Succession Planning Vs. Replacement Hiring

Many people would be surprised to see the discrepancy between their general perception of how mature their succession plan is, and the results of the Succession Planning Checklist. In fact, most companies believe they are engaging in succession planning when they are really using a strategy called replacement hiring. This is typically due to a misunderstanding of the differences between the two. With that in mind, let’s review some of the main differences between succession planning and replacement hiring.

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 focuses on filling an immediate need for a specific critical role. There is less focus on employee talent and leadership development, as it is more of a reaction to necessity.
  • Succession planning looks toward the future, developing strong benches of succession candidates to provide a proactive solution when an unexpected loss of talent occurs.

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

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 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 SIGMA Can Help

If you’re looking to build a robust succession plan for your organization, check out SIGMA’s Succession Planning Launch. Our consultants will help you get 6 months of work done in just two half-day sessions. By the end of the Launch 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. We’re always happy to chat!

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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].

About the Author

Glen Harrison

Vice President

Glen oversees SIGMA’s sales and marketing activities. As a skilled presenter and trainer, he has designed and delivered engaging and entertaining workshops and webinars to help leaders and HR professionals enhance their understanding of how our products and services can be used to realize potential within their organizations.