All across the world, as business leaders consider the future of work, evolving skills, and the talent shortage, succession planning is being added to business agendas. No matter what size a business is, unless there are good people in place, it will not achieve the performance expected to meet business objectives.
If your business is located in Cincinnati, Orcutt & Co. can help you with accounting, bookkeeping, and payroll services. We can also help you with your succession planning- it’s never too early to get started.
In this article, we will explain the 8 steps to make your succession planning successful.
Defining Succession Planning
Succession planning is the process by which a company ensures that all vital positions are filled by an employee that has the appropriate skills and experience. The goal is to identify and prepare suitable candidates to ensure a smooth transition between employees and to avoid vacant positions. Succession planning is critical for career pathing and employee engagement.
Often, companies focus primarily on senior executive positions- but succession planning should take a broader approach, promoting in-house instead of recruiting from outside the company. This is very important because most of the in-demand skills are hard to find and expensive to acquire once you do.
Why is it so important?
In addition to the impact succession planning has on the business itself, there are some market issues that make it critical for every business. Succession planning is critical for every business for a couple of reasons: skills shortage on industry-specific skills and a shrinking talent pool due to demographic shifts.
Succession planning pivots on the assumption that there are not as many suitable candidates on the market, so companies need to be focused on upskilling and promoting from within.
Plus, keep in mind that when your most valuable and longest lasting employees leave the company, they take their knowledge and experience with them. However, you can avoid losing this intellectual capital by having a succession plan in place and monitoring the readiness of your successors so they can shadow and learn from those that are leaving.
8 Steps of Succession Planning
Take some time to consider the talent risks facing your company. What would happen if a critical team member left? How would it impact your customer success, product development, and revenue? Succession planning increases your company’s resilience to these changes.
The following 8 steps of succession planning will ensure that the transition in leadership goes as smoothly as possible.
1. Define positions that are involved
First, identify the positions that are critical to the continuity of your business. Then, determine the experience, behaviors, skills, and attributes required for those positions. Track competencies in your company and map them to employees/positions. Determine which employees already have the required competencies and who is developing them.
2. Review critical positions
Next, you need to prioritize these critical positions based on how they affect your business. Which ones take the longest to recruit and have the longest productivity time? Also, determine which positions are likely to become vacant over the next few months or years and use risk mapping to determine how that loss will affect your business.
3. Classify employees based on potential for succession
Create a list of “as-is” employees based on their current stage of development and then review the positions within your company and assess each position against the person who is currently in it. Determine which of your candidates are ready to move into the position now versus those who need limited development versus those who have longer to go to be ready. Finally, use data visualization to emphasize the number of employees who are ready to move up and those who have potential for the next level and potential for senior leadership.
4. Identify candidates for succession and track development priorities
Go back to your “as-is” list and identify employees without a “succession status” and direct them to one or more positions that closely match their development level. Determine what development is required for your potential candidates for succession and emphasize this development.
5. Review succession status of positions
Take some time to review the positions that have a successor ready versus those with gaps in succession versus those that have no succession status.
6. Review talent status
Take some time to look back at where you’ve mapped candidates into positions in step three and identify the employees that you’ve linked to too many positions versus those who have no links. Additionally, look for those candidates that are ready but may not have a chance to move up any time soon.
7. Identify gaps in succession and make a plan
If you have positions that have no candidates for succession, consider implementing development programs and cross-train the most appropriate candidates. If there are no potential candidates that come forward, you can rely on external recruitment.
8. Identify talent risks and make a plan
If you have employees in your company that do not have a career path, create a succession plan that gives them a chance to move laterally within the company.
Succession Planning Unlocks Potential – but Needs to Be Realistic
Succession planning is a great tool to map the potential of your employees but if you don’t do it right, you could intensify the issues that you’re hoping to fix. As with any other analysis of your company, you can make it more complex and refined over time. However, keep in mind that this means you need to gather more information, have more discussions, and spend more time and effort on succession planning.
If you are a business owner in Cincinnati, let Orcutt & Co. handle your accounting, bookkeeping, tax planning, and payroll services so you can focus on more important tasks, such as succession planning.