Succession planning is a business strategy that helps ensure a company’s smooth operation when employees leave due to retirement or new opportunities. Succession planning for an organization includes strategic planning for identifying and developing new potential leaders as replacements for leadership roles that become vacant.
It also helps cut recruitment costs and prevents additional knowledge loss. Effective succession planning involves capturing and transferring institutional knowledge and ensures that crucial information and expertise are not lost during transition.
Ongoing succession planning is key to many businesses. Identifying and developing current employees during their employment keeps them engaged and loyal. Employees can be groomed for future leadership roles by mentoring, job rotation, and cross-training. Organizations that endeavor to build a culture where knowledge is shared offer opportunities for employees to grow and develop and potentially step into a vacant leadership role.
Five keys to building a plan
Successful succession planning should align with the overall business strategy to ensure that investment in future leaders is targeted and reflects the organization’s strategic direction. Formal plans should include five steps.
The first is to identify critical roles, which are roles that are critical to the organization’s operations, strategy, and long-term growth.
Second, internal talent should be assessed, including things like reviewing performance evaluations, interviewing employees and their leaders, and identifying development opportunities.
Third, the talent pipeline should be developed, focusing on the transfer of knowledge. Utilize things like cross-training, job rotation, and exposure to executive decision-making.
Fourth, implement the succession plan. Talent pipelines allow organizations to execute their succession plan. HR leaders can use this resource to work with internal recruitment teams to find the right person.
Lastly, monitor and evaluate the effectiveness of the plan and employees. Ongoing succession planning requires monitoring, evaluation, and adjustment. Organizations should track metrics, including retention rates, internal promotion rates, and the success of successors in new roles.
Common obstacles organizations face
Organizations can struggle with successful succession plans. Common obstacles that some organizations face include the lack of senior leadership buy-in, about 70% of succession plans fail because of this lack of support.
Resistance to change is another common obstacle as some leaders feel threatened by plans to replace them. Limited resources can also hinder developing and executing plans as they require dedicated time, staff, and money. Inadequate data and metrics can also impact the succession plan, by investing in the right tools and technology to capture and analyze data, credit unions can implement successful succession plans.
Don’t wait till you need it
Organizations that prioritize succession planning and use HR professionals’ expertise will be better prepared to navigate the changes and drive long-term success even though challenges may exist. They will have developed a pipeline of talented leaders who are engaged and ready to take on leadership roles when needed. If you don’t have a plan in place, now is the time to get started and make sure your credit union is prepared for the future.
