Employee attrition occurs due to a multitude of factors. While some retire with advancing age, others relocate in search of improved opportunities. There are certain responsibilities that an employee continues to fulfill even after departing from the organization. It should be possible for the organization to promptly locate a replacement for the vacant position while ensuring that work operations remain uninterrupted. Nonetheless, it is not feasible for an individual to unexpectedly assume the position. For this reason, succession planning is crucial, and organizations must implement it in order to continue operations.
Succession planning is thoroughly covered in the Advanced Executive Certificate Course in Supply Chain Strategy and Operations Management. We have additional details regarding this course on our website.
Preceding succession planning is an acronym.
Succession planning is an organizational strategy designed to guarantee that in the event of an unexpected departure, there is no vacancy in any company positions. While particularly advantageous for leadership roles, its applicability extends to other organizational positions as well. Planning for succession entails ensuring that an individual is prepared to assume the vacancy. Personnel who possess the capability to perform additional duties are provided with appropriate training and maintained in readiness to assume those responsibilities in the event of an unforeseen departure from the organization. It retains its applicability even in the event of a vacancy caused by retirement, an event that is foreseeable.
The unanticipated departure of a senior-level employee can pose a significant risk to the organization. The resignation of a C-suite member generates significant media attention and has the potential to precipitate a precipitous decline in the company’s share prices. Conversely, an abrupt departure of this nature complicates the organization’s ability to formulate crucial decisions. This is the reason why succession planning is essential; each organization must have an individual qualified to assume the position at the ready. Ensuring a plentiful supply of qualified successors for both present and forthcoming senior positions is of the utmost. Indeed, it also
Promotion Or Hiring?
This brings us to the pivotal inquiry of whether the successor should be an internal candidate or an external candidate. It will depend entirely on the organization and the availability of qualified personnel. Both approaches offer distinct advantages. When an employee is chosen and trained from within the organization, it instills employees with optimism regarding their prospective career paths. It facilitates employee retention and fosters a more positive organizational environment. One benefit of promoting an employee from within is that the individual is well-versed in the organization’s ethos.
Certain organizations might experience a dearth of competent and qualified personnel to advance to higher-level roles. When this occurs, the firm will be compelled to hire an individual from the outside. While it might incur higher costs for the organization, an all-out reliance on its internal talent pool could result in stagnation. Recruiting individuals from outside the organization will aid in the generation of innovative ideas. Whether from the interior or the exterior, an urgent replacement is required; otherwise, the operation of the business will suffer. For this reason, succession planning is crucial for all organizations.
Internal Vs External Filling
Internal Filling
Short recruitment process as the top management knows the person’s skills and capabilities.
The company can give specific training to the employee in skills needed to take up the job.
Short induction process because the successor knows the procedures and culture of the company and most of the colleagues.
Better employee loyalty as they see the future of the company
Motivates other employees to work harder to reach higher positions.
External Filling
Outsiders bring with them new opportunities to network.
Previous conflicts and issues in the company don’t distract them from their job.
Someone from outside may enjoy better acceptance, especially in a leadership position.
They come with additional knowledge and skills.
Why Do Companies Need Succession Planning?
To Ensure Continuity
A succession plan helps uphold the firm’s vision and mission, ensuring that the focus on the company’s long-term plans remains intact. The board members of most companies wish to maintain the culture, which is possible with good succession planning.
Identify High-Potential Future Leaders
Another reason why succession planning is important is that it allows the company to identify high-potential employees. It allows the top management to understand their strengths and weaknesses. Such people exhibit high skills and a willingness to take up higher responsibilities. The awareness of employees’ skill levels makes the company future-ready, which is essential in a competitive market.
Motivates Employees
Another big reason for implementing succession planning is that it motivates the employees. Knowing they are all being considered for higher positions makes them work harder. The knowledge that the firm values them highly gives them extreme happiness, which motivates them to improve their work and learn new skills.
Manage Disruptions
In a competitive market condition, companies cannot afford to have any disruptions in their operations. The resignation of a top-level employee can temporarily put a stop to all company’s plans. It can greatly affect their competitiveness in the market. The reason why succession planning is important is that it allows the company to have a competent person to replace and continue the activities without any break.
Saves Money
It is common knowledge that hiring a person is more expensive than retaining an existing employee. Having a succession plan ensures that there is someone to replace executives who leave the company. It means the organisation doesn’t have to spend money and effort looking for suitable people outside.
The Dangers Of Not Having A Succession Plan
Uncertainty
Without succession planning, the company is exposing itself to an uncertain future. When top positions in the company are left vacant for a long time, it will not achieve the firm’s objectives. It will also create a feeling in the stakeholders about the security of their investment in the company. A company with such an uncertain future will also lose its credibility in the market leading to a fall in the business. It is why succession planning is important for all organisations.
Reducing Loyalty
When there are no clear succession plans, the company will be forced to make hasty decisions about replacing people. It could result in promoting the wrong person to a top position leaving out those more capable. Such action frustrates good workers and makes them think about leaving the firm. Employees may also not cooperate very well with the new person if they feel that the promotion was given to an undeserving person.
High Attrition
All employees are looking forward to growth in their careers. Most of them would prefer to move upwards in the same company instead of looking at opportunities outside. If they feel that the company doesn’t have a proper succession plan, they will be left to wonder if they have a future in the organisation. They will also feel that the company is not interested in their growth and development. It could lead to high attrition and is another reason why succession planning is important.
Wrong Hiring
Another danger of not having a proper succession plan is that it could lead to hiring the wrong person. When a leader resigns suddenly, the organisation will be looking to fill that position as soon as possible. This can lead to recruiting the wrong people without seeing if they are suitable for the position and the company culture. But when there is a succession plan, the company has time to hire correctly and train the person for the job.
You will learn the need for succession planning and the dangers of not doing it in the Advanced Executive Certificate Course In Supply Chain Strategy And Operations Management. You can visit our website to learn more about this course.
The Objectives Of Succession Planning
Improving Retention
Employee retention is crucial to all companies as finding suitable persons and hiring them is time-consuming. Recruitment and training new people are also expensive. It is why companies do everything in their power to retain employees. One of the main reasons someone leaves a firm is the feeling that there is no future in it. Training them and preparing them for higher responsibilities gives them hope that they have a chance to move upward in the firm. The ability to retain employees is why succession planning is important for all organisations.
Employee Development And Engagement
Succession planning allows the company to understand the capabilities of their employees. It also provides the chance to give training to the workers and make them ready for more responsibilities. Companies can also have a clear training and development process. Training and developing staff members also help to increase their engagement with the company. They become more involved in the job and perform better, knowing that the establishment values their work. It is another objective of the exercise and why succession planning is important.