A Comprehensive Guide To Leadership Succession Planning

In medieval times, if a king didn’t have male heirs to the throne, his reign and the period that followed were often mired in political instability.

The lack of an heir almost always led to succession disputes, bloodshed, and instability.

Fast forward to the Information Age, and succession is still a major issue – in the political as well as business world. If your organization has capable leaders, and they are not training others for leadership roles, there will be major operational and financial instability in your near future.

Luckily, you can avoid such instability and prepare many heirs to the throne with the help of leadership succession planning.

What is leadership succession planning, and why does it matter?

Back in 1985, Steve Jobs was ousted from Apple. As you can imagine, the company struggled to find a clear direction after him and suffered some major financial setbacks until Jobs returned in 1997 and revitalized the company.

The lesson – you have to have a process to identify and develop future leaders, so when a leader retires, resigns, or becomes unavailable, you have someone ready to step in their shoes and hit the ground running.

The process to identify and train new leaders is called leadership succession planning and it matters because organizations should be able to outlast their leaders. Some of the other benefits of leadership succession planning include:

• Operational stability during unexpected leadership departures.
• Increased employee engagement and loyalty due to better career growth opportunities.
• Transfer of institutional knowledge from current leaders to successors, so you don’t lose out on the valuable insights and experience of current and past leaders.

What role do leaders play in succession planning?

Your current leaders can make or break the whole succession planning program.

• Leaders make sure that the succession plan aligns with the organization's vision and strategic goals.
• They identify high-potential employees who could take on leadership roles.
• They mentor and develop identified successors.
• They manage the transition process, which includes preparing the successor, communicating the change to stakeholders, and ensuring a smooth handover of responsibilities.
• They create an environment where leadership development is prioritized, and succession planning is seen as an ongoing process rather than a one-time event.

Taking all of the above into account, we can safely say that HR and L&D cannot produce future leaders on their own. The current leaders of your organization have to step up and train their replacements.

• When Steve Jobs planned for his succession at Apple, he made sure that his successor, Tim Cook, possessed the necessary skills and shared his vision for the company's future. 
• Warren Buffet provides challenging assignments, exposure to different aspects of the business, and personal mentoring, to his potential successors at Berkshire Hathaway.
• Jack Welch developed many leaders willing to step into challenging roles. The list goes on and on. In each of the examples we mentioned, leaders did not shy away from actively creating their own successors.

Bonus resource: Here’s a checklist of items leaders can use to develop a healthy pipeline of successors in their organizations:

1. Align succession planning with organizational strategy and goals.
2. Determine positions that are critical to the organization’s success and need succession planning.
3. Evaluate internal talent for leadership potential using performance data and leadership competencies.
4. Implement targeted development programs for potential successors, including training, mentoring, and rotational assignments.
5. Promote a culture that values continuous learning and leadership development.
6. Keep stakeholders informed about the succession plan and its progress.
7. Develop a transition plan for each key role, addressing how and when the handover of responsibilities will occur.
8. Regularly review the succession plan to ensure it remains relevant and effective.

🪜The 4 Stages of Succession Planning

Common challenges faced by organizations in leadership succession planning

Preparing future leaders is not easy – it comes with its fair share of challenges. Most organizations do not have a succession planning culture in place and try to adopt it as a reactive measure. Some of the more common challenges organizations face include:

Identifying suitable candidates

Only 14% of companies excel in training global leaders.

That’s because most organizations lack a systematic approach to identifying suitable candidates for leadership programs. Organizations struggle to identify future leaders among their employees because:

• Different stakeholders may have varying opinions on what constitutes a good leader. This leads to inconsistent evaluation criteria.
• Some employees with high leadership potential may not currently be in roles that allow them to showcase these abilities.
• The culture of an organization might not encourage leadership development or might prioritize seniority over potential.

To overcome this challenge, implement a structured approach to identify potential leaders. Build leadership competency frameworks specific to your organization, get input from stakeholders about the values and qualities needed in leaders, and establish objective performance metrics to assess potential candidates.

Assessing and closing skill gaps

Skill gaps impact an organization’s ability to adapt to market changes and create future leaders. While 87% of companies are aware they have skill gaps, they don’t know how to close them.

Organizations often struggle to accurately assess skill gaps due to rapidly changing market demands and the evolving nature of job roles. There’s also the matter of biases in assessment methods and a lack of clear skill mapping. All of these factors make it difficult for organizations to close skill gaps and train future leaders.

To overcome this challenge, take the following steps:

• Implement dynamic skill assessment tools and regular training needs analyses. CliftonStrengths®, Myers-Briggs Type Indicator®, and MindTools’ leadership skills assessment are all good resources in this regard.
• Use data-driven approaches to identify emerging skills, and offer targeted training programs. 
• Regularly update skill frameworks to align with industry trends.

Dealing with resistance to change

Your current leaders might be resistant to identifying and developing successors, possibly due to a fear of being replaced or due to comfort with the status quo. Your employees may be resistant to change due to a general lack of trust in the organization. In either case, when you introduce a succession planning program in your organization, you will face resistance from all sides.

To overcome resistance to change:

• Communicate the reasons behind the succession plan, how it will be executed, and its anticipated benefits. Transparency helps in reducing uncertainty and fear among employees.
• Include employees, management, and other key stakeholders in the planning process. Doing so will create a sense of ownership and reduce resistance.
• Understand the concerns and fears of employees regarding the change. Acknowledging these and providing clear, factual responses can help alleviate anxieties.
• Clearly articulate the benefits of the succession plan not just for the organization, but also for the employees, such as opportunities for growth, development, and a more robust leadership structure.

5 Best practices for successful leadership succession planning

You now know what leadership succession planning is all about, the process in creating future leaders, and the challenges you may face when doing so. Now, it is time to discuss some best practices for successful leadership succession planning.

1. Identify key roles and competencies

Determine which roles are crucial for the organization's success and define the competencies and skills required for these roles. By doing this, you will know your future leadership needs inside out and will be able to prepare accordingly.

To determine positions crucial to the organization's success, consider factors like the impact of the role on the organization’s strategy, the difficulty in replacing the role, and the role’s influence on the organizational culture. Also, develop competency frameworks for each role and keep an eye on industry trends that may change the nature of key roles.

2. Develop a talent pool

Instead of focusing on just one successor, develop a pool of high-potential candidates. This approach gives you more options and a ready supply of candidates ready to step into leadership roles as needed.

Here’s how you can do this:

• Use performance appraisals, 360-degree feedback, and leadership assessments to identify potential candidates for future leadership roles. 
• Create customized development plans that address their unique strengths and development areas.
• Hold regular succession planning meetings to discuss potential successors for key roles and the development progress of individuals in the talent pool.

3. Use a mix of development methods

Implement diverse development methods, including mentoring, coaching, training programs, and practical experience through stretch assignments or job rotation. Different development methods address various aspects of leadership. 

While some methods may focus on technical skills, others enhance soft skills or provide real-world experience. A mix of methods prepares potential leaders for the multi-faceted challenges they will face. Here’s how you can implement this:

• Use programs like workshops, seminars, and leadership courses for theoretical knowledge and skill development. 
• Pair current leaders with groups of identified future leaders so they can pass on their knowledge and mentor them.
• Promote a culture where individuals take the initiative to seek learning opportunities, such as online courses or industry conferences.

4. Evaluate potential leaders in different contexts

Assess how potential leaders perform under various circumstances and challenges. This can provide insights into their adaptability, learning ability, and leadership style. When you put your future leaders under different situations, you will learn how these individuals handle stress, adapt to change, work with diverse teams, and solve complex problems.

Use the following techniques to introduce your potential leaders to diverse situations:

• Create scenarios that mimic real-life challenges and observe how potential leaders respond.
• Collect feedback from a variety of sources (peers, subordinates, supervisors) in different contexts to gain a well-rounded view of the candidate's leadership capabilities.
• Utilize psychometric assessments or behavioral interviews designed to evaluate leadership potential in different scenarios.

5. Plan for emergency successions

Apart from long-term planning, have a contingency plan in case of sudden departures to ensure continuity in key positions. Without a plan for emergency succession, your organization may face confusion, disrupted operations, and strategic setbacks if there’s a sudden leadership vacancy due to health issues, unexpected resignations, or other unforeseen circumstances.

Develop clear policies outlining the steps to be taken in the event of an unexpected vacancy. This should include decision-making processes, communication protocols, and transition plans. In addition to having such policies in place, make sure you:

• Implement cross-training programs to ensure that there are multiple employees capable of stepping into critical roles. This also aids in overall workforce flexibility and resilience.
• Conduct simulation exercises to test the effectiveness of the emergency succession plan and make necessary adjustments.

See what Crystal Black, Sr. L&D Specialist at AAA, says about the ingredients for employee retention:

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The role of mentoring in leadership succession planning

Mentoring acts as a bridge between current and future leaders. That makes it one of the best strategies for leadership succession planning out there.

Through mentoring, experienced leaders impart valuable knowledge, skills, and insights to potential successors, contributing to their professional growth and preparing them for leadership roles. Mentors share organizational culture and values with their mentees, leading to continuity in leadership style and philosophy. 

Mentoring programs also provides potential leaders with a supportive environment to discuss challenges and explore solutions with their mentors, enhancing their decision-making and problem-solving skills. 

For organizations looking to streamline their mentoring programs as part of leadership succession planning, Together offers tools and resources to facilitate effective mentoring relationships. Explore how Together can enhance your organization's mentoring and succession planning initiatives by booking a demo today.