Succession planning is a huge benefit for many organizations. It can potentially protect a company from a worst-case scenario. Consider what would happen if your top employee suddenly quit? What would happen if multiple employees put in their notice at the same time? This would be a nightmare for many companies but one that could be all too real. Employees left their jobs in droves in 2021, which had experts dubbing this time as the “Great Resignation.” The US Bureau of Labor Statistics reported that 4 million people quit their jobs in July 2021. One reason for this could be the current demand for workers (there are more jobs than workers) so if an employee feels overworked or is burned out, there is likely something better out there. If you don’t have a succession plan as part of your business strategy, you could be left scrambling if a key employee quits. As an added benefit, a succession plan could help you retain your employees for longer, setting you up to be the employer employees want to work for.
What is Succession Planning?
Succession planning is a process that helps your existing talent advance and build their career path within your company by allowing managers to easily identify your best employees, so you can determine who will be able to take on key roles in the future. A proper succession plan ensures your employees know you are invested in their future by helping them achieve their goals and develop within your company, boosting their engagement.
4 Key Benefits Succession Planning Provides
Succession planning not only helps keep your existing workforce engaged but can also be a powerful tool to help secure your company’s future.
Four key benefits for adding a succession plan to your overall business strategy include:
Retaining Your Top Talent
Companies are feeling the pain of finding enough workers to fill positions. According to reports, five million fewer people are working than before the pandemic began and three million fewer are looking for work. With a succession plan in place, companies can easily adapt to talent scarcity by promoting from within, retaining their top talent. According to Indeed, succession plans show employees they’re valuable, which may make them stay with your company longer. Succession plans provide a clear direction for employees about their career advancement.
Identifying Skills Gaps
A succession plan can not only provide a roadmap for your employees’ future but highlight any areas where skills are spread thin across your workforce. For example, maybe you only have one person that can do payroll. If that employee has an emergency, the rest of your workforce might not get paid on time. A succession plan allows you to look at every aspect of your organization, or just parts of it, to determine where gaps need to be filled. As technology changes, workers need to continually update their skills to keep up with core tasks and responsibilities, according to AIHR. Identifying existing skills gaps gives insight into your current workers’ skills, boosts development, helps with overall strategic planning and can also improve recruitment as you can target specific skills.
Retaining Institutional Knowledge
Baby boomers are retiring in large numbers. Early in the pandemic, nearly 30 million Baby Boomers left the job market. Many boomers likely held leadership roles so it makes sense that according to research, the number of people in leadership roles that plan to retire in the coming years is greater than those entering the workforce. Companies can’t afford to be left without a leader’s knowledge. Succession planning can help transfer the knowledge of outgoing employees to the ones slated to step up into their places because even the most loyal employee will retire at some point.
Averting Potential Crisis
Many companies realize that if a leader or an employee with highly-specialized knowledge suddenly leaves, it could seriously disrupt operations. When a departure is unscheduled, there’s not an opportunity to make accommodations to minimize its impact, according to Indeed. A succession plan can help minimize the disruption by making sure employees share knowledge. Succession planning not only meets the needs of the company but the employees as well. The process helps employees feel empowered to come forward for open positions and train them if they don’t currently have the required skills.
Preparing a succession plan is a process that should focus on a smooth transition. Download our guide, “Top Tips for Succession Planning, Planning Today Can Protect your Tomorrow,” to learn some best practices.
One practice that can make the process easy on companies is by using succession planning HR software. Arcoro’s Succession Planning software automates the process by giving companies the power to accurately review employee performance and readiness with scorecards, comparative ratings and 9-box Talent Matrices. This module can be integrated with various modules, systems, platforms and more within human capital management (HCM) and enterprise relationship planning (ERP) suites.
The module helps to facilitate the sharing and streamlining of data between administrators and leadership to improve reporting, increase transparency and enhance the decision-making process based on evidence. Learn more by requesting a demo.