Succession management enables organizations to place the right people with the right skills in the right positions at the right time. Whether adapting to shifts in leadership or changes in critical operational roles, a robust succession management approach minimizes disruption and builds organizational resilience.

This article explains why succession management is essential and how HR can develop a succession management plan that works.

Succession management is a systematic approach to identifying, selecting, and developing key employees and bringing in talented new hires to assume critical roles and prepare the organization for the future.

As business conditions become increasingly challenging, it takes skilled individuals at all levels to confront them and continue driving the organization forward. However, organizations often don't have an abundance of employees who are equipped with the abilities and qualities necessary to step into critical roles when needed. Succession management ensures a steady pipeline of capable and engaged talent is in place to fill key positions, keeping the organization resilient and future-ready.

Although the terms "succession planning" and "succession management" are frequently used interchangeably, they are distinctive practices with different scopes and approaches. Succession planning is a focused process within the broader framework of succession management.

To clarify, here are explanations for both:

Put simply, succession planning is a critical component of succession management, but the latter takes a more holistic view, integrating talent development with organizational strategy to ensure long-term success.

HR plays an essential role in succession management: facilitating and operationalizing the process to embed succession management throughout the organization.

Why is succession management important?

Success management is vital for organizational stability and long-term success. Here's why it matters:

Developing a strong talent pipeline for a competitive advantage

Effective succession management fosters a steady flow of skilled employees ready to meet current and future organizational challenges. By continuously identifying and nurturing talent, organizations build resilience, strengthen market confidence, and maintain trust with shareholders.

Building critical skills for success

Investing in and nurturing talent within your organization helps ensure your team members have the critical skills required to lead and grow the business successfully. This approach broadens the focus beyond leadership roles to create a versatile and capable workforce.

Reaching business objectives with the right talent

With key organizational goals and objectives in mind, you can strategically hire and develop promising individuals with the skills necessary for achieving these goals in the most efficient way.

Minimizing disruptions through proactive planning

Unexpected departures at any level can lead to delays and operational setbacks. Succession management prepares skilled employees to step into key roles, minimizing disruptions and maintaining momentum during transitions.

Enhancing employee engagement and reducing turnover by filling positions internally

When employees experience personal growth, believe promotions are feasible, and visualize a future with their employer, they will feel more valued in their jobs and connected to the organization.

Internal candidates are also more likely to succeed and remain in your organization than external hires. In fact, a study found that external hires are 61% more likely to be laid off or fired. They're also 21% more likely to leave their job than internal hires.

Overall, investing in employee career development and succession management programs can help improve employee retention. Research done by leadership consulting firm DDI revealed a 77% decrease in turnover for organizations with effective leadership training programs.

Furthermore, research compiled by Harvard Business Review uncovered that external hires often get paid more yet score lower in performance reviews and are more likely to leave the company.

Preserving institutional knowledge

Succession management facilitates the transfer of critical insights and institutional knowledge. By mentoring and developing talent across the organization, businesses can retain and share valuable expertise, enabling smooth transitions during leadership or role changes.

As an HR professional, you need to proactively address talent gaps to deliver lasting impact on your organization's success. Learn how to build robust talent pipelines and succession plans that ensure organizational stability and long-term success.

Succession management strategies

Succession management is a continuous and strategic approach that should be deeply embedded in the organization's culture and practices. The HR department integrates succession management into HR processes like recruitment, performance management, and learning and development strategies.

Here are three of the strategies HR can use to bring succession management to life:

Talent pools

Although traditional succession planning that primes specific individuals for specific roles contributes to succession management, organizations should also embrace the broader concept of talent pools. This involves sourcing a group of trained and developed candidates who can step into a range of leadership positions. This approach fosters agility and prepares the organization for business changes and leadership openings.

Job rotations and cross-training

(Future) Leaders need a strong overall understanding of their organization's operations. Providing opportunities for employees to move between different departments or roles in job rotation programs enables them to expand their skill set and knowledge of the organization and equips them with a well-rounded perspective when they step into key roles.

Mentorship and leadership development programs

Organizations that implement systems of leadership development can shape future leaders who align with business strategies and organizational culture.

Formal training and coaching programs teach required skills to potential successors throughout the organization with a consistent approach. Mentorship opportunities pair high-potential employees with experienced leaders who model leadership capabilities and provide insights that will help them succeed in future roles.

11 steps to create a succession management plan

Having a solid succession management plan in place and following and adjusting it along the way is essential in preparing for future challenges. That way, the organization remains equipped with capable talent to meet evolving needs and sustain growth, even during transitions or unexpected changes.

Here are 11 steps to help you start crafting your plan today:

1. Embed succession management into organizational strategy

Your company's organizational strategy is the foundation of your succession management plan. Consider where the business aims to grow over the next ten years. For example, what is the overall vision for the future? Will you be entering new markets? Who will your competitors be if your strategy or focus changes? What does your current structure look like, and will this be changing in the coming years?

Business acumen is a key competency in understanding your organization's goals and vision. It allows you to create processes and policies that support and align with this. Knowing how best to serve and grow your organization allows you to tailor day-to-day activities and policies, ultimately leading to an increase in profits.

2. Ensure leadership commitment and engagement

Although HR professionals play a significant role in operationalizing a succession strategy, it's imperative that you seek buy-in and support from business leaders. This will ensure that you can implement your plan successfully and secure the resources necessary for creating the desired results.

Communicate to leadership that succession management is a strategic collaboration with HR, and related activities will reinforce long-term organizational goals.

3. Determine key positions for succession management focus

Identify the positions you want to ensure are consistently filled by qualified and capable people in your succession pipeline. These will be the roles that are crucial to maintaining the organization's operations and ensuring its success. They may include leadership positions, technical roles, or other specialized jobs critical to business continuity and long-term objectives.

A useful benchmark is to identify the top 5 to 10 critical roles in the organization. This doesn't mean focusing solely on leadership roles -- consider positions that require unique expertise, are difficult to fill externally, or would create significant disruption if left vacant. Prioritize these roles in your succession management plan to ensure a steady pipeline of qualified and capable individuals ready to step in when needed.

4. Continuously identify and develop high-potential employees

Seek out employees who could fill the key roles in the near future. Focus on individuals with the greatest potential. These may be your high-will, high-skill employees or the (future) stars from your 9-box grid. You can base your decisions on valuable data such as employee performance metrics. The benefit of this approach is that you're investing your efforts and resources in people who have the highest probability of succeeding.

Once you've identified the high potentials who demonstrate foundational skills to succeed in those higher positions, discuss the situation with them and encourage them to participate in development opportunities. However, be sure to manage their expectations. Make it clear that there are no guarantees, and all roles and circumstances are subject to change.

For each candidate, establish key goals and competencies needed to fulfill the future role. Set out realistic timelines for these to be achieved. Clear expectations are vital here.

One way to do this is to create structured leadership development plans for these individuals and empower them to follow them through regular check-ins and feedback loops. An isolated training session or learning initiative will not suffice. Organizations collectively spend over $350 billion per year on leadership development. Yet, 74% of executives alarmingly report not being adequately prepared for the senior leadership challenges they face.

Actively engage your employees in the process and encourage them to set their own development goals. Monitor their leadership readiness progress with regular performance assessments. Develop their leadership skills by offering them mentoring and coaching. Also, help them gain experience, build confidence in various roles, and test how they cope with new responsibilities and adapt to new environments.

When done consistently, leadership development programs will ensure your people are highly skilled and qualified and feel confident negotiating any challenges future senior management roles present.

5. Implement suitable succession management strategies

Successful succession management requires a holistic approach to HR practices, such as recruitment, workforce planning, learning and development, and performance management. This means looking for ways to attract and develop promising talent wherever feasible.

As discussed above, examples of targeted succession management strategies you could consider include:

A steady succession pipeline is crucial to effective succession management. However, it also requires a significant amount of time and effort. In fact, 74% of public companies and 52% of private companies state that maintaining a strong talent pipeline is the most challenging aspect of succession planning.

However, overlooking your pipeline can be a costly mistake that leaves the organization in a vulnerable position. Therefore, even if there are no current openings, it's important to start building your pipeline today. That way, you'll have a consistent pool of successful candidates to tap into for the next generation of leaders.

Analyzing your existing leaders, pinpointing skill gaps, and keeping in mind the organization's future vision can help you make effective development plans that truly prepare people for upcoming roles and set the business up for success.

7. Regularly evaluate and adapt your leadership bench strength

Evaluating the progress your potential successors are making on a regular basis ensures that your leadership pipeline remains strong at all times.

For example, if a specific candidate shows little to no improvement over time despite continuous training and mentoring, it may be time to revise your plan for this employee. Without monitoring and assessing, you would be unable to make this informed decision. You could end up promoting someone into a role that they are not a good fit for and passing up on another candidate who is an ideal match.

Analyzing how strong your leadership bench currently is also offers you a better grasp of where to focus in the future to improve your succession pool.

8. Adopt a data-driven succession management strategy

Using metrics and analytics in succession management ensures that you're determining employee potential objectively and selecting strategies based on facts.

Ways to use data insights in succession management include:

A data-driven succession management strategy requires HR to leverage technology. The larger an organization is, the more unrealistic it becomes to adequately manage talent and a succession management plan using paper files or spreadsheets.

Today, most HR systems enable you to centralize, automate, and manage various tasks, including recruiting, onboarding, training and development, and performance management. These systems generate an abundance of data and can produce reports to help you easily identify talent gaps, compare employees, and simplify the succession management process.

9. Make succession management a part of your recruitment planning

While it makes sense to focus on your current employees, succession management must also be factored into your hiring strategy.

Once you've identified the critical roles you want to fill in your organization, along with any talent gaps, you have a clearer idea of the type of candidates you need to hire. For instance, let's say that the organization aims to explore new markets and expand overseas within the next five years. This means you're ideally looking for candidates who speak multiple languages and would be happy to travel extensively.

Integrating your succession management plan into your recruitment process will ensure your talent pipeline remains strong and aligned with the organization's future.

10. Foster a culture of knowledge-sharing

A knowledge-sharing culture encourages the open exchange of information, ideas, techniques, and expertise. Along with helping employees do their jobs better, this environment nurtures their personal development as they absorb insight from the successes and failures that occur throughout the organization. This wisdom and knowledge transfer becomes an added value to high-potential employees.

Organizations can promote knowledge sharing in a variety of ways, such as:

11. Develop leadership resilience and adaptability

Strong formal and informal leaders must be able to navigate uncertainty, overcome obstacles, and rebound after setbacks. When they can adjust, innovate, and make good decisions during stressful times, they inspire others to remain diligent in their work. This is the type of guidance every organization needs.

There are many avenues to developing resilience and adaptability in future leaders, including:

A strong succession management plan is a must for future success

It's true what they say: failing to prepare is preparing to fail. Knowing where you want to grow as a business is key to creating a winning succession management plan that will give your organization a vision and actionable map for the future.

Continually monitoring your succession management program and adjusting accordingly will help you develop tomorrow's leaders and maintain your competitive edge in an ever-changing market.