6-Step Succession Planning Process
SIGMA’s 6-Step Succession Planning Process
The succession planning process is dynamic – as organizational needs change, the succession plan must evolve as well. It is important to consider how employee aspirations and talents can be aligned with the internal and external environment of the organization . Robust succession management provides a roadmap for success, ensuring the necessary structure to support effective, efficient, and consistent communication and implementation throughout all levels of the organization.
Here, we will introduce you to SIGMA’s 6-Step Succession Planning Process. Check out the overview for a high-level summary, as well as associated tools and templates. Below, we will walk you through each step in more detail and show you where you can download our free resources.
Why Plan for Succession?
Most organizations recognize the importance of succession planning, and yet over 1 in 3 companies don’t have a plan. This can be costly. According to a recent study by Harvard Business Review (HBR), the S&P 1500 forgoes close to $1 trillion in market value each year due to poorly managed CEO and C-suite transitions. HBR estimates that better succession planning alone could help increase annual company valuations and investor returns by 20-25%. Unplanned succession often forces companies to hire externally, rather than benefiting from a well-developed internal talent pool and leadership pipeline to feed succession. Most people know this. SIGMA has worked with thousands of organizations across North America, and what CEOs continuously tell us is that they don’t plan for tomorrow because they can hardly keep up with the demands of today. Planning for succession certainly requires an investment of time and effort, which is why we’ve developed a practical and convenient guide to our succession planning methods that walk you through each stage of the process.
Download SIGMA’s Succession Planning Guide and begin creating your succession plan today.
SIGMA’s Succession Planning Process
SIGMA uses a six-step succession planning process. Each step has its own tools and templates. This easy-to-follow succession planning outline will help you understand how you can use SIGMA’s six-step process to create a succession plan for your organization.
For more instructions as well as links to download SIGMA’s form-fillable PDF templates, click on the drop-downs below.
There is no shortage of leadership roles that would benefit from proper talent assessment. However, it is critical to take a measured approach when introducing succession planning into an organization for the first time. With this in mind, the first step in the succession planning process is to identify those key roles your organization should target based on urgency and importance to the business operations. These roles are called “Critical Roles.” Try using SIGMA’s Critical Role Identification Questionnaire below to help you identify which roles are critical for succession planning in your organization.
TOOLS/TEMPLATES: Critical Role Identification Questionnaire
Once you’ve narrowed the need to your most critical positions, you can then focus on understanding the requirements of each position. Success profiles are documents that outline the skills and abilities needed to succeed in a particular position. Success profiles are similar to job descriptions in that they include position demographics (location, level, direct reports), and role requirements (education required, skills needed, and duties to be aware of). However, a success profile goes above and beyond traditional job descriptions in that it also includes leadership competencies that are needed for success in a role, or will be currently needed for success in the future.
Use SIGMA’s Success Profile™ template to organize your thoughts and take advantage of valid and reliable leadership assessments like SIGMA’s Leadership Skills Profile – RevisedTM (LSP-R) to make sure you’re getting objective information about key positions and current incumbents.
Once you have developed an understanding of which competencies are important for success in a critical position, you can begin to nominate potential succession candidates for that position. Start the process by using SIGMA’s Succession Candidate Nomination Survey to help your succession advisory team evaluate the potential of each candidate. Results from the nomination survey are used to populate a Succession Bench that groups successors based on their readiness for the critical role and provides an ‘eye-test’ measure of bench strength for the incumbent’s position. A well-maintained Succession Bench is also a great way to measure the success of your overall succession plan.
To fill out the nomination survey, start by listing the succession position and putting your name down under who the nominations were completed by. Don’t forget to date your entry. Next, list the names of potential succession candidates and the positions they currently hold. For each candidate, provide an estimated timeline for how long the candidate will need before they are ready to take on the position. For these estimates, it’s important to consider input from multiple sources. Consider consulting current role incumbents, senior management and succession advisory teams, leaders, peers, and direct reports of the succession candidate. To add context to your evaluation, take note of any additional information on the potential successor and their skills along with their ratings. Be sure to complete the Succession Nomination Survey for each succession candidate.
Once you’ve completed the survey for each critical role, fill out the Succession Bench Template to organize who your top candidates are for each critical position in your organization. To fill out this form, first indicate incumbent and urgency information for the key position and list succession candidates according to three levels:
- Level A: Succession candidates ready for role in less than 3 years
- Level B: Succession candidates ready for role in 3 to 5 years
- Level C: Potential successors ready for role in more than 5 years
Provide the name and demographics for each succession candidate and record their progress over time. Use the Succession Bench template to track the overall strength of your succession bench as well as to monitor the success of individual candidates in improving their skills and becoming more qualified over time.
The Nomination Survey is only the first step in evaluating your bench strength. At this stage in the succession planning process, there is an incredible opportunity to add objectivity through scientifically validated leadership assessments. Talent assessments do not replace an evaluation of the succession candidate’s history and experience, but rather, they add an objective perspective to understanding candidate strengths and development opportunities. All succession plans should incorporate scientifically-validated assessments to better understand each candidate’s readiness for future roles.
To assess your candidates’ development needs, fill out the Candidate Profile Template. On this template, you will indicate target position information and report succession candidate demographics, education, and experience. Use your Success Profiles to provide position criteria, and use validated assessments (like SIGMA’s LSP-R) to evaluate the succession candidate on qualities required for the target role. List notable gaps between current candidate skills and those required for the target position in each category, then use this worksheet to identify priorities for candidate growth and talent development opportunities.
After assessing talent and identifying development needs, it’s time to create a development plan. Creating talent development plans is the brunt of effective succession planning. These plans should be individually customized for each succession candidate and are designed to help candidates close gaps in their skillsets and/or experience. This will help them progress in their readiness to fill future roles in the company. To help structure the talent development process we’ve created a Development Actions Form that identifies gaps in talent and allows you to monitor the development progress of succession candidates.
SIGMA recommends creating a development plan for, at a minimum, all your high-potential succession candidates. In a perfect world, you would have talent development plans in place for your entire Succession Bench.
To fill out the Development Actions Form, begin by providing information on the succession candidate and their current role in the organization. List the critical role that the individual may be a candidate for. Next, choose the top development areas from the Candidate Profile and rank the candidate’s development opportunities based on two criteria:
- What are the largest gaps between role requirements and the succession candidate’s abilities?
- What are the most important or frequently used skills of the role?
Work with the succession candidate to fill out their Development Actions Form and mutually decide which areas of talent development to focus on in the short, medium, and long-term. After you’ve selected top development areas, decide on specific talent development activities. Make sure you work together with each succession candidate to find relevant and accessible development opportunities that they are interested in. Try to provide a range of activities that will ensure the candidate receives well-rounded training, and use this worksheet to track progress and completion.
Measuring success is an often overlooked, but very important part of every succession plan because it allows you to track and communicate year-over-year progress. Tracking measurable progress indicators and regularly sharing the results with key stakeholders demonstrates the value of your succession plan and keeps its importance on top of mind.
Get started by looking at which metrics can be easily measured in your organization. Record the numbers from these metrics when you begin the succession planning process and revisit them regularly. Set a calendar reminder to review, compare and communicate progress of the plan every six months. Even if you only track one metric, get in the habit of recording it, attaching a dollar value if possible, and conveying that to your stakeholders.
Use the Talent Progress Scorecard to review the outcomes of your succession program across a variety of indicators, including money saved, delays prevented, and improvements to existing HR processes. These indicators will help you communicate success to senior leadership, succession candidates, and the organization as a whole.
Launch Your Succession Plan
If you’re ready to get started, SIGMA’s Succession Planning Launch can help you get off the ground. Give us five hours and we’ll give you a custom, 12-month succession plan for each member of your leadership team. To learn more, check out the website or contact Glen below.
Talk to an Expert.
If you’re interested in learning more about SIGMA’s leadership consulting and succession planning services, Glen is the guy for you. He knows our material inside and out, and can tell you first-hand stories of the work we’ve done with our clients. And just so you know, Glen doesn’t do sales – he does solutions. That might mean answering your questions, giving you our best tips and tricks, or pointing you to our FREE resources. Send him an email or give him a call! He’d love to chat with you.
Succession Planning Process FAQ
Succession planning itself is a strategy that works to identify and develop talent for critical roles (at any level) in an organization.
There are six simple steps you can follow in order to create a robust succession planning process:
- Identify Critical Roles
- Draft Success Profiles
- Nominate Succession Candidates
- Assess Development Needs
- Develop Talent
- Measure Progress
To learn more about these steps, click on the drop-down menus above and explore our succession planning templates. You can also download our Succession Planning Guide, which walks you through each step and includes practical tools to help you implement the process.
Unlike your annual report, budget, or strategic plan, succession plans are more than a document. Succession planning is an ongoing process of leadership development, so rather than a list of headers, figures, and references, the structure of a succession plan will depend on the people in your organization.
That being said, SIGMA does have a template you can use to establish a robust planning process. Check out SIGMA’s six-step succession planning process, or download our succession plan templates or Free Succession Planning Guide.
The responsibility for overseeing the succession planning process typically lies with human resources in collaboration with senior management and executives. Ideally, succession planning efforts should be overseen by a Succession Advisory Team (SAT). For more information about how to build a SAT and who should be on it, read SIGMA’s blog, Creating a Succession Advisory Team.
Common succession planning challenges include:
- Not enough time
- Lack of standardization
- No dedicated team
- Lack of knowledge
- Getting buy-in from senior management
- Maintaining long-term commitment
We have also seen organizations struggle with a lack of suitable internal candidates and difficulty in accurately predicting future leadership requirements. Many of these challenges can be overcome by working with SIGMA. Our consultants have built SIGMA’s Succession Planning Launch to specifically address these challenges.
Organizations can promote diversity and inclusion by implementing an objective, standardized succession planning process. This will ensure that talent development is accessible to all and protected from bias. To learn more, read our blog or download the guide, Developing a Succession Plan That Supports Diversity in the Workplace.