Succession Planning Best Practices

Setting up a succession planning framework is a critical component of any sound organizational strategy that plans to ensure continuity, stability, and sustained growth. By identifying and developing talent within the organization, businesses can mitigate risks associated with leadership turnover and position themselves for future success. In some cases, succession can be something as simple as the transfer of business from father to son; however, most of the time, succession planning is an incredibly involved process with several stakeholders and deeper implications.

In this comprehensive guide, we’ll identify several succession planning best practices, examine the best models for succession planning, provide real-world succession planning examples, and offer practical tips on how to effectively plan the succession of your business.

What are the main steps in the succession planning process?

Questions surrounding your organization’s succession strategy should play a major role in any exit planning discussions. A successful succession planning process typically involves several key steps:

1. Assessment of organizational needs. Begin by conducting a thorough assessment of your organization’s current and future leadership needs. Identify critical roles, key skills, and competencies required for success.
2. Identification of talent. Once organizational needs are established, identify potential successors for key positions. Look beyond traditional hierarchies and consider employees with high potential and relevant skills.
3. Development planning. Create individualized development plans for identified successors. Provide training, mentoring, and stretch assignments to help them acquire the necessary skills and experience.
4. Performance monitoring. Continuously monitor the performance and progress of potential successors. Provide regular feedback and support to check that they are on track to meet development goals.
5. Succession plan implementation. Implement the succession plan by promoting internal candidates to key roles or strategically hiring external talent when necessary. Communicate changes transparently to all stakeholders.

What is the best model for succession planning?

There is no one-size-fits-all approach to transferring a business to a successor, as the optimal model depends on the unique needs and circumstances of each organization. However, some commonly used models implement succession planning tools like talent pipelines, leadership development programs, and succession committees.

Talent pipelines

Establishing talent pipelines involves proactively identifying and nurturing internal talent to meet future leadership needs. By systematically assessing employees’ potential and providing targeted development opportunities, organizations can cultivate a pool of qualified candidates for key roles.

Talent pipelines promote employee engagement and retention while planning for a smooth transition during leadership turnover. Through ongoing investment in employee growth and development, organizations can build a sustainable pipeline of capable leaders ready to step into leadership positions when needed.

Leadership development programs

Leadership development programs are structured initiatives designed to prepare high-potential employees for future leadership roles. These programs typically include a combination of formal training, mentoring, and rotational assignments to develop well-rounded leaders. By providing participants with exposure to different aspects of the business and opportunities for skill development, leadership development programs prepare individuals to take on increasing levels of responsibility within the organization.

These programs not only develop leadership skills but also foster a culture of continuous learning and growth, which can drive organizational success in the long term.

Succession committees

Succession committees play a crucial role in overseeing the succession planning process within organizations. Comprising senior leaders and key stakeholders, these committees are responsible for evaluating potential successors, reviewing succession plans, and making recommendations to the executive team. Succession committees make sure that succession planning efforts align with organizational goals and priorities, helping to foster transparency and accountability throughout the process.

By actively engaging in succession planning activities, these committees help organizations identify and develop future leaders, which can mitigate risks associated with leadership turnover and preserve business continuity.

Read more: The risks of starting a business

Succession planning examples

Several organizations have successfully implemented succession planning strategies to ensure smooth leadership transitions and long-term organizational success. Some examples of a succession plan done right can be found in the following companies:

General Electric. GE is known for its rigorous leadership development programs, such as the Experienced Commercial Leadership Program (ECLP) and the Edison Engineering Development Program (EEDP). These programs identify and develop high-potential employees for future leadership roles within the company.

Procter & Gamble. P&G’s Leadership Development Programs are part of their robust succession planning process, which includes regular talent reviews and leadership development initiatives. The company emphasizes the importance of grooming internal talent and has a track record of promoting from within.

Johnson & Johnson. Johnson & Johnson’s Leadership Development Program (LDP) is designed to identify and develop future leaders across various functions and regions. The program offers participants exposure to different parts of the business and provides opportunities for career advancement.

How do you effectively plan a succession?

Effective succession planning requires assessing needs, identifying successors, developing plans, monitoring progress, and transparent communication for organizational readiness. As you build out your succession planning strategy, consider using the following succession planning template:

1. Identify key roles. Start by identifying critical roles within the organization that require succession planning.
2. Assess current talent. Evaluate the skills, experience, and potential of existing employees to determine potential successors for key roles.
3. Develop succession plans. Create individualized development plans for identified successors, outlining specific goals, milestones, and development activities.
4. Implement development initiatives. Provide training, mentoring, and stretch assignments to support the growth and development of potential successors.
5. Monitor progress. Continuously monitor the performance and progress of potential successors, providing feedback and support as needed.
6. Review and adjust. Regularly review and adjust succession plans based on changes in organizational needs, employee performance, and external factors.

Additionally, you should consider partnering with financial professionals who offer succession planning as part of their larger wealth planning for business owners and corporate executives offerings, like those at Avidian Wealth Solutions.

Give Avidian Wealth Solutions a call, and see these succession planning best practices in action.

Effective succession planning can be a deeply involved and lengthy process. It requires an honest assessment of your organization’s needs, evaluation of the available talent pool, and utilization of tools and systems that can develop future leaders capable of making high-level decisions. 

At Avidian Wealth Solutions, our team of business consultants can work with you to develop a comprehensive succession plan designed to streamline the succession planning process, identify high-potential talent, and develop future leaders effectively. Our firm works out of a boutique family office-style environment that allows us to provide personalized attention to our clients, assist them in implementing best practices in succession planning, and help them drive organizational success.

Schedule a conversation with one of our tax advisors in Houston, Austin, Sugar Land, or The Woodlands today to see how we can help you achieve your business goals while ensuring a smooth transition to your organization’s next chapter.

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