Learn how to create a succession plan

What is succession planning?

Succession planning is deciding how to fill leadership roles with current employees. Companies can pursue either a role-specific or a more generic approach. For a role-specific approach, leaders identify a role they must fill soon -- for example, a CFO may be retiring within the next year. They assess internal candidates, determine any skills gaps and provide coaching and development if needed.

For more generic succession planning, leaders identify high-potential employees who are a good fit to eventually take on a role one or two levels above their current position. This type of succession planning includes creating a list of the competencies required for leadership success, such as strategy creation, team building and stakeholder influencing. Company leaders then assess promising employees and single out workers who need development and support.

One obstacle to succession planning occurs when a current leader is reluctant to plan for their departure, said Joe Campagna, owner of My Virtual HR Director, an HR outsourcing company located in Plainfield, N.J.

"[What] I see from the HR perspective [is] the people who have to identify and nurture high potentials are a little insecure and don't like developing someone that could replace them or jump over them," he said.

HR leaders play a key role in promoting succession plans, Campagna said.

"Succession plans, especially in larger companies, [are] really big when they first come out," he said. "Then unless HR pushes it, it doesn't even exist."

6 steps for creating a succession plan

An effective succession plan requires a thoughtful strategy. Here are six steps to follow when creating a succession plan as well as some best practices to follow.

1. Identify the roles to prioritize

Jumping into succession planning can feel overwhelming.

HR leaders can help solve this problem by first identifying the roles most in need of succession plans and noting the job department and level of each, said Alexander Kirss, senior principal of research at Gartner.

Then HR and other leaders should consider leadership needs that will surface in the future.

Discussing upcoming leadership needs is possibly the most important part of succession planning, Kirss said. Identifying the skills and capabilities required will help drive the creation of a forward-looking succession planning strategy.

2. Look beyond the usual successor sources

Leaders should also reconsider past succession planning methods to ensure they are giving all employees fair consideration for leadership. For example, if an organization's previous three CEOs were all white men who previously worked in the finance department, HR and other leaders should analyze how they are identifying candidates for succession planning and consider how to change their methods.

All employees must receive the opportunity to improve their skill sets and move toward a leadership track, Kirss said.

3. Engage successors

Successors need to know they're in the pipeline, so once leaders have identified promising employees, they must communicate the company's plans for these workers.

Managers or other leaders must initiate regular career conversations and check-ins with their high-potential employees and be upfront about the employee's performance as well as areas where they have room to grow, Kirss said.

"This keeps them involved and excited about the opportunities ahead," he said.

4. Make succession planning business as usual

Succession planning is not a single event. Instead, HR leaders must ensure that succession planning is a part of ongoing company plans and processes.

Leaders must embed the succession planning process into operations and regularly identify and upskill employees who could be future leaders, Kirss said.

5. Consider technology to facilitate succession planning

In many cases, technology can help make the succession planning process easier to carry out.

Performance management software and learning management systems can help leaders spot employees with leadership potential and help train candidates, said Philip Alberstat, managing director who leads the HR team at Embarc Advisors, a corporate finance advisory firm located in West Hollywood, Calif.

However, leaders must still apply their knowledge of employees when making final hiring decisions.

"Technology only gets you so far," Alberstat said. "You can look at employee data [such as] performance reviews and see someone is incredible, but you still need human interaction to make a decision."

6. Use succession planning as a motivator

When done right, succession planning should be an important tool for keeping employees engaged and motivated.

Leaders should think of succession planning as a type of employee recognition, Campagna said.

However, some high-potential employees may be hesitant to move up the ladder.

Framing succession planning as rewards and recognition can potentially alleviate some of their fears, which may include concerns over taking on more responsibility or working longer hours, Campagna said.

"People are much more open to somebody saying, 'You're doing a good job' than somebody saying, 'We want more from you,'" he said.

Christine Campbell is a freelance writer specializing in business and B2B technology.