Succession planning is a process for identifying and developing internal candidates with the potential to fill key business leadership positions within the organization. It increases the availability of experienced and capable employees that are prepared to assume these roles as they become available. Thus, “replacement planning” for key roles is the core of succession planning. Proactive and effective succession planning management incorporates the development of a plan that promotes qualified and interested candidates from within the organization. In contrast, replacement planning is focused narrowly on identifying specific back-up candidates for specific senior management positions. Position-driven replacement planning is a forecast, which research indicates does not have substantial impact on outcomes. However, strategic successive planning often greatly influences business results.
Succession planning is certainly not a novel concept. Companies have faced challenges with ways to identify, develop, and retain their talent for many years. The surge in recent years of succession planning is related to several key components:
- Higher demands in a global market with the retirement of the Baby Boomers
- The widening talent gap
- Millennial generation workers (also known as Generation Y) turnover
The traditional practices regarding succession planning relied upon by companies in the past are no longer ideal or practicable for the needs of today’s workforce. Organizations have had to rethink their strategies and begin with the essential criteria. The current challenges that employers face are many; however, the three captioned factors above hold a large influence on the need for any organization to implement a functional succession plan.
Retirement, especially as it pertains to the Baby Boomer generation bears a great impact on the current workforce and is not showing signs of slowing down. With the youngest Baby Boomers turning 49 this year, employers must continue to incorporate effective succession planning into their strategic operations.
The talent gap has widened as companies scramble to fill positions but cannot locate candidates, internally or externally, that meet their qualifications. Employers who focus on establishing a knowledge base in internal processes, promoting educational development as well as remaining current with respect to technology will provide an advantage in remaining competitive within their industry. These steps help employers retain employees who have been earmarked for succession planning and development as well as attract superior candidates to the organization.
Another aspect to consider is the Millennial Generation, also known as the youngest and most technologically savvy generation in the present workforce. Millennial Generation employees are accustomed to sophisticated technology. They are typically at ease with electronics and computer software and operating systems. In addition to their ability to perform tasks quickly, they tend to lose their interest rapidly as well and, as a result, many do not have the same approach to employment as did the members of prior generations. Millennial generation employees(as a whole) hold a 60% turnover rate (over a three year period) within their positions. Not only is it costly for employers to replenish these employees’ positions, it also creates a dilemma for employers who seek out this group for succession planning.
Succession planning is a challenging process whereby an organization ensures that employees are recruited and developed to fill each key role within the company, and, in the best case, the employees remain engaged and motivated to remain employed with the company for the long term. Through an organization’s succession planning process, it is imperative that companies recruit employees with a foundation and interest in the company’s work, a commitment to learn and the propensity to seek more challenging roles with greater responsibility within the organization. Setting up a succession plan with clear objectives, attainable goals, and effective marketing and recruiting tactics will enable an organization to establish a successful foundation for its succession planning objectives.