Succession planning

Succession planning is a process for identifying and developing new leaders who can replace old leaders when they leave, retire or die. Succession planning increases the availability of experienced and capable employees that are prepared to assume these roles as they become available. Taken narrowly, 'replacement planning' for key roles is the heart of succession planning. Succession planning is a process for identifying and developing new leaders who can replace old leaders when they leave, retire or die. Succession planning increases the availability of experienced and capable employees that are prepared to assume these roles as they become available. Taken narrowly, 'replacement planning' for key roles is the heart of succession planning. Effective succession or talent-pool management concerns itself with building a series of feeder groups up and down the entire leadership pipeline or progression. In contrast, replacement planning is focused narrowly on identifying specific back-up candidates for given senior management positions. Thought should be given to the retention of key employees, and the consequences that the departure of key employees may have on the business. Fundamental to the succession-management process is an underlying philosophy that argues that top talent in the corporation must be managed for the greater good of the enterprise. Merck and other companies argue that a 'talent mindset' must be part of the leadership culture for these practices to be effective. Organizations use succession planning as a process to ensure that employees are recruited and developed to fill each key role within the company. Through one's succession-planning process, one recruits superior employees, develops their knowledge, skills, and abilities, and prepares them for advancement or promotion into ever more-challenging roles.Actively pursuing succession planning ensures that employees are constantly developed to fill each needed role. As one's organization expands, loses key employees, provides promotional opportunities, or increases sales, one's succession planning aims to ensure that one has employees on hand ready and waiting to fill new roles. According to a 2006 Canadian Federation of Independent Business survey, slightly more than one third of owners of independent businesses plan to exit their business within the next 5 years - and within the next 10 years two-thirds of owners plan to exit their business. The survey also found that Small and medium-sized enterprises (SMEs) are not adequately prepared for their business succession: only 10% of owners have a formal, written succession plan; 38% have an informal, unwritten plan; and the remaining 52% do not have any succession plan at all. A 2004 CIBC survey suggests that succession planning is increasingly becoming a critical issue. The CIBC estimated that by 2010, $1.2 trillion in business assets would be poised to change hands. Research indicates many succession-planning initiatives fall short of their intent. 'Bench strength', as it is commonly called, remains a stubborn problem in many if not most companies. Studies indicate that companies that report the greatest gains from succession planning feature high ownership by the CEO and high degrees of engagement among the larger leadership team. Companies well known for their succession planning and executive-talent development practices include: General Electric, Honeywell, IBM, Marriott, Microsoft, Pepsi and Procter & Gamble. Research indicates that clear objectives are critical to establishing effective succession planning. These objectives tend to be core to many or most companies that have well-established practices: