Building a Future-Ready Workforce With Succession Planning

When I mention succession planning to others, most respond back with some narrative about grooming an heir apparent. Although that may be one path, one of the key realities of such a scenario is that it doesn’t always create long-term value for the organization. Why?  Because succession planning is so much more than naming the next person that is going to take Joe or Sally’s job. Yes, succession planning does involve identifying and developing new leaders to replace old ones when they leave, retire, or pass away. However, it's more than just finding a replacement. A robust succession plan aligns with an organization's strategic objectives, addresses workforce needs, and mitigates risks associated with leadership gaps. It goes beyond the top leadership roles and extends to career paths and employee development throughout the organization.

Many organizations either overlook the development and maintenance of a succession plan process or make critical errors that undermine its effectiveness. This is unfortunate, as an effective succession plan is a cornerstone of a resilient organization. It provides a structured approach to managing transitions, developing talent, and maintaining operational continuity. The core benefits extend across several key areas of the business:

• Risk Management and Stability: One of the primary functions of succession planning is risk management. The unexpected departure of a key leader can create significant disruption. A plan ensures that procedural and operational duties continue without interruption. Consider the financial roles a CEO or key executive might handle exclusively. A succession plan re-delegates these responsibilities, establishing a clear timeframe and chain of command to maintain financial stability. This process provides a roadmap for interim operations, offering stability during a crisis. Less than half of nonprofits, for example, have a written succession plan, leaving them vulnerable. A successful organization must be larger than its key personalities, and planning ensures it can thrive beyond the tenure of any single individual.

• Leadership and Talent Development: Succession planning is fundamentally about developing talent. It serves as a strategic investment in your people. The process requires organizations to identify skills gaps, forecast future needs, and allocate resources to bolster internal talent. By regularly and frankly discussing succession, you can review the skills your staff will need to implement the strategic plan and invest in relevant professional development. This focus on internal development creates a talent pipeline that aligns with long-term goals. It reduces the risk of leadership gaps and ensures the right people are in place to drive success. This is particularly important given that 45% of managers report their organization isn't doing enough to develop future leaders.

Common Mistakes in Succession Planning

Many organizations approach succession planning with good intentions but fall into common traps that render their efforts ineffective. Avoiding these mistakes is crucial for building a plan that delivers real value.

• Delegating Solely to HR: While HR plays a vital role, succession planning is a strategic leadership function. It should involve a core group of stakeholders, including senior management and the board or ownership, not be siloed within a single department.

• Focusing Only on Senior Management: The traditional view of succession planning centers on the C-suite. However, employee mobility is at an all-time high. A systematic approach ensures that every critical position has a potential successor, minimizing disruption across the entire organization.

• Thinking in Terms of Replacement, Not Development: The goal is not simply to find an "heir apparent." This narrow approach limits the organization's ability to select a leader who fits the current strategic needs. The focus should be on developing a pool of capable individuals, which allows for a more flexible and strategic selection when a vacancy occurs.

• Treating the Plan as a Static Document: Business needs evolve, and so do the skills required for key roles. A succession plan must be a living document, reviewed and updated regularly to reflect changing priorities and organizational goals.

It is also essential that your plan addresses the workforce of tomorrow, not simply the current state today! Today’s workforce is composed of up to five different generations, each with unique expectations and career aspirations. This dynamic presents both a challenge and an opportunity for succession planning. Younger generations, in particular, expect clear career paths and opportunities for development.

Failing to provide these pathways can lead to higher turnover, as evidenced by the drop in average tenure in architecture and engineering firms from seven to 4.9 years. An effective succession plan addresses this by creating transparent career ladders. It shows employees that the organization is invested in their growth, which is a powerful tool for retention. Integrating talent development across all levels makes the organization more attractive to new talent and more resilient to workforce changes.

How to get started

Creating a successful succession plan requires a structured, strategic approach. It should be integrated with your overall business strategy and involve key stakeholders from across the organization.

Start by aligning your succession planning with long-term organizational goals. Ask critical questions to guide the process:

• If the organization is expanding, which roles will be essential for driving growth into new markets?

• If the priority is stabilization, which roles are most at risk from turnover?

• What skills will be needed to implement the strategic plan over the next three to five years?

By connecting succession planning directly to business priorities, you can anticipate needs and address them proactively.

Next, identify critical roles and required competencies. While planning for all roles is beneficial, prioritize positions that are critical to operations. Conduct a risk analysis to evaluate how each role contributes to business outcomes. For these key positions, define the "must-have" and "nice-to-have" skills and traits. This involves creating detailed job descriptions that reflect not only current responsibilities but also future needs.

Assess your current talent pool to identify high-potential employees. Tools like the nine-box grid can help evaluate individuals based on their performance and potential, identifying those ready for the next step. This evaluation will highlight skills gaps within your organization, showing where you need to focus development efforts or consider external hiring. A strong plan balances promoting from within and recruiting externally. Developing internal talent boosts morale, reduces onboarding time, and reinforces company culture. However, external hiring may be necessary to fill significant skill gaps or bring in fresh perspectives. Capitalize on industry partnerships, mentorship programs, and specialized training to support both approaches.

The formal succession plan should be a detailed document that serves as a guide during a transition. Key components include:

• An identified interim leadership team with contact information.

• A clear outline of who is responsible for managing operations during an immediate departure.

• A complete list of resources, including access to digital systems, files, and passwords.

• A detailed communication plan with suggested messaging for internal and external stakeholders.

• A timeline for the transition and the search for a permanent replacement.

Finally, communication is essential. While the details of the plan may be confidential, the organization's commitment to development and planning should be transparent. This helps build confidence and engagement. Finally, the plan must be reviewed at least annually to ensure it remains aligned with the strategic direction of the organization.

Succession planning is not merely a crisis management tool; it is a fundamental component of strategic leadership. By avoiding common pitfalls and adopting a comprehensive approach, organizations can build a resilient, future-ready workforce. The process fosters stability, drives leadership development, and ensures that the organization can adapt and thrive through any transition. Investing the time and resources to create a living succession plan is an investment in your organization's enduring success. AOE has extensive experience helping organizations develop succession plans and we would love to hear your needs. Contact us today.