Succession planning is known to almost all major organizations today, but is seldom implemented effectively.  In fact, many top people tend to ignore this process for various reasons.  Some think that their time won't come, while others are plainly too busy with their current activities to allocate time and resources for it.  Unfortunately, lack of succession planning can jeopardize the viability of a company in an instant.  The sudden loss of a CEO with nobody primed to fill up the void left behind can bring down the company's stock price like a disaster has just occurred.

A good understanding of the organization's long-term goals and objectives, as well as its growth path and relevant industry trends, is needed for effective succession planning. HR managers must be aware of where the company is going to be able to meet the company's future requirements for key personnel. Meeting future needs means continuously developing the existing pool of talents to prepare them for bigger roles someday and hiring people at the right moment to augment all foreseen gaps.   

How succession planning should be done is still a hotly debated issue up to now.  The traditional way of doing it is to identify successors at every senior post in advance, and to identify key people with high potential within the younger generations for continuous grooming as they mature within the company.  These key people are then rewarded with a series of promotions to keep them within the company until they themselves have reached a senior post. 

Modern organizations, which are flatter in structure than the conservative ones, tend to have less flexibility in implementing an effective succession planning program in this traditional manner.  For one, the lesser number of rungs in a modern corporate ladder doesn't offer too many opportunities for promotion.  Another reason is the fact that many key people in modern companies today are technology specialists or individual contributors who are motivated by 'challenge' rather than the desire to be promoted to managerial positions.

Retention of technical people or scientists therefore requires a different approach versus people who want to be senior managers.  Thus, HR managers must be aware of the fact that the idea of career success varies from one person to another.  They must have a clear understanding of what career success means to each of their key individuals in order to better manage their retention within the company.  

Not all companies identify successors in advance as part of their succession planning.  Some companies instead devote their efforts to developing a very strong pool of candidates, from which a 'successor' is pulled every time there is a need for it. When this need arises, the strongest candidate at that time becomes the successor.  

Whether to source a successor internally or externally is another highly contested issue.  Some companies find it more rewarding to promote a successor from within, while others prefer to get their candidates externally.  There really is no hard-fast rule on this, but experts tend to agree that a non-profitable or mismanaged company is better off getting its next leader from outside the current organization.

Although internal promotions are a good motivation for incumbent people to do their best, it is good practice to bring in new blood into the organization once in a while. Experts believe that sourcing all future executives from within the company is dangerous, since this practice tends to limit internal management skills and thought processes to what had been home-grown and institutionalized over the years.  New problems may require new solutions, which can only be brought in by external executives. In short, diversity of management gene pool is an important factor of succession planning. 

In the end, the success of a company's succession planning program depends on how well the CEO and its senior management staff recognizes the importance of having somebody step into their shoes, and those of other key people, when they're gone, whether as planned or in an unexpected manner.  After all,  they are the ones charting the course of the company.

See Also:   Knowledge Management;  Hoshin Planning