Employee Succession Planning Vs. Replacement Planning

I get asked a lot by my clients to help them plan for the future. As an HR Business Partner at Helios HR, my job is to work with senior management teams to plan for the unexpected. To help them continuously move their human capital forward successfully. Sometimes, these organizations that want to plan for the future just want to mitigate their risk of an employee leaving the organization.  So this got me thinking, what is the true difference between succession planning versus replacement planning?

Succession Planning Vs. Replacement Planning

Succession Planning

At its most basic level, succession planning is a “deliberate and systematic effort by a company to ensure leadership continuity in key positions, retain and develop intellectual and knowledge capital for the future, and encourage individual advancement”, as stated by William J. Rothwell in his book Effective Succession Planning. Succession planning is an organization’s proactive attempt to come up with a succinct plan of action to ensure continuity of business operations, at all levels of an organization, by cultivating talent from within the organization through planned development activities. This means reviewing your strategic plan for the organization, reviewing the capabilities of the human capital currently on staff and making a determination of what additional development activities these individuals need to help the organization move forward with the strategic plan.

Replacement Planning

On the other hand, Rothwell shares that replacement planning “is a form of risk management….The chief aim of replacement planning is to limit the chance of catastrophe stemming from the immediate and unplanned loss of key job incumbents”. Replacement planning is the typical, what would happen if Johnny or Susie, who happens to be our CEO, gets hit by a bus on their way to work. While this is an extreme example, the likely scenario your company will face is the unexpected departure of an employee who is an important contributor to a team, department, and organization.

So what can your organization do now to start the succession planning process? 

One of the first things your organization should do is to map out your entire organization. You can do this by creating an organizational chart or start an excel spreadsheet that details all of your employees – employee name, title, and supervisor. The main point here is to create an employee roster not make the fanciest spreadsheet of all time. After you have an employee roster, I would recommend the following seven steps:

How to Start the Succession Planning Process

1. Review strategic plans – have an updated list on hand of the strategic objectives for the organization and each department that comprises your firm. Having these strategic plans handy will help you decide if your current staff has the KSA (Knowledge, Skills, and Abilities) to achieve your strategic objectives.
2. Review key positions – go through your employee roster and identify your key positions not only on the senior management team but throughout your organization. There is probably one position, and it doesn’t always have to be a supervisor, that is the key cog in the wheel for a department or team. Identify the top 5-10% of the positions your organization cannot live without. Remember don’t focus on the people but the positions!
3. Ensure everyone has an updated resume – Beyond your senior management team, your organization should have some sort of updated resume or skill set tracking mechanism to determine what KSA’s are currently available within your organization. (I would also recommend having a resume for you senior management team as well.) While it takes time to compile this information, the more accurate information you gather the chances of creating a successful succession plan increase.
4. Analyze the data- This is the point you want to review the people in the positions. Who is currently in the positions and what skills are necessary if this person leaves the organization? Do we have a plethora of people somewhere in the organization that could take over if this key employee were to leave? This is the point you need to start analyzing what you have, what you need, and the path forward for getting there.
5. Talk to your employees – One area that employers tend to miss in the succession planning process is not engaging their key employees to find out what they want from a career. While you don’t have to tell the employee they are on a list of “key” employees, managers or senior executives should be having conversations with the folks on this list to determine if their career path is what the firm has in mind for them. If it’s not, there might not be a point in providing vast amounts of training or job responsibilities to an employee who has little interest in becoming the next Managing Director, COO, CFO, or even CEO.
6. Begin creating road map –After speaking to the key employee, create a road map for the types of KSA’s this employee will need for their next role.  Keep your list short and don’t get into too many details at this point. You can fill in the details later as your firm strategy continues to take shape and changes over time.
7. Continue assessing – Continue assessing employees to see if they are still on track for their next assignment. If they are on track, continue providing them opportunities to advance their KSA’s. If they are not, is this person still a viable candidate for the next level in the organization or does the project road map for their career need to be tweaked.

Remember, going out to the market to find an employee is not succession planning. That is replacement planning at its most basic form. Succession planning takes time and effort and should be carried out in a methodical manner to ensure you have the right people, in the right place, doing the right things. For more information on how to get started on your organization's succession plan, feel free to contact me for a consultation.