No employer relishes the thought of a valued employee walking out the door. Not only does their knowledge and experience walk out the door with them, so too do their relationships – and relationships are critical for any business. For small and medium businesses (SMBs) the impact is exacerbated by scarce resources. The exit of any productive, skilled employee is likely to increase workloads and stress levels for those who remain.
What is succession management?
The obvious solution is to have a succession plan in place, to cover all critical roles in the business. However, with the pressures of establishing and growing a business, it seems succession planning is being neglected by many SMB leaders.
Succession management is essential for retaining top talent. However, a staggering amount of small & medium-sized businesses (SMBs) – nine in 10, to be precise – do not have a succession plan in place.
The problem is particularly pertinent for millennials. Millennials are no longer the “future workforce” – they are the present workforce, making up 40% of Australia’s entire workforce. What’s more, 91% want rapid career progression. Employers must recognise the expectations that employees – especially millennials – have at work so they are better equipped to build a retention strategy.
Effective succession planning can potentially be win/win for employers and employees. Employers benefit from building their own talent pool to help mitigate the risks associated with staff turnover, while employees benefit from more defined career paths and development plans.
5 succession management tips for when employees leave
Here are 5 succession management tips to ensure your business comes through unscathed when key people leave.
1. Define the critical positions
No one knows your business better than yourself, so a first step is to ‘audit’ your business and the roles within it from the perspective of business continuity. Which roles provide the foundation for your day-to-day operations? What are the key competencies of these roles? Which roles will take the longest to replace, either due to knowledge, seniority, contacts or their specialised skill sets?
2. Widen the succession net
Succession plans have traditionally only been considered for CEO, Managing Director or other senior leadership roles. However, it’s beneficial to also consider technical roles which, although they may not hold management or leadership responsibilities, will be hard to fill unless some sort of contingency plan is put in place. It may be beneficial to conduct some scenario planning to develop different plans – and you may want to consider more than 1 successor for each role.
3. Match those key positions with existing employees
Remembering that the best talent might already exist within your organisation, it’s important to consider those employees who could be promoted into these positions. A talent assessment can help to identify areas of strength, gaps, and opportunities for development for current employees. This step will ensure your organisation can transition smoothly from the loss of a key employee, but it also means you’re starting to create a pool of qualified, motivated (and “known quantity”) employees without the added cost of external recruitment. You’ll need to assess existing employees based on their existing skills and knowledge, how much training and mentoring is required, and how long this process would take. Ideally, you’ll already be aware of your employees’ career aspirations; this is the opportunity to match those aspirations with roles they might be interested in.
4. Engage relevant stakeholders
It’s critical to involve all the stakeholders who will be impacted by both the loss of a key member of staff and those whose input should be sought before putting any plan into action. This might include obtaining buy-in from your board of directors and senior management, but also from the employees who will be directly affected by the plan.
5. Use the right tools
It’s not easy keeping track of employee career aspirations, “flight risks”, and the talent needs of an evolving and growing organisation. Fortunately, an integrated talent management suite can connect the disparate elements required to future-proof your workforce, including succession management, performance management and learning management.
The benefits of succession management
- Help managers determine role criticality and identify potential flight risks
- Identify high performers and match them to critical roles by comparing candidate suitability by skills, performance, potential and aspirations
- Empower employees to view succession pathways, investigate desired career paths, identify their skills gaps, and create development plans to plug those gaps
- Integrate with other ELMO modules including Performance Management to ensure employee performance and suitability for future roles are considered; Learning Management to ensure skills gaps are closed and learning pathways are developed; and Pivot Remuneration to ensure high performers and critical talent are compensated appropriately
Succession management is not a “one-off” task but a constantly evolving process to be monitored and updated as circumstances change: the business grows, your business strategy shifts, new skills are required, the workforce evolves – and yes, people depart (despite your best efforts).
Remember, by failing to prepare, you are preparing to fail!
ELMO Software (ASX:ELO) is a cloud-based solution that helps thousands of organisations across Australia, New Zealand and the United Kingdom to effectively manage their people, process and pay. ELMO solutions span the entire employee lifecycle from ‘hire to retire’. They can be used together or stand-alone, and are configurable according to an organisation’s unique processes and workflows. Automate and streamline your operations to reduce costs, increase efficiency and bolster productivity. For further information, contact us.
 SME Research Report 2017/18, Hill Rogers
 “Generation MillZ: What Australian millennials and Gen Z are really thinking”, Deloitte, 2019
 “Attracting and retaining millennial professionals”, Robert Watson report