Guide to Creating a Succession Plan [+ Free Downloadable Template]

Creating an effective succession plan requires both anticipating the needs of the business and determining how to ensure a steady flow of individuals are ready to lead the organization.

Without the right tools and resources, many organizations can get derailed when attempting to create an effective succession plan. In fact, research by Deloitte found that although 86 percent of leaders believe leadership succession planning is an “urgent” or “important” priority, only 14 percent believe they do it well. By following a clear process and using available resources, it is possible to develop and execute your company’s succession plan.

We’ve created a simple succession planning worksheet, a competency-based succession planning template, and a CEO succession planning template. 

Download a customizable succession planning template

What is Succession Planning?

Succession planning is the process of identifying high-potential employees for key leadership roles within an organization. 

Once identified, an individual development plan for employees is created to ensure they are ready to take the next steps and fill these essential roles. Developing an effective succession plan involves two separate things:

• Understanding the needs of the business

• Figuring out how to keep a steady flow of individuals ready to lead the organization

We've created a guide that will help you create the best succession plan for your business.

Why business succession planning is important

Why do you need to create a succession plan? Here are a few key points that address the important benefits of succession planning:

Help During Mergers and Acquisitions

During key moments such as mergers or acquisitions, having an understanding of where redundancies exist helps a company best manage its talent and resources. Succession planning also provides organizations with the bench strength of potential leaders needed to support their growth. 

Provide an up-to-date understanding of potential leaders in a company

At any given time, managers and leaders understand where the strengths are and also where they'll need to hire more staff if they feel they don't have the right employee for future positions. It can streamline the onboarding process and help organizations find the right talent - whether it's from within or not.

Increases employee engagement levels and retention

Implementing a succession plan and explaining it to employees is proven to increase engagement levels. One study found that 94% of employers said that a succession plan positively impacted employee engagement within their business. This is because it gives employees a clear career roadmap for their futures - they can see what's achievable, increasing their motivation to work hard. 

Succession planning also fosters transparency by creating communication between executives, management, and entry-level employees about the overall direction of the company. One review of twelve studies indicated that only 60% of employees felt they knew where the company they worked for was going. A succession plan can provide the transparency needed to increase this percentage in your business. 

Ensure Your Company Is Prepared For The Future

The process of building a succession plan requires that Human Resources, People Ops professionals, and the leadership team at your company have taken stock of critical roles that will be essential for the long-term health of the company. 

Business partners, stakeholders, and employees alike have a vested interest in a companies’ ability to remain competitive financially and in their professional skillsets.

Without this type of process in place, a company might overlook the need for roles that don’t even exist yet but that could ultimately give their competitors an advantage in the future of your industry.

Try Our Free Downloadable Succession Planning Template

A succession planning process to fill out your template

How can you build your succession plan? The following section will go through the steps your Human Resources or People Ops team need to fill out your succession template and create an effective plan:

Step 1: Evaluate your existing succession plan (if you have one)

Start by evaluating an existing succession plan to understand who is still on your team, what their skills were, and where the initial predictions for succession were.  

It is helpful to have an org chart to increase visibility when developing your documented succession plan.

If you don’t currently have access to any type of succession plan, begin with any documentation or visualization you have of all your team members, their roles, and departments.

Step 2: Establish the most important or critical positions at your company

Next, you need to identify which roles are the most critical for your organization. You can look at current roles to pinpoint the most important ones in the immediate state of your organization, but also consider future key positions that you may need to create in the future. 

This step will help establish the different roles that you are going to develop your hot prospects for. It will also help you evaluate the current and future organizational structure of your company based on industry, geography, and technological needs.

Recommended Reading: 8 Types of Organizational Structures [+ Free Downloadable Org Charts]

Step 3: Document the required skills for those roles

You need to look at the leadership roles you’ve labeled as “critical” and understand all the required skills and key competencies needed to be successful in that position. 

It will be beneficial to articulate all these skills and create a profile for the ideal employee to fill the role. This will give you clarity into action plans in later steps that are required to lift current employees into these leadership positions.

Step 4: Establish the best employees for those positions

When you have created a list of skills needed for the key roles, you can look at your employees to see who currently best fits them. These will likely be your staff members that already exhibit some of the skills required to succeed in the key roles. 

At this point, you're taking stock of the talents on your team and figuring out where they fit in your organization. You should now have a shortlist of employees that could graduate to senior-level roles in the future. 

Step 5: Establish timelines and professional development needs

Before you start developing your talent pool, you need to work out what their professional development needs are. Here, it's a case of setting professional development goals to help your employees reach the targets they need to achieve to qualify for the key roles in your organization. 

This might include the need for actual qualifications, or it could require them to learn new skills or showcase an ability in a chosen field. 

Once you have outlined the needs of team members and potential development opportunities, you can create a timeline of events. This communicates the development activities with dates your employees will accomplish AND attend training opportunities. The more small goals you can include will help keep employees feeling engaged in their path to success.

Step 6: Develop talent and measure progress toward succession

The next step is executing this plan and developing your talent. This could include sending your employees on courses, to industry events, and so on.

Additionally, all great talent management requires measuring the progress of your succession plan. Track and communicate progress regularly so all leadership and employees understand succession planning progress. Try setting up employee self-evaluations every few months - 3 months is a good idea, giving you a progress report every quarter.

Examples of companies prioritizing succession planning

Investing time and resources into a succession plan benefits the company and its employees. Plenty of big companies are doing this, and here are a few examples of brands that are prioritizing succession planning:

• Apple - Tim Cook has always outlined succession planning as a core value in the company framework. He even went on record to say that "every Apple board meeting in recent years has had succession planning on the agenda for all key executive roles."

• Amazon - Jeff Bezos is another CEO who publicly spoke about succession planning in his business. He spoke about it in 2014, outlining plans for himself and all other senior leaders at Amazon. This was put into practice when he announced he was stepping down as CEO and had already molded Andy Jessy as his successor. 

• IBM - This tech giant has shown succession planning in practice when the then-current SVP, Virginia Rometty, would be taking over as the company's first female CEO. This happened when the then-current CEO retired, and it was all part of a carefully calculated process to ready Rometty for the role. She'd been with the company since 1981 and had undergone development throughout her years to make her ready for the promotion. 

Try Our Free Downloadable Succession Planning Template

Start Building Your Succession Plan With Pingboard

Getting started with a succession plan doesn't mean starting from scratch. In fact, if you want a simple and visually appealing way of building your succession plan, check out Pingboard's org chat planning platform today. It will help you create everything you need for effective succession planning. 

Get started with a 14-day free trial that your entire staff is sure to love.

Try Pingboard for free by adding your employee data to this org chart template!

Ready to start creating your own succession plans? Fill out the form below to receive a simple succession planning worksheet, a competency-based succession planning template, and a CEO succession planning template.