What Is Succession Planning? Your Steps to Success

Can your workers answer the question, "What is the succession plan at your company?" They can, if you've shared it. And you can, if you’ve built one for your accounting department or organization.

Effective succession planning has advantages for your staff members, by giving them a self-esteem boost and an answer to the question of what’s next for them. For managers and employers, it’s a proactive measure that gives them an alignment of talent development with the company’s future leadership needs.

What is succession planning?

It's a strategy for identifying and developing future leaders at your company — at all levels. Succession plans are used to address the inevitable changes that occur when employees resign, retire, are fired, get sick, or die. They make sure the business are prepared for all contingencies by identifying and training high-potential workers for advancement into key roles.

This is a critical but often overlooked process for companies, and something they all need to continue to run smoothly. It's also a manageable event, not a major organizational crisis. The end result is a well-oiled machine with a multitude of favorable outcomes, not least of which is staff retention.

Here are seven suggestions to kick-start your succession planning, whether you have a small, family-owned business or an multinational corporation:

1. Be proactive with succession planning

It can take time to find and prepare a promising candidate for a leadership role. As such, don’t dawdle with this part of your plan. Even if you don’t think you’ll need a replacement in the near future, prepping someone to assume an important role creates an invaluable safety net.

Think you need to bring in temporary accounting and finance help during this planning phase? We can help with that.

2. Keep an open mind

While the obvious successor may be the second in command, don’t disregard other promising employees. Look for people who best display the skills necessary to thrive in higher positions, regardless of their current title.

3. Make the vision known

Include potential managers in strategy conversations to help them acquire planning and leadership skills, as well as a broad vision of the organization and its objectives. Consider sharing your succession planning with human resources and your board of directors.

4. Offer regular feedback to protégés

When someone uses well-honed presentation skills or outperforms on a project, make note of it. Keep track of these achievements in a top-performer file so you have something to reference the next time a management position opens. Diligently chronicling topics like strong work and achievement will also come in handy during performance reviews.

5. Provide training to peak performers

As you identify your top performers, offer mentoring relationships, job shadowing and training, which are true articles of value to help them develop new skills and refine existing ones. Remember that good leaders not only need technical acumen but also strong interpersonal skills, including standout verbal and written communication abilities, as well as tact and diplomacy.

6. Do a trial run of your succession plan

A vacation is a great time to have a potential successor step in to assume some responsibilities. The employee will gain experience while you learn how prepared the person is to take on a bigger role.

7. Use your plan to develop a hiring strategy

Once you’ve identified internal employees as successors for key roles in your organization, take note of any talent gaps. In this way, the succession planning process can help you identify where to focus your recruiting efforts.

Last but not least, a succession plan is an investment in your company's future. If you are making plans to move up the ranks in the C-suite, bear in mind you’ll need a successor, too, who’s enthusiastic about being a boss.

Knowing the importance of identifying potential future leaders and developing a succession plan, you help employees feel valued for their contributions and eager to realize their potential within the company.