Succession planning: what is, process and example

The succession planning is a strategic talent evaluation process that guarantees the continuity of an organization and its long-term success.

In the current business environment, organizations must face major challenges that include continuous adaptation to fluctuating and increasingly competitive markets.

In this environment, having human capital that is not only qualified, but also solid and resilient is crucial. To do this, companies must be able to react successfully to the loss of critical high-value roles through optimal knowledge transfer processes.

To help you with this task, in this article we are going to address the succession planning definition and what it consists of, as well as a series of important issues for you to implement it successfully in your company.

What is a succession planning?

Succession planning is a relevant business strategy in Human Resources (HR) management that focuses on identifying critical roles in an organization and creating a talent pool. In this way, when the people who perform them retire or leave the company for other reasons, other qualified people can take on these roles.

In this sense, the figure of the successor refers to an employee with the necessary knowledge, skills and competences to be able to become the permanent replacement for a relevant position in the company that has become vacant.

To this end, it is necessary for these types of plans to identify current and future needs, as well as employees with the necessary potential to perform key jobs in the organization.

Successful succession planning is a powerful tool for companies, as it ensures that they can continue to operate smoothly after the retirement or loss of key people.

In that sense, it provides a liquidity event in the context of the transfer of ownership or leadership within the organization, as the company shows itself prepared to promote or promote employees when necessary, nurturing a sustained growth of the project.

This growth will be boosted by the creation of a solid organizational culture that focuses on the internal development of talent and benefits the retention of highly qualified employees.

Succession planning function

As we have just seen, the function of succession planning is to guarantee the continuity, growth and performance of a company thanks to the identification and development of internal talent, especially in contexts of leadership change and transformation.

It is important to point out that this strategy can bring great benefits even when a need for succession has not been detected, as it is a structured process that helps to:

• Identify gaps in the knowledge, skills and training of teams.
• Detect critical positions and trends of possible future vacancies.
• Focus on people development to increase the competitiveness of the organization.
• Build a stable and resilient environment despite market uncertainty where employees can plan their career plans.
• Help create a solid plan to diversify teams.

Characteristics of successful succession planning

Succession planning is a long-term project, that is its main characteristic. It is a job that requires time, effort and resources that include strategies for identifying, hiring, developing and retaining talent.

Beyond this consideration, we share with you some desirable characteristics in succession planning:

• Continuous process, not limited to the specific existence of a need and totally adapted to the profile of each company.
• Identification of talent within the company, favoring in this case horizontal and vertical career growth, although it can also resort to the recruitment of external talent.
• Supervision of the process by management and involvement of all parties concerned. For example, in large companies, both the manager and the board of directors should be involved in analyzing the impact on owners, employees and shareholders.
• Incorporation of training programs, certifications, and skills development to enhance the talent of employees, as well as the scheduling of specific evaluations to monitor the development of people in their new responsibilities.

Types of succession planning

Each organization will resort to a specific type of succession planning according to its needs.

The first distinction we can make is whether the selection of the successor is carried out through internal promotion, which is the case of internal succession planning, or whether external recruitment is used, in which case we would be talking about external succession planning.

Leadership succession planning, on the other hand, focuses on identifying, developing and preparing leaders in strategic roles for a company in order to ensure an effective transition.

It can also happen that a company has to immediately replace a person in the event of the unexpected departure of an employee in order to guarantee the operational continuity of a project. In that case, emergency succession planning should be applied.

The opposite case, and to a certain extent the ideal situation, is that of transition succession planning, a structured, foreseen and planned process of role replacement.

Depending on the reason for the handover, one type of transition or the other can be applied.

When it comes to how to approach succession planning, there are three basic scenarios:

1. Open recruitment. An action plan is defined for each strategic position within the company, in order to be prepared for any eventuality.
2. Specialized recruitment. The process focuses solely on preparing the transition for the most strategic positions, such as the heads of a company’s most important departments.
3. External recruitment. The organization does not have the talent it needs and is looking for very specific profiles. In this type of talent acquisition, it is common to turn to specialized companies such as headhunters.

Why is succession planning important?

The importance of succession planning can be summed up in the capacity for resilience that it provides to an organization.

These types of strategies help a company to plan its actions and prepare for the future based on different scenarios for the transfer of knowledge and experience of the most valuable profiles.

To further explore the importance of succession planning, consider the reasons why implementing this strategy in a company is linked to its success:

• It improves risk management by consolidating the continuity of a project and having the necessary talent to make transitions successfully.
• It offers organizational stability that positively affects employee satisfaction, morale and confidence.
• It proactively preserves institutional knowledge and leadership development.
• It retains top talent by offering them tangible opportunities for internal advancement, while saving on the costs of external hiring.
• It attracts investors and shareholders by limiting uncertainty in the face of unexpected changes.
• It improves the organizational climate and participates in the creation of a clear roadmap to achieve the company’s objectives.

The importance of succession planning is also evident in the risks a company faces when it lacks one. These risks include the loss of key know-how, which may never be recovered, or the appointment of a successor who lacks the necessary skills and competencies to perform the role successfully.

Any of these situations can have negative consequences for a project, such as disruptions in workflows or the need to dedicate time and resources to identifying, evaluating, and training a new successor.

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Succession planning process: the importance of knowing the workforce

In the succession planning process, it is necessary to be very clear about one thing: the workforce must be at the center of any action. That being the case, before thinking about developing it, it is imperative that you get to know your workers.

With the intention of guiding you through the process, we have prepared the following table that allows you to have a visual representation of essential data when approaching succession planning:

Useful information before planning the succession
Type of data	Key information for succession planning
Total number of employees.	Visual representation of the organization’s human capital.
Eligibility for retirement and length of time after eligibility.	Percentage of employees eligible for retirement and length of time they remain in the company after eligibility.
Distribution of the employee pool.	Identification of the pool of young employees who can take over internally.
Recruitment trends.	Analysis of the company’s recruitment trends to detect future needs, define profiles, incorporate new skills, etc.
Areas of staff turnover.	Detection of departments with high staff turnover that will determine the priorities in succession planning.
Hiring time by type of position to be filled.	Analysis of how difficult or risky it would be for the company if certain roles remain unfilled.

You can take advantage of this initial phase to carry out an analysis of the professional development plan of your teams, as well as to improve the job descriptions of the roles for which you are going to prepare the replacement, as they may need to be updated.

The 5 steps of succession planning process

The succession planning development program is structured around five essential steps that we will detail in the following sections.

This will provide you with a precise outline that covers the entire structure of the process so that you can adapt it to your project.

Step 1. Define the different agents of succession planning

Before starting to work on the roadmap for the action plan, you need to identify and define the roles and responsibilities of the people who are going to participate in the process or who are going to be involved in it in one way or another.

Generally, there are these four, but your project may require others:

1. Project Manager. Appoint a project manager to coordinate all actions.
2. Stakeholders. Involve senior managers with experience who will be very useful in identifying critical roles for which the company must ensure replacements.
3. Incumbent. This is the person who, as an expert, shares their knowledge, skills and competencies in the position that needs to be planned.
4. Potential successors. These are the successors who will prepare and develop to fill key roles in the organization.

As in all processes, it is also advisable to create an action plan that includes a time schedule detailing the deadlines and milestones of succession planning.

This document will help the coordinator to supervise its development and the parties involved to remain attentive to its evolution, as well as being an effective communication tool to reinforce the transparency of the whole process.

Step 2. Identify the critical roles

To start working on your succession planning, you can create a diagram representing the strategic positions in your organization and the possible successors.

Within these roles, identify the most vulnerable in order to prioritize their treatment. It is common for these types of roles to be leadership positions or profiles with special skills.

At this point, competency mappings bring clarity to the requirements of each role. It is a very visual tool with which you can quickly check the skills needed to successfully perform a particular job.

Step 3. Create a talent pool

Having a properly segmented talent pool of potential candidates to fill critical roles is very important.

You can create it with both internal and external profiles, and it is an HR tool that allows you to shorten the time it takes to select successors and to better manage resources.

To set it up, you can use different talent assessment tools such as 360 evaluations.

Step 4. Nominate successors

Once you have identified the profiles you are interested in developing to cover critical functions, you can start to create a personalized action plan that takes into account their strengths and weaknesses, but also the professional aspirations of the successors.

This plan should define concrete activities and objectives focused on achieving the agreed goal: that the successor is prepared to take over the vacancy at the right time.

The more comprehensive and relevant the individual development plans (IDP) are, the higher the success rate in preparing the potential candidate. Depending on the needs, they can include training programs, tutorials, mentoring programs, executive coaching, etc.

Step 5. Evaluate the process

Evaluation is the fifth step in succession planning and is of particular importance.

Monitoring the process will provide you with the data and results necessary to make the necessary adjustments to verify its effectiveness and its alignment with the company’s objectives, but also to ensure that you offer successors the experiences and learning opportunities they need to develop the required competencies.

To do this, you can establish Key Performance Indicators (KPIs) and periodic evaluations to detect errors, gaps or new needs that may arise depending on market conditions or the internal dynamics of talent.

Always keep in mind that succession planning is, as we have already mentioned, a continuous process.

Key tips for developing a succession plan

Ensuring a smooth leadership transition is crucial for long-term business success. Here are 4 key tips for developing an effective succession plan:

1. Develop a communication strategy. This will enable you to keep all stakeholders informed and improve acceptance, participation and commitment to the process.
2. Involve the stakeholders. Invite not only managers, but also employees and external partners to participate in the succession planning process. This inclusive approach will provide a valuable source of information, and in this way, you will strengthen relationships of trust.
3. Align the succession planning with the strategic objectives. In this way, you will be able to guarantee the development of future leaders in line with the values, philosophy and long-term goals of the organization.
4. Create a realistic, structured and long-term roadmap. Succession planning should be a process of continuous improvement. This is the only way to remain in tune with the real needs of the markets, those of the company and those of the most valuable profiles.  

How do you write a simple succession plan? Checklist example

To write a simple succession plan, you can use the table we have prepared in checklist format to make it easier to follow the steps:  

Checklist for writing a simple succession plan
Identify business challenges and critical positions
	Define medium and long-term business challenges.
	Detect the key roles for the continuity of the company.
	List the essential knowledge, skills and competencies.
Evaluate internal talent
	Detect employees with high potential.
	Implement personal development strategies to create a group of profiles prepared to adopt critical roles.
	Detect gaps in eligible profiles.
	Determine the capacity to have a group of qualified candidates available.
Develop talent and leadership
	Capture key employee knowledge before they leave the company.
	Implement personal development strategies to create a group of profiles prepared to adopt critical roles.
Select the successor
	Create a succession matrix in which you assign different profiles to critical functions.
	Assess the likelihood of key employees leaving the organization and establish a mitigation plan with temporary successors until a replacement is found.
Document and update the action plan
	Draw up a timetable for action.
	Supervise and update succession planning in accordance with organizational and talent changes.

Mistakes to avoid when planning succession

Successful succession planning is not just about knowing how to carry it out, but also knowing what mistakes to avoid. Take note of the most common ones:

• Not following a structured long-term plan. This can lead to poor execution and confusion, as well as a departure from the company’s objectives.
• Not using internal talent. Internal candidates are already familiar with the company culture, protocols and processes, as well as the strategic objectives. In addition, you may lose very valuable talent.
• Not dedicating the necessary time and resources to identify critical functions.
• Relying solely on seniority to make decisions. Remember that it is about transferring knowledge, skills and strategic competencies that do not depend solely on the time spent in the company but on the abilities of the people.
• Failure to develop a communication strategy can be seen as a lack of transparency on the part of the company.
• Failure to train successors can lead to inefficient transitions that result in frustration, wasted time and money, and can compromise the stability of the company.

Contributions of succession planning: diversity, equity and inclusion

Diversity, equity and inclusion (DEI) are increasingly relevant to the success of an organization. Diversity brings innovative perspectives and improves decision-making, while establishing an inclusive culture increases employee engagement and promotes talent retention.

Likewise, companies that prioritize DEI in all areas, from recruitment to training and leadership development, strengthen their brand image and create more equitable environments that foster creativity, collaboration and exchange.

In your succession planning strategy, adopting a DEI perspective will help you avoid homogeneous thinking and facilitate the promotion of talent by reducing the barriers to promotion that may arise, especially in underrepresented groups.

All of this benefits the consolidation of management in relation to employees, stakeholders, clients and external collaborators.

Benefits of succession planning

To make a small compilation of the advantages of implementing succession planning in organizations, we have prepared the following list of the most relevant ones:

• It limits the risks that can affect the continuity of your business. In fact, it is advisable to include it in Enterprise Risk Management (ERM).
• It allows you to identify the most qualified leaders and enhance their skills by constantly improving the talent in the organization and preserving the brand image.
• It helps to update the feedback from teams about the company, roles, protocols, etc. Talking to potential candidates about their impressions, interests and career plans will provide you with valuable information for your project.
• It facilitates the implementation of a company culture oriented towards continuous improvement and development that is as motivating for your employees as it is beneficial for your brand image.
• Improvement of internal processes thanks to reflection on current practices necessary to develop succession planning and which helps to detect weaknesses, but also new opportunities for positive and more up-to-date changes.
• It enables the transfer of knowledge and strategic relationships to prepare the company for future challenges, reinforcing its resilience.

How can AI improve succession planning?

Artificial intelligence (AI) also has a role to play in improving succession planning, thanks to HR tools that incorporate it to streamline the process of identifying and preparing future leaders for critical company functions.

For example, through predictive analysis, a resource capable of identifying high-potential employees, reducing organizational risk and shortening the time spent on repetitive tasks in particular.

In the same vein, AI participates in optimizing decision-making, reducing bias and personalizing training programs aimed at improving internal talent.

Succession planning is a tool that allows companies to anticipate the future, as you have seen throughout this article, ensuring continuity of leadership and alignment with the organization’s objectives for sustainable progress.

In this sense, Smowltech’s proctoring plans are a very valuable tool, as they provide secure remote proctoring environments for talent development with online assessments that guarantee the integrity of the processes.

You can request a free demo to discover innovative solutions that will help you boost your talent assessment strategies in your organization.