Navigating Succession Planning: Busting the Top 5 Myths

In an ever-changing business environment, companies must be able to adapt quickly to new challenges and opportunities. Take the aging workforce in Canada, which means that 5 million Canadian employees are set to retire in the next 5 years. Or consider the increased mobility of employees, who are switching jobs and careers at least twice as often than in previous decades. These trends underscore the importance of organizations’ readiness and preparedness for change.

One crucial strategy for successfully navigating these changes is through succession planning: identifying future staffing needs and the employees with the potential to meet these needs. Unfortunately, many companies, as many as two thirds, still fail to succession plan or use ineffective and biased succession strategies. Perhaps contributing to this trend are the many common myths that pervade leaders’ thinking about succession planning. Below are some of these popular myths and how to think about them instead:

1. Succession planning is only for large organizations.

Reality: Succession planning is important for organizations of all sizes. Why? Because critical employees are just as critical in small organizations as they are in large organizations! The loss of a key employee can be devastating and disruptive, regardless of the company’s size. Additionally, the cost of externally replacing an employee can be even more taxing for a smaller company with fewer resources. The truth is that succession planning is considered widely attractive to employees, regardless of the organization’s size. When employees know they have a future at the organization and an opportunity to advance their careers, they are naturally more satisfied and motivated to stay at the organization.

2. Succession planning should only be done for the CEO’s position.

Reality: Succession planning is important for all critical positions in an organization. In addition to the CEO, there are typically several other positions that also play a critical value in the organization’s functioning. How can you determine which roles in your organization are critical? Consider the following criteria when identifying critical roles for succession planning:

• How urgently will you need a successor? Positions that are expected to be vacant sooner are more critical.
• What impact does the role have on business operations? Positions that play a more central role in daily business operations or revenue generation are more critical.
• Which roles require a unique skillset or knowledge? These roles are typically more difficult to hire for externally and so they are considered more critical.
• What is the internal bench strength like for a role? Positions without any qualified internal candidates are more critical.

3. Succession planning is about finding replicates of existing leaders.

Reality: Succession planning requires identifying what the future recipe for success in that role will entail. Finding clones or perfect replicas of existing leaders will not guarantee that these future leaders will experience the same success as their incumbent. Consider the Chief Human Resource Officer (CHRO), which is a role that is expected to become more strategic and require greater technical and analytic skills in the coming years. This means that finding a successor who possesses the same skills and background as the current CHRO is unlikely to ensure that the future CHRO will be equipped to handle the future demands of this role. It is important to engage in workforce planning to identify how the business and wider economic and social patterns may change over time – 1, 3 and 5 years down the road – and then identify what skills will be needed in each critical role to tackle these challenges.

4. Succession planning is a secret process carried out by HR.

Reality: Succession planning requires buy-in from all key stakeholders at an organization. In fact, senior leadership plays a pivotal role in succession planning because it is often their positions where successors are needed. When selecting successors, the incumbent in that role should be actively involved in suggesting suitable candidates to succeed them. The only secretive aspect of succession planning is preventing the identification of these successors from becoming widely known inside and outside of the company, as this can lead to tension and animosity among employees and poaching from competitors. Even successors themselves should not be informed that they have been selected to succeed in a particular role. Instead, these employees should be notified that they have high potential and given ample opportunity for developing their skills and knowledge.

5. Succession planning is too time-consuming and expensive.

Reality: Succession planning does have associated costs, both for time and money. However, the price of failing to succession plan far outweigh these costs. For instance, companies that effectively engage in succession planning experience 59% lower turnover rates than companies who don’t, and the costs of hiring externally is known to far supersede the costs of investing in the development of current employees. The research shows that the long-term gain of succession planning far outweighs the short-term pain. Additionally, assessing the succession planning metrics listed below to track the success and progress of succession planning initiatives over time will help ensure that resources are being allocated appropriately.

• # of successors ready now, ready in 1-2 years, and ready in 3+ years: measured by the number of successors in the pool who are deemed ready (for promotion) now, in 1-2 years, and in 3+ years.
• Internal replacement rate: measured by the number of roles back-filled internally vs. externally.
• Time-to-fill critical positions: measured by the average number of days it takes to fill a critical role.
• Average time in succession pool: measured by the average number of months it takes for a successor to be promoted.
• Succession planning ROI: measured by the impact on employee retention, organizational performance, and long-term sustainability.

Despite the importance of succession planning for organizations’ current and future success, many still struggle to build a succession management system that truly satisfies their needs as an organization. If your organization is looking to improve their succession management, visit our demo page to learn about how SuccessFinder can leverage behavioural science to identify and develop successors for your critical roles.