Succession Planning

• Business Management Theory
• Succession Planning

Introduction

Employees don't stay with firms forever; they leave if their circumstances change or if they want a new challenge. Its important to think about what you will do if an employee leaves especially if they are carrying out a key or specialist role.

A plan detailing how to replace employees in the future is known as a Succession Plan.

The diagram below is an example succession plan and it details how you will develop employees so that they can take over from those who leave the company.

Why Succession Plan

Is there any value in succession planning? Surely employees can simply be replaced as and when they leave? Yes all firms need a succession plan, some employees will be easier to replace than others. If an employee's role requires a specialist skill, it may take time to train someone else to carry out the work competently. Similarly if the job role requires a person with personality traits that you can't instill in a person such as vision, innovation, ethos, emotional intelligence or specific ethical values it may take time to find the "right person". A succession plan will help you effectively manage employee departures by planning for the departure before it occurs.

Examples Showing What Happens if You Don't Succession Plans?

Example 1 - Tesco PLC

After working as a marketing executive for Tesco Sir Terry Leahy was appointed to its board of directors 1992. In 1997 Leahy took over as chief executive after Lord MacLaurin (his mentor) stepped down. MacLaurin wanted a successor who would be able to grow the business in the UK and internationally Leahy managed to increase Tesco's UK market share even though upon his appointment Tesco was already the UK's biggest retailer. In March 2011 Philip Clarke took over from Leahy but his tenure lasted a little more than three years. Clarke failed to stop Tesco's decline in market share or contain losses caused by unsuccessful international expansion. In July 2014 despite a profit warning Tesco's share price rose on the news that Clarke was leaving the company.

Example 2 - Apple Inc

Steven Jobs was the co-founder of Apple Inc, after disagreement with the board of directors he left the company in 1985. Although Apple enjoyed success after Jobs departure, by 1996 Apple was suffering from failed projects and large employee redundancies. In 1996 Apple purchased Jobs' company NeXT Inc and Jobs joined Apple as a consultant. In 1997 Jobs took over as interim Chief Executive Officer and rebuilt the company, rescuing Apple from bankruptcy so that it was profitable again by 1998. By 2011 Apple was the most valuable customer facing brand, since Jobbs return its share price had increased by 9000%. Predictably the news of Jobs' death in October 2011 caused Apple's share price to fall.

Write Your Succession Plan

The first step is to make a list of job roles/positions in your firm e.g. receptionist, administrator, team leader, assistant manager, director. Next to each job write down the skills, qualifications, experience and if applicable personality traits needed for each role.

For each job role, think about the steps you need to take now and on an ongoing basis , so that you will be ready to fill that position with a new employee should the job position become vacant. The steps required will depend on the type of position; jobs requiring generic skills and qualifications can be quickly filled through internal and external recruitment. Such jobs will not need long term planning and can be filled through effective recruitment procedures. However trades such as engineer, surveyor, producer may require you to start training apprentices in preparation for the full role in two to five years time.

Finally gather your lists and notes and use them to write a succession plan showing how you will prepare for future job vacancies. Each task should be SMART, show who is responsible for it and have a clear deadline.

Employee Development Through Mentoring and Shadowing

Employees are often prepared for senior positions through mentorship programmes where senior employees will work closely with junior employees providing them with information and guidance. It is important for the mentor to not offer advice as effective mentoring is about supporting the mentoree to find their own solutions. During shadowing junior/new employees will follow experienced employees to gain an understanding of what the experienced person's job involves.

Conclusion

Succession plans are vital, otherwise when employees leave, firms will suffer through lack of employees or because they have filled vacancies with employees that are unsuitable for the role. Each job role needs to have a succession plan as each job role needs to be performed by a member of staff. Succession plans should be regularly reviewed with the people responsible for implementing them to ensure they are effective and relevant.