Succession planning in a business setting refers to the plans for promotion or personnel changes in the event that an employee retires, resigns or is let go. Succession plans are typically limited to senior leadership or executive positions.
A succession plan identifies leadership assets within the company. Once the potential replacements have been identified, these people are groomed for advancement. This grooming can include work assignments in a variety of departments. By exposing leadership candidates to a wide variety of business units, employees become well rounded and better able to make decisions that affect multiple departments.
In order to ensure that the best candidates are selected, stakeholders must be engaged in the process of succession planning. If the company has a board of directors, the board should be involved in the planning. Each stakeholder should have a say on what personality traits and skills are important to the success of the company moving forward. Succession planning is usually headed by the current CEO or the head of human resources.
Planning for the departure of company leadership is critical for ensuring the stability and continued smooth operation of the company once the leadership departs. Failure to plan for a change in leadership can result in internal turmoil and power struggles that damage the company.