HR Answers: Do’s and Don’ts of Successful Succession Planning

handing gold baton across table to businesswoman successor
By Tracy Winn

5 minutes

Communication, knowledge sharing and looking within are keys to effective talent development and leadership transitions.

Succession planning is crucial for every business and for every key employee. It is the process of preparing for when important roles within an organization become vacant and how to best fill them. Every organization experiences turnover, retirements and sudden losses. When those events happen, institutional knowledge is lost, affecting not just your business operations but sometimes the member experience as well.

Your credit union should have a succession plan in place for every executive and leaders with key roles. For example, if you have an account manager who is in charge of a key portfolio, this is someone you want to make sure you can replace without disruption to the member (or business member).

The timeline for a good succession strategy is typically one to three years, but in reality, it’s an ongoing process that should be bolstered continually with internal knowledge-sharing and mentoring. By planning ahead, your credit union will be prepared to continue working towards its future goals.

Below are a few “do’s” and “don’ts” to keep in mind when it comes to succession planning: 

Do Start by Looking Inward

Recruiting—particularly for executive and upper management-level positions—can be time intensive and expensive. Hiring from within is beneficial not just because it can eliminate the need for a potentially costly search, but because you are identifying future leaders in your own organization while providing opportunities for learning and development.

A tight labor market compounds the difficulty of the already challenging task of finding replacement talent. By planning and developing your successors from within the organization, you are creating your own talent pool while also retaining top-performing employees. As more executives are planning to retire and fewer available employees are entering the workforce, it’s more critical than ever to focus on talent within the organization. 

Employee retention is a huge advantage of promoting within your own ranks. With a proper succession strategy in place, you will be working to cross-train your existing talent, boost morale, provide employees with the opportunity to grow within the organization and receive fresh ideas from those who might be training in different departments than where they started.

Key Takeaway: Building talent and successors within the company helps maintain brand identity, increases retention and employee morale, and reduces the learning curve for replacements.

Do Prevent Knowledge Hoarding

When an employee feels they are going to be let go or is planning for retirement, they might hoard their knowledge in the hopes that it shows how invaluable they are. When these employees eventually do depart, however, they take with them information about member relationships, internal processes, best practices, etc.—potentially leaving your credit union without critical knowledge it needs to operate.

To get around this issue, you should have programs in place for mentoring and sharing knowledge between current leaders and potential future leaders. Managers and executives have a duty to train, support and develop their employees. As leaders, they should set the example of sharing knowledge with others.

Key Takeaway: Creating process documentation, updating job descriptions and cross-training will prevent knowledge hoarding.

Do Think Beyond the Job Description

A good succession plan should be about more than just fulfilling a job description. Soft skills, such as leadership, communication and vision should also be taken into account.

Once you’ve identified the skills needed for a position, assess the people within your credit union who might already have those skills or could develop them with the right training or guidance. But don’t just limit your grooming to one position—some employees might be an excellent fit for multiple positions and their training should bear that in mind.

For instance, mid-level managers are often tactical, while executives are usually more strategic and visionary. Gear your manager training toward not just how to do the job from day-to-day, but also how to lead and inspire teams.

Don’t be Afraid to Look Outside the Organization

While planning to promote from within is often preferable, sometimes it’s simply not an option. If there is no one in the organization who has the skillset or capacity to move into a soon-to-be open position, or the employee you’ve been developing to take over a role suddenly decides to make a different career move, your succession plan may have to include looking outside your credit union. 

There are several advantages to recruiting outside talent, the main one being the fresh eye and objectivity that someone not already familiar with your processes might be able to provide. For some positions, it might even be beneficial to bring in a complete industry outsider to offer a new perspective on your everyday processes and procedures.

Key Takeaway: While succession planning is all about building a deep bench of talent to ensure stability and continuity, you must always be prepared to look outside the the organization in case your plan has to change.

Don’t Forget to Communicate

One of the worst things you can do when grooming an employee for leadership is to not talk to them about their goals and aspirations. If the person you want to head up your commercial banking division is hoping to move into personal loans, they might not be on board with your future plans. That’s why it’s important to continuously evaluate the goals and feedback from the employees being trained.

Key Takeaway: Sound out the employee(s) you’re considering as part of your succession plan to make sure that your goals for them are in line with their own career plans.

How a PEO Can Help with Succession Planning

At every stage of succession planning, getting expert advice from a trusted advisor is recommended. A professional employer organization is an excellent source for helping you identify key roles, write job descriptions and put together succession plans. 

Many PEOs can also help with developing training and cross-training programs, as well as providing guidance for the transition in order to prevent employee turnover. They can also offer an objective perspective on your talent pool. Additionally, your PEO can advise regarding personnel changes and how to best communicate those changes to the rest of the organization.

Tracy Winn is senior HR advisor at G&A Partners, Houston. 

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