Succession planning and replacement planning are two different things. Replacement planning is focused on identifying immediate understudies in your team, while succession planning is focused on developing talent in the team to move forward.
What is Business Succession Planning?
Successful succession planning relates to leadership development. It develops a pool of talent so that there are numerous qualified candidates throughout the team to fill vacancies in leadership. Succession planning used to concentrate on developing leadership at the top level, but now it is building a strong talent base, which helps to increase team loyalty and ensure the longevity of the team. This strategy requires recruiting qualified talent, creating a talent pool, and instilling loyalty.
Benefits of succession planning:
- Decreased turnover
- Increased employee satisfaction
- Improved commitment to team goals
- Enhanced image of the team
What does succession planning require?
- Identify the long-term goals and objectives of the team: The long-term goals directly relate to succession planning. Is the team’s goal to grow or maintain its current position? Will it expand into other fields? All of these questions need to be addressed before creating a succession plan.
- Understand the developmental needs of the team and identify team members who fit these needs: The responsibilities of team members change over time. Some positions may be eliminated in the future while others will be added.
- Recognize trends in the workforce and engage team members to build loyalty: Understanding workforce trends will help you predict the needs of your team. For example, are your key team members nearing retirement? Have you invested in talented team members to take on additional roles?
What Is Replacement Planning?
Replacement planning works under the assumption that the structure of the team will not change. This is easier to apply in small family businesses that do not have any goals to expand or grow in the future. There are typically two or three “replacements” identified in the organization chart. Each backup is listed with his or her ability to replace an existing leader. The team members are not necessarily developed to understand the new working environment or smoothly transition into his or her new responsibilities.
Differences Between Replacement and Succession Planning
Many team leaders believe that they engage in succession planning, but in reality they are still using replacement planning.
The Main Differences:
- Replacement planning focuses on finding suitable replacements only for top leaders.
- Succession planning means that the team is easily able to fill vacancies throughout the business because team members are being empowered and developed.
- There is a short list of candidates in replacement planning.
- Succession planning builds a large talent pool.
Succession planning takes a little more time and effort from those in leadership, but it yields a high return on such an investment.
Deciding What You Need
There are several different factors that indicate when a team needs to implement or re-evaluate succession planning.
- Turnover becomes critical: The number of high-potential team members leaving is higher than average team members leaving. (This can happen in any economy.)
- Team members feel undervalued: When a majority of your team members feel that there is no room for advancement or that you choose too many outside hires, there is a succession-planning problem.
- There are no replacements for key talent: Should a valued member of the team suddenly leaves, there is no one able to take his or her place.
- Managers notice that there are not many candidates for promotion: Team leaders who are not developed for leadership will never be promoted.
- The time to fill metric is high or unknown: The time to fill metric is the average length of time that it takes to fill a position. A high number means that the company needs to focus on succession planning.
- The retention risk analysis is high: A risk analysis uses different factors to determine the potential number of team members who will leave. These will factor in retirement and other trends.