Succession planning is important because of the following reasons:
Despite these definitions, questions still remain.
By reading this article, these questions will be answered and you will know more about the different succession management models. You will also learn the advantages and disadvantages of each model.
Model 1: Mass Recruitment
This type of succession planning model maximizes the use of available human resources within the business organization to make sure that there will be capable leaders within the organization in the event of death, resignation or retirement of a senior executive. Training and professional development is open to all employees of the business organization who have supervisory roles.
This type of succession management encourages all junior supervisors, senior supervisors, middle-level executives and top-level executives to take part in the leadership development programs of the business organization.
Regardless of the management position the employees are in, training programs have the same style and structure when using this type of succession planning model. It is an effective talent management strategy to ensure that there will be no unwanted vacancy in any leadership position. However, this workforce planning model may require additional funds to implement since there are lots of employees to be trained all at once.
Model 2: Specialized Recruitment
This type of succession planning model can also be effective when properly used. It seeks to train one or two employees in every leadership role or position within the business organization. Only a few, select groups of people will undergo training to ensure that there will be competent leaders when faced with certain situations and business conditions.
The leadership training is more specialized depending on the needs required by each leadership position. It is cost-effective on the part of the business organization. However, the supply of competent leaders is limited because the results are still affected by employee retention.
Model 3: Outside Recruitment
This is type of succession management is hard to implement. It entails lots of time, effort, energy and money in order to get qualified applicants for the leadership position.
There may be competent leaders outside the business organization, but they are not yet trained to the specific industry. Even if they have industry-specific experience, there’s no guarantee that those leaders coming from outside recruitment share the same corporate value as the business organization. They still need to be retrained in order to be familiarized with standard operating procedures and policies within the business organization.
There are several ways to approach the creation of succession planning models, but regardless of choice, most corporate succession plans would include the five essential steps outlined below:
Succession planning models represent an integral part of successful succession planning. Broadly defined, corporate succession planning is a process that allows firms to identify and develop internal candidates with a clear objective to fill senior-level positions as and when they become available.
In other words, if well executed, corporate succession planning becomes part of a risk management strategy, which aims to minimize a company's exposure to skills shortage - especially in times of crisis, such as the sudden departure of a top executive. Minimizing the potential risk of personnel loss through carefully planned and executed succession planning models is crucial to an organization's continued success.
In recent years, the concept of corporate succession planning to mitigate the potential loss of organizational expertise has become extremely relevant as the benefits of succession planning have become widely recognized.
This has been mainly triggered by two key factors: the outflow of senior and experienced executives associated with the retirement of the baby-boom generation, and the complex nature of the global business operations. Both of these factors represent enormous risks for organizations and their ability to retain high-level expertise in the area of their core business.
Succession planning models provide a much-needed solution, minimizing organizational exposure and ensuring that the right internal personnel get promoted to the right kind of positions when they become vacant.
Even though the potential benefits of succession planning are numerous, they can only be realized with solid succession planning models in place.
The development of such models is a task that falls under the Human Resource function and the responsibility of senior management. Only through such critical collaboration can an organization develop and implement suitable succession planning models that can ensure leadership continuity of the highest caliber.
In fact, for most global businesses this is no longer a choice, but an absolute must.
The most critical component of successful corporate succession planning is an underlying organizational philosophy that that highlights the need to manage top talent in the corporation for the greater good of the enterprise.
The most frequently cited reason for the failure of corporate succession planning is the lack of sustained desire to implement succession planning on behalf of Human Resources and senior management.
In other words, it is often perceived as an expense and not as a potential benefit or risk mitigation strategy. This false view could be greatly modified by developing effective succession planning models that organizations could adhere to while implementing corporate succession planning.
Explore IMD's Leading the Family Business program, the world's longest-running family business program.