stress and only limited planning effort.

However, any stable and established team will develop niche specializations. That can create succession headaches, as the team can easily become pivotally dependent on an individual. This tendency can be moderated by internal mentoring or even an apprenticeship program. Thus, key staff members are given the benefit of a learner (where they or the role suits such), and the company gains greater security of knowledge/skills as the key role successor is already in place.

Listed below are the benefits of succession planning:

1. Improved Organizational Performance: Succession planning helps to ensure there is a pipeline of talent ready to take on key leadership roles—and these “leaders in waiting” strengthen the whole business.
2. Continuity of Leadership: Smooth transition of leadership in the event of deaths, departures, or retirements helps to reduce disruptions and allow business as usual.
3. Employee Engagement and Retention: Knowing there is a strong career path increases employee engagement and retention. When employees see their career development and advancement in real-time, they are more likely to be engaged and committed to the organization.
4. Risk Management: Thorough succession planning mitigates key personnel risks, such as a loss of institutional knowledge and expertise.
5. Talent Management: Improved talent management helps organizations identify, assess, recruit, and develop capable people, strengthening the alignment of talent with organizational needs.
6. Informed Decisions: Succession planning helps organizations to make informed decisions about future leadership, putting the right people in place and having them ready.
7. Increased Shareholder Value: Succession planning is key for the shareholder value of public companies, particularly when a potential CEO is already well respected within the business. A well-communicated succession plan ensures that shareholders won't sell the company's stock when the CEO retires.

Diversity is a key aspect of strong succession planning. Building a talent pool that realistically reflects the local population strengthens any organization, both internally and in the community. This ensures that the organization's leadership reflects the diversity of its staff, its customers, and the various communities it belongs to and serves. Benefits of succession planning for diversity includes:

1. Improves representation by ensuring that underrepresented groups have equal opportunities to advance into leadership roles, leading to better representation, a more diverse leadership team, and an increase in the available talent pool.
2. A more diverse leadership is more likely to consider wider perspectives and make more informed decisions, resulting in better outcomes for the organization and its stakeholders.
3. Increased innovation, by encouraging wider inputs in creativity and innovation, with the aim of improved competitiveness and a more socially responsive organization.
4. Improved employee engagement and retention are generally stronger in workplaces that represent greater diversity, widening the talent pool and reducing turnover.
5. Enhanced reputation as an organization that values diversity and inclusiveness, enabling the attraction of talent.

A well-structured and operated succession plan will remove internal barriers at all levels and ensure a comfortable work environment for all employees. It is critical that this aspect gets company buy-in, rather than acting simply to boost a corporation's image.

The biggest mistake that is commonly made in succession planning is not having a plan. Any plan is better than no plan at all. Organic processes work up to a point, and a well-made team is a flexible and adaptive entity that will roll with changes.

Failing to plan, failing to communicate the vision, assuming talents/skills in team members, and failing to diversify the talent pool are all indicators that succession will be more challenging. The purpose of planning is to recognize and adapt to those challenges before they hit!