Succession planning is planning performed by a business or other hierarchical organisation in which contingency plans are outlined to replace the organisation's current leadership. Succession planning is a form of risk management in which the organisation attempts to prevent loss of productivity by developing a plan to continue operations as normal.
Succession planning generally involves the collaboration of an organisation's top leadership to develop strategies to replace either key members of the organisation or an entire generation. For example, a business may wish to perform succession planning to identify a person to take interim control of the organisation if the chief executive becomes incapacitated. Similarly, an organisation may wish to consider a broad strategy for how it will replace its current group of members as they leave the organisation or die.
Succession planning takes two main forms: crisis and long-term. Under crisis succession planning, an organisation develops an emergency plan of action in the event that key members of the organisation are no long able to fulfil their role. This planning would identify people who could immediately fill the vacant spots and allow for continuity of duties. Long-term succession planning identifies actions that can be taken over many years. This kind of succession planning focuses more on general strategies for filling vacancies, such as new recruitment campaigns.
Succession planning allows organisations to mitigate risk. A good succession plan is like an insurance policy, one that allows the organisation to survive challenging events intact. If the plan is well put together, then the organisation may be able to avoid step financial losses and inefficiencies. For example, if a chief executive dies, but the company has a succession plan in place, it may minimise lost productive and maintain investor confidence.
The biggest drawback to succession planning is that in some cases it can be a waste of resources. If the contingency that is being planned for is unlikely to happen, the resources used to make the plan might be better shifted elsewhere. Similarly, the plans developed may not remain viable. As time passes, the plan could become outdated, forcing the devotion of more resources to keep it current.
According to Business First, one of the key components in a succession plan is transparency. After a plan a plan has been developed, it should be shared with all relevant parties. This provides key players, including successors, a clear understanding of their roles in the organisation's future.