Succession planning: simple steps for effective preparation

Saying goodbye to a key employee is hard - replacing them is even harder. Learn how to succession plan to guarantee business continuity during times of change.

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Written and reviewed by:
Helena Young

Succession planning involves investing in your company’s future leadership team and senior staff to prepare for the loss of a key team member. Essentially, it’s a contingency plan for your workforce talent.

Nobody wants to think about a valued co-worker leaving. But in today’s competitive jobs market, even the most talented and loyal employees – or founders – might receive a rival job offer they can’t refuse. When this happens, leavers take their skills and experience with them. If there isn’t an obvious substitute, the fallout can be disastrous.

Effective succession planning is the cheat code to avoiding this worst-case scenario. With the right prep, you’ll have a replacement candidate already lined up to go, ensuring a smooth transition period and making a stressful process much easier to handle.

So what exactly is involved in succession planning? How do you get started? We’ve broken down succession planning into simple, actionable steps that you can get going with right away.

Get started now with the free ClickUp succession plan template

Before we take you through our guide to succession planning, it’s a good idea to download a pre-made, well-organised plan so you can start inputting as you go. We recommend the free ClickUp succession plan template.

It’s available for zero charge and has already mapped out key metrics to measure, such as employee specialisms, employment information, and succession potential. View the template below and then sign up to ClickUp to get started with your own version.

ClickUp succession planning

What is succession planning?

Succession planning is a people management strategy. The process involves finding and developing future leaders or C-Suite executives, as well as more specialist individuals, for that dreaded day when an indispensable employee hands in their notice.

Every company has crucial leadership roles – these include department heads, board members, or even founders and the CEO. When these individuals choose to leave, it can be a nasty surprise for organisations that haven’t prepared sufficiently. That’s particularly true for startups, which tend to have smaller, more specialist teams.

In simple terms, a succession plan will ensure that key individuals can be replaced at short notice should they choose to retire, resign, or relocate.

Succession planning can seem overwhelming, with a lot of moving parts to consider. But, change is constant in business. The truth is, succession planning is a necessary process with lots of positives.

What do the experts say?

Ed Reid, managing director of business coaching franchise The Alternative Board, says “Whilst the primary reason for a succession plan is to be ready for disaster, it is exciting to plan for change and being involved can motivate your employees and maintain their company loyalty.”

Why is succession planning important?

Succession planning has never been more crucial than in today’s competitive jobs market. Just after COVID-19, the so-called great resignation saw a wave of working-age people quit the workforce. The tide has yet to turn as today’s bad economy means dissatisfied workers continue to resign. Often, unexpectedly and without warning.

In this climate, succession planning is a must. As hiring managers struggle to find qualified candidates for a role, internal recruitment is the only sure way to avoid a costly and sparse talent market.

Thankfully, with the right succession planning, you’ll have a wealth of home-grown individuals to choose from to fill a vacancy. Consequently, HR managers will avoid making random or rushed selections that negatively impact on business performance and finances.

Case study: Microsoft

Microsoft logo at office building, Munich Germany

There are plenty of examples of businesses that have been thrown into chaos after being unprepared for the resignation of a key player. Namely, Steve Ballmer, who stepped down as CEO of Microsoft in 2013.

Despite being a global technology giant, Microsoft had no plan for who would replace Ballmer. Instead, it recruited externally, in a six-month long process that left the company effectively in limbo until a replacement, Satya Nadella, was found.

Proper succession planning would have helped Microsoft to avoid this undesirable scenario.

What happens if you fail to succession plan?

If you’ve seen the in-fighting travails of the Roy family in HBO show, Succession, you’ll already know that finding a successor is no easy feat. Looking for someone to take over a key leadership role that you’ve lovingly nurtured (or fiercely held onto) is difficult to imagine. This is particularly the case if you’re waving goodbye to the business you yourself started.

Logan Roy

Logan Roy contemplates his poor succession planning – photograph: HBO/David M. Russell

Done poorly, you’ll be like Logan Roy, stuck between competing unlikeable candidates and unable to decide. Typically, this leads to an external replacement being rushed in quickly who doesn’t know the dynamics of the organisation. The result can have the following negative impacts:

  • Time – under-qualified candidates need training to get them up-to-speed, which means more time and resources spent on onboarding and learning.
  • Finances – a bad hire at mid-manager level can cost a business more than £132,000 in one year. If you’re having to do this multiple times, the penalties will add up.
  • Company culture – a poorly-judged hire might also be a bad cultural fit for your company, which can damage organisational culture.
  • Productivity – if your new hire is a manager, they might curtail productivity by failing to ‘gel’ with co-workers and encourage cohesive team working.
  • Morale – if a team member feels they are being mismanaged, they may feel disengaged, leading to low staff satisfaction that might trigger other resignations.

How to do effective succession planning

There is no single ‘right’ way to do succession planning. The best strategy depends on the unique make-up of your organisation – particularly if you are a founder who is leaving the business you started.

For example, if you are a very hands-on leader who looks after multiple responsibilities, you need to choose whether to spread these duties across multiple individuals or departments.

That said, here is a general, three-step outline of the steps to follow to keep the succession planning process as smooth as possible:

Step 1: Identify the critical roles in your business that need to be prioritised

To begin succession planning, reflect on the roles and responsibilities that need to exist to protect business continuity. Then, take the information you’ve compiled and use it to create ‘job profiles’.

These describe jobs that require specific licences or qualifications, like an accountant, or they might be famously difficult to hire for, like a software engineer. Either way, you should have a good understanding of what each role entails so you can more easily locate a suitable replacement.

Now is also a good moment to think about new business challenges that might be waiting in the wings in the near future. For example, given the current labour shortages, a recruitment manager might be a critical hire this year if you work in an industry with high turnover.

Step 2: Identify employees that have the most potential to succeed

In the free ClickUp succession plan template, type up a shortlist of employees that could succeed the current post-holder. Remember to think long-term; they don’t have to be ready to lead the nation tomorrow morning.

Using ClickUp’s ready-made columns, list factors that might influence each candidate’s suitability like their start date or industry specialism. Other relevant notes, like their supervisor, can also be added.

Finally, use these criteria to allocate a ‘succession potential’ score to each person ranging from ‘High’ to ‘Low’. Don’t worry about discarding low-potential employees. They might have moved dramatically up the scale in a year’s time.

Step 3: Develop a training program to help talent step into their chosen roles

No-one is born to be Chief Financial Officer. Potential successors need long-term support to reach that level of knowledge. As the fourth step, highlight areas for growth within each worker and outline a strategy to kickstart career development.

Designing a ‘hands-on’ training program is the best way to achieve suitability. For example, you might choose to instruct individuals to shadow various departments to understand the business on a granular level. Or, connect them with a mentor.

What do the experts say?

Simon Gardiner, co-founder of technical recruitment company Carrington West, cautions that companies should invest in long-term training to create a high-performance culture for “truly successful succession planning.

“Identifying a successor is not an overnight process,” he adds. “People can’t simply be selected, they have to desire to perform their new role. If you have a poor retention rate, plans can be torn up as quickly as they are designed.”

Five top tips for effective succession planning

  1. Look sideways – succession planning might not be a promotion for the successor, but a sideways progression. For example, the Head of Sales becomes Head of Marketing. Based on the choices available, or even your business strategy, this could be the smarter choice.
  2. Continuously update your plan – succession plans should be evaluated and updated each year to reflect the state of the market or business. With the impending recession, you might resolve to make the Head of Accounting a critical role due to its relevance to financial reporting/planning, for example.
  3. Get advice – succession planning does take time, which small business owners are often short of. Third-party HR consulting firms can take on a lot of the hassle and work directly with managers to design a succession plan.
  4. Employ technology – cheaper than using a HR consultancy is to sign up to project management software. Many have free succession plan templates you can download for free, such as the ClickUp succession template.
  5. Think outside the boardroom – if you’re solely reliant on one person to keep the business moving – for example, a high-level engineer – you could be setting yourself up for failure. Increasingly, succession planning should be utilised not just for C-Suite roles, but for any technical role requiring expertise.
What do the experts say?

Dominic Ashley-Timms, CEO of Notion Business Coaching, says that business owners need to be prepared to step back and relinquish control to others when there is a learning opportunity.

“People become leaders by being put in harm’s way,” explains Ashley-Timms. “It’s hard for managers to say ‘actually, there’s someone who could benefit more from solving this’ That’s the mental shift that needs to happen.”

When should you begin succession planning?

We spoke to three experts about the exact timeline of succession planning as a small business owner. All of them gave the same, short answer: as soon as possible.

Really, a succession plan begins with your first hire. After all, every new team member is onboarded to achieve a business objective. Even a temp secretary might be able to grow through the ranks to become Chief People Officer in ten years’ time.

Katy Camidge is Chief People Officer at The University of Law. Camidge says that “early conversations around career aspirations, what interests and motivates an individual will soon provide the business owner with an overview of future leadership suitability in the organisation.”

Get off on the right foot. With every new senior hire, edit your succession plan template to document a list of candidates with future succession potential.

Design a Succession Plan Today

Download the free ClickUp template to start planning for a smooth leadership transition

Download ClickUp template
Succession Planning FAQs
  • Who is responsible for succession planning?
    In a small business, the owner or founder is usually solely responsible for succession planning. If you are larger than most, or specialist enough to have a HR team, you might share or designate responsibilities.
  • How do you write a succession plan?
    Firstly, begin by locating the roles in your organisation that are critical to success. Then, outline the skills required to fulfil these responsibilities. Finally, make a list of ‘maybe’ candidates, and score their knowledge and experience to find high-potential replacements.
  • Why do succession plans fail?
    Lack of training can sink a succession plan. Having identified a potential successor, evaluate their level of expertise, interest, and skill set for gaps and implement a training programme that’s specifically designed to iron out weaknesses.
Written by:
Helena Young
Helena is Lead Writer at Startups. As resident people and premises expert, she's an authority on topics such as business energy, office and coworking spaces, and project management software. With a background in PR and marketing, Helena also manages the Startups 100 Index and is passionate about giving early-stage startups a platform to boost their brands. From interviewing Wetherspoon's boss Tim Martin to spotting data-led working from home trends, her insight has been featured by major trade publications including the ICAEW, and news outlets like the BBC, ITV News, Daily Express, and HuffPost UK.

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