Home »  Succession Planning Vs. Replacement Hiring

Succession planning and replacement hiring are two different approaches to filling leadership roles. Succession planning is a long-term, proactive strategy that identifies and develops a pool of internal candidates for future leadership roles. Replacement hiring is a short-term, reactive tactic used to fill an immediate vacancy and keep daily operations running. Many organizations mistake replacement hiring for succession planning, largely because the distinction between the two is not always well understood. 

The two approaches differ across four areas: time horizon, focus and process, candidate pool, and organizational impact. The sections below define each term, compare the four differences side by side, and help you determine which approach your organization is currently using. 

What’s The Difference Between Succession Planning and Replacement Hiring? 

It is common for organizations to confuse succession planning with replacement hiring. However, the two are not the same.

• Replacement hiring: A short-term, reactive approach to filling a specific vacant role, usually by selecting the best available candidate at the time the position opens, with less focus on long-term talent development. 
• Succession planning: A long-term, proactive strategy for identifying and developing a pool of internal candidates so an organization has qualified people ready to step into leadership roles as vacancies arise.

Here’s a summary of the key differences between replacement hiring and succession planning:

Key Features at a Glance

	Succession Planning	Replacement Hiring
Time Horizon	Looks years ahead to align talent with future organizational needs.	Focuses on the immediate present and emergency coverage.
Focus & Process	Built on coaching, mentoring, and continuous development.	Spots a gap and finds someone, internally or externally, to fill it
Candidate Pool	Builds a diverse bench of multiple ready candidates.	Usually targets one specific backup person or an external search.
Organizational Impact	Increases employee engagement and retention.	Functions as risk management to prevent sudden work disruption.

Four Main Differences Between Succession Planning & Replacement Hiring

There are four main differences you’ll want to consider when it comes to comparing succession planning and replacement hiring: differences in planning, differences in integration, differences in decision-making, and differences in outcome.

1. Differences in Planning

Replacement Hiring Fills an Immediate Need

The first area of discrepancy is planning. Replacement hiring is typically employed when there is an immediate need. For example, a leader decides to retire and a role becomes vacant. Then, either a subordinate fills the role, or an external candidate is hired. This usually results in a long learning curve, as there would likely not be any transition period between the incumbent and their replacement.

Succession Planning Builds a Long-Term Pool of Talent

Succession planning, on the other hand, uses a long-term perspective to build a pool of talent before it is needed. That way, candidates are ready for a role if and when your leaders decide to step down. Candidates are developed in advance of a role becoming vacant. Long-term training, such as job-shadowing, becomes an available option to prepare qualified candidates for their future responsibilities. This forward-thinking perspective also allows an organization to prepare not only to replace their leadership roles but to fill the vacancies left in their middle management roles when these individuals move into higher key positions.

One of the things we often miss in succession planning is that it should be gradual and thoughtful, with lots of sharing of information and knowledge and perspective, so that it’s almost a non-event when it happens.
– Anne M. Mulcahy

2. Differences in Integration

Replacement Hiring Focuses on The Now

Given its reactive nature, replacement hiring is focused on the now, and on the immediate need of filling a vacant role. Traditionally, the goal of replacement hiring is to find a candidate that is most similar to the leader who just left. Consequently, this leaves little room for growth and future-planning for the role.

Succession Planning Looks at Integrating Policies Throughout the Company

Succession planning, on the other hand, begins at the bottom and is integrated into policies throughout the company. Employees, even at lower levels of the organization, can be hired with their long-term potential in mind. It can be integrated into performance management by asking employees about their career aspirations and ambitions. Succession planning should align with long-term strategic planning to ensure succession candidates have opportunities to grow their skills and prepare for their future in your organization. Consider the many ways you can weave succession planning into your daily operations to maximize the benefits to your organization.

3. Differences in Decision Making

Replacement Hiring Maintains The Status Quo

Even without a mature succession plan in place, many organizations have a back-up person in mind for their most senior roles. Generally, this decision was made by “default”, and may not reflect careful planning and thoughtful decision making. Replacement hiring runs the risk of maintaining the status quo in an organization and not capitalizing on the benefits of a systematic process for choosing succession candidates.

Succession Planning Helps Determine Candidates Based on The Role

Good succession planning allows a company to choose potential candidates based on the requirements of the role, and their abilities to meet these requirements. A well-designed plan will use objective, evidence-based assessments, including leadership assessments that measure competencies rather than tenure or familiarity, to determine the right candidates for the right role, and will involve multiple stakeholders, such as the role incumbent, their peers, and members of your senior management team.

While 71% of organizations say they have a leadership bench prepared for continuity of a position, only 30% say they have a bench prepared with options.¹

4. Differences in Outcome

Replacement Hiring May Be Limiting for Current Employees

One of the potential drawbacks of replacement hiring only is that it may be difficult for employees to predict if they are being considered for promotion, and when that promotion may be expected. As such, it may be difficult to retain talented individuals looking to advance. Replacement hiring also does not inherently plan for employees to develop their skills or enhance their abilities, making it difficult to grow talented employees in the first place. Candidates may not be ready to take on the position they are given in replacement hiring, resulting in potential costs and delays for the organization as the new leader learns the ropes of their role.

Succession Planning Looks at Expanding the Skills of Current Valued Employees

Succession planning is developmental in nature. Even when you cannot offer a high-potential employee a promotion at that moment, by providing them with opportunities to try their hand at new tasks, gain experience on a variety of projects, or build their skills, key employees will remain engaged and more likely to stay with your organization. This also has the added benefit of creating a more developed workforce for you to choose from when a critical position does open up in the future. The best succession planning processes are mutually beneficial for employees and organizations alike.

How Do You Know Which One You’re Doing?

Most organizations already have a general sense of whether they’re planning ahead or reacting to vacancies as they happen, but it’s worth checking against a structured list rather than a gut feeling. SIGMA has two free tools to help: 

• Use the Succession Planning Checklist to measure how mature your current succession plan is. 
• Use the “Are You Engaging in Succession Planning?” Checklist if you’re not yet sure whether your current approach is succession planning or replacement hiring in disguise. 

How SIGMA Can Help

If you’re looking to build a robust succession plan for your organization, explore SIGMA’s Succession Planning Sprint. With only a four-hour time commitment required from your leadership team, our consultants will deliver a comprehensive succession plan in only 30 days. By the end of the Sprint, you will have a custom 12-month succession plan for each of your leaders, as well as a variety of tools and templates to help you implement your plan. Ready to get started? Contact us for more information or to speak with an expert.

Resources

Not sure if your organization has a mature succession plan? Check out our Succession Planning Checklist.

If you have a succession plan, and you’re wondering how it stacks up, check out SIGMA’s Are You Engaging in Succession Planning? Checklist to evaluate the degree to which your company is engaging in true Succession Planning.

¹ Corporate Executive Board Company (2014). Succession strategies for the new work environment [PDF].