Succession planning is the process of identifying vital positions within a company and developing a proper action plan for individuals to assume those positions. It takes into account a holistic view of the current and future goals of a company, and ensures that it has the right people in the right jobs today and in the years to come. As Richard Ghilarducci points out, a succession plan typically identifies the future staffing needs of a company, along with the people with the skills and potential to perform in these future roles.

Richard Ghilarducci offers overview of succession planning

Succession planning is a strategic approach adopted by businesses to transfer important leadership positions to other employees or a team within the organization. Its primary goal is to facilitate a seamless transition and maintain operational continuity as people in leadership positions pursue new ventures, retire, or pass away. Succession planning and management serve as a means for a company to create an opportunity for the transfer of leadership to younger employees, allowing for a smooth transition of a functioning entity. By implementing a proper succession plan, companies can guarantee readiness in promoting and advancing all employees, not solely those occupying managerial or executive roles.

For succession planning and management, it is important to:

• Identify the required executive competencies on the basis of the future business needs, values and strategies of a company
• Identify high-potential individuals for possible inclusion in a pool
• Assess young, capable employees to identify strengths and skills gaps that help determine who will be in the high-potential pool
• Establish individually tailored development program for each and every high-potential individual that includes training, job rotation, special assignments and time with senior executives
• Select and place young professionals into senior jobs on the basis of their job performance, their experience and assessment of their potential for a specific job
• Monitor the system and top management support continuously

As Richard Ghilarducci points out,  succession planning is a form of a contingency plan; however, it is not a one-time event. Instead, a succession plan has to be orderly revaluated and updated every year, or as changes takes plan within a company.  Due to this reason, succession planning and management involves evaluating the skills of every business leader, and identifying potential replacements within and outside the company. In case of external replacements, training such employees becomes important so that they are adequately prepared to assume control.

In the case of larger companies, the board of directors commonly oversees succession planning apart from the chief executive officer (CEO). It ideally affects owners, employees, as well as shareholders. A larger company might train mid-level employees to one day take over higher-level positions. On the other hand, for small businesses and family-owned companies, succession planning commonly means training the next generation to take over the business.

Companies might find it advantageous to develop various types of succession plans. One such plan is the emergency succession plan, which is designed for the unexpected replacement of a crucial leader. Conversely, a long-term succession plan aims to prepare the company for anticipated shifts in leadership, allowing for proactive management of upcoming changes.