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How Does Succession Planning Differ from Replacement Planning?

What is the difference between what you do today and what you will need to do tomorrow?

Executive leaders drive their teams to deliver on their company’s performance goals, vision, business plans and strategic growth plans. They must be certain that part of that plan ensures the business has the right talent to support its future growth. It is imperative that great companies have leaders who identify and develop great people, and know that developing talent is their legacy for the next generation.

Executive leadership directs their Human Resources (HR) teams to support its workforce. Among other important responsibilities, HR ensures that each role contributes to shared company objectives. This means helping place the right people in the right roles at the right time — supporting employees in their current roles and helping them develop into future internal leaders taking on more responsibility. The most important factor in business success is the quality of your workforce.

Understanding current and future talent needs is important for any business leader. Identifying who leaders recognize in the organization as having the knowledge, potential, and aspiration to grow is equally important and one tool that looks at all of these areas is succession planning.

what is sucession planning?

Succession planning is a proactive approach to help ensure there is a pipeline of talented people for roles that the organization views as critical to success. It means considering your current workforce in light of future goals, and developing internal talent to fill emerging leadership positions.

Successful succession planning encourages employees to continually increase their knowledge and effectiveness as they become aware they are considered a big part of the company’s future plans. In the long-term, upskilled employees step into important roles that keep them with the company.

Succession planning follows a few critical steps.

  1. Recognize critical or vulnerable positions: It is important to understand the long-term business plan of your company as you are developing your succession plan. Succession planning begins when organizations identify positions that are critical to its current and future success. This includes roles that if they became vacant, would cause a risk to the organization. Prioritize leadership positions with no obvious successor, where a vacancy could create serious risk.
  2. Establish eligibility requirements: Develop a profile for any high-profile position. Outline expected job requirements for each role now and in the future. For example, the job description for a current role may need to be updated due to growth or change in company focus areas… Identify the leadership competencies important to the company.
  3. Create a talent pipeline: Look at each role that you want a succession plan for. Identify candidates who are ready now or could be developed in the next 1-3 years or 3-5 years for these roles. Also identify someone who could be an emergency short-term replacement. Make sure these candidates currently have or can develop the competencies important to the company.
  4. Implement succession plan: Create a plan that prepares potential successors for future roles. Determine the development needed, possible exposure needed, identify new roles, potential projects and/or mentors for each candidate. Each plan should include growth and learning opportunities that address any skills gaps employees might face. Remember that an important part of any plan is the measurement of the candidates progress and the success of the plan.

Leadership roles and responsibilities can change quickly. Business trends in AI, for example, allow corporate leaders to spend less time collecting data and more time learning from it. However, these new opportunities also require new skills in data visualization and interpretation.

These developments mean companies must plan for roles that might exist tomorrow, even if they don’t exist in their current form today. Who do you have in your organization that you can invest in for these types of opportunities and business needs?

What does succession planning offer my employees?

Succession planning is a great way to encourage employee buy-in. It allows employees to participate in preparatory programs that might include on-the-job training, new certifications, or additional education in fields that are related to their current and future responsibilities.

This clear vote of confidence in employees’ abilities is great for long-term succession, but it’s also a strong workforce retention strategy. 45% of employees are more likely to stay with their current employer if they receive training. However, employers can spend up to two times an employee’s salary to replace them if they leave. This makes succession planning a great strategy for protecting your company’s workforce and wallet.

Communicating to employees that they have been identified as a potential successor to a critical role will energize them about the future and their role in the success of the business.

What is replacement planning?

Replacement planning is typically role-specific and may assume the structure of the organization will not change much. It tends to be focused on identifying replacements for top executives only and fills an immediate or emergency need. During this planning process, two to three candidates are identified as potential replacements for each position and notes are shared about each candidate’s ability to replace an existing leader.

What’s the difference between succession and replacement planning?

While succession planning and replacement planning may share some of the same steps (ex: identifying a pool of candidates), the similarities tend to stop there. Replacement planning usually has a shorter list of candidates for each position while the goal of a succession plan is to develop a large pool of high potential candidates over time to fill the future needs of the organization.

Another difference between the two is that a good succession plan will identify not only candidates but specific development opportunities and a plan for each candidate to prepare them for future leadership opportunities. Included in that plan is a consistent follow-up on the progress of the individual development plan for the candidates. Replacement planning typically stops at the identification of replacement candidates. They are not intentionally developed for future roles and experiences.

Succession planning is a proactive process for protecting long-term company success by developing a pool of engaged and talented performers in roles throughout the company. Replacement planning is typically a shorter-term process for replacing specific roles. No matter what the strategy, it’s important to find contributors who align with the company’s mission and values.

Preparing today’s team for tomorrow’s challenges

Scenario planning, strategic partnerships, and a strong product portfolio all help companies guard against future uncertainty. But perhaps the best strategy to keep your company strong over time is talent development. While that’s a responsibility of every employee, talent development begins and ends with an engaged HR department.

These responsibilities are important for company growth and success, but they can also weigh heavy on HR’s shoulders. HR departments that already oversee hiring, retention, DEI, and development sometimes have challenges finding the bandwidth for full employee upskilling programs.

That’s where Fahrenheit Advisors can help. If your organization doesn’t have a full-size HR department — or if your HR team members are busy with other priorities — we can supplement your experts with our own. Our seasoned HR experts have experience in every industry and company size, providing tailored recommendations that can help your company outline and execute succession or replacement planning at any scale.

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About the author

Charlie PetroliaCharlie Petrolia is an HR executive experienced at directing change management initiatives that achieve business goals, drive world-class employee experience, and maximize stakeholder value. He has over 18 years of HR leadership experience at multi-billion-dollar companies. More recently with Fahrenheit Advisors, Charlie has helped middle market companies and non-profit clients in Interim CHRO and Interim People Operations roles along with HR project work. By melding his Corporate HR leadership with operations acumen, he inspires high-performing remote/onsite teams to deliver results.