The Secret to an Effective Succession Planning Strategy? Capability Building

The health of your business is only as good as your succession planning strategy. Bad succession planning = lost productivity and mission-critical knowledge.

But making a succession plan effective is more than just identifying future roles and potential successors; it’s making a strategic investment in the future capabilities of your organization.

In this blog, we’ll break down how you can build your talent pool and succession strategy in the only way that matters: with capabilities.

What is a succession planning strategy?

A succession planning strategy is a proactive approach to succession planning that ensures organizations have a sustainable pipeline of skilled employees ready to step into key roles.

It involves identifying and developing future leaders and successors for critical roles, to maintain business continuity and minimize disruptions when transitions occur. The idea is to strategically build capabilities across the organization, rather than focusing on replacing individuals when critical positions open.

Where regular succession planning goes wrong

Let’s be real. When people hear “succession planning”, they usually think of planning for senior leadership positions. That’s the most common trigger for succession planning, especially given employee performance decreases by 15% when leadership transitions go poorly. But succession planning goes way beyond your future leadership pipeline because it’s not just senior leaders who contribute strategic value to an organization.

Key positions are more about the institutional knowledge they hold than seniority in the business, which means when business-critical roles become vacant, you lose the business-critical capabilities they encompassed. And if you only focus on developing future leaders you won’t have qualified successors for non-leadership roles.

This all comes down to a lack of proactive development strategies. A reactive succession planning process usually results in two things:

1. Potential successors aren’t identified early enough, so they don’t develop the right capabilities by the time they’re required to transition into key positions and can’t help deliver business strategy.
2. Development plans aren’t properly thought out, personalized to learner needs, or even aligned with long-term business strategy and goals.

In both cases, you miss opportunities to identify key successors and develop them with the right technical and personal skills they need. The end result? You don’t have the right people in the right positions to drive organizational success.

How to build a capability-focused succession planning strategy

The trick to a proactive strategy? Capabilities. We’re big believers in capability-driven L&D being the secret sauce to continuous learning. It’s the best way to identify future opportunities and ensure employees have the right capabilities for a smooth transition into critical positions (or not-so-critical but still necessary positions, as the case may be).

You can create a proactive capability-focused succession planning process in five steps:

1. Identify key positions
2. Determine succession risks and gaps
3. Identify key talent
4. Determine development needs and pathways
5. Evaluate the succession planning process.

Step 1: Identify key positions

Some roles are more crucial to business performance, and need robust succession plans to ensure you have a steady pipeline of key talent for organizational sustainability.

If you’re wondering what puts the “key” in key talent, the answer is business capabilities. Critical positions embody essential capabilities needed for organizational resilience and success, whether that’s driving strategy or holding crucial expertise.

Generally, there are several factors that define critical positions:

1. Direct impact on strategic goals. Critical roles directly contribute strategic value to the business, and losing them would affect the organization’s ability to reach its desired outcomes.
2. Specialized expertise. These roles require unique, highly specialized skills or deep domain knowledge that may be hard to find externally, replicate internally, or costly to replace.
3. Operational stability. These roles keep essential operations running smoothly (such as senior IT roles, supply chain managers, or legal and regulatory roles), and their absence would disrupt multiple business functions.
4. High replacement difficulty. These are any roles requiring extensive hiring, onboarding, or training time (e.g., roles with advanced technical certifications or years of specific experience) that can’t be filled quickly without affecting business continuity.
5. Leadership and influence. These are any roles with significant decision-making authority or influence over strategic directions, such as executives, department heads, or roles responsible for major budgetary decisions.
6. Direct customer or stakeholder impact. Roles that directly interact with key clients or customers are essential because they maintain crucial relationships, and losing those key employees could mean losing those client relationships.

When you identify these roles, make sure you create job profiles outlining the requirements, performance expectations, and relevant capabilities of each of them. This goes deeper than just listing what capabilities are assigned to which role, and also requires you to define the competency (the measured scale of how a capability is performed) required in each assigned capability.

Just remember your defined competency level here is the desired level for the role to have (i.e., emergent or foundational, proficient, or advanced) which means it should line up with what your future goals are for the role. This will help you later when it comes to choosing high-potential employees (HiPos) to fill critical roles and designing talent development programs.

Step 2: Determine succession risks and gaps

A robust succession plan needs to reduce and even eliminate succession risks and talent gaps through talent management—whether that’s leadership development programs, general capability-building initiatives, or simply hiring qualified external candidates.

But to find out where learning and development should be targeted, you need to identify which roles are at risk of turnover and whether they have a succession plan in place.

Every role in your business can be categorized as:

• High criticality (like your senior leaders, executives, or positions with crucial institutional knowledge)
• Moderate criticality (like project managers)
• Low criticality (entry-level and junior roles).

“Criticality” refers to your key positions. Roles with low criticality tend to be more junior positions because they aren’t as involved on a high-level. It’s also easier to find entry-level employees to fill junior roles in comparison with senior roles, because senior roles need more specialised capability-sets.

Critical roles without a clear successor in the pipeline are high-risk, because if they unexpectedly become vacant, your business would lose their capabilities and expertise. Even a position with low criticality can be moderately risky if there are no successors lined up—especially if the role remains unfilled or has no successors for an extended period of time.

Now, we’ll be the first to tell you that successful succession planning needs to be an ongoing process, but that doesn’t mean you should provide the same one-size-fits-all training for all roles every year. Organizing roles in terms of criticality and vulnerability identifies which roles need a succession plan now so you can build effective succession planning strategies that focus on the greatest risks to your business continuity.

Step 3: Identify key talent

This part can be tricky, because while a lot of employees might show potential as capable leaders or institutional knowledge-holders, they may not actually be ready to transition into those roles. High-potential employees are generally high-performers at the individual contributor level, but if they don’t have leadership qualities or are disinterested in leadership as a whole, well, they’re not going to be high performers in a leadership position.

When you select succession candidates, you need to consider:

1. Whether the candidate is interested in the role
2. The candidates’ current competency levels in relevant capabilities
3. How much training candidates need to undergo to be ready for succession.

For the first consideration, you need only look as far as employee goals. All employees will have goals relating to their career growth, whether that’s developing key competencies or moving into more senior roles. These are created in collaboration between employees and their managers, usually during performance reviews or regular one-on-one meetings.

Identifying potential candidates’ current capabilities is a simple matter of carrying out a capability assessment. It provides an objective overview of employee performance based on measurable levels of competency. From there, you can determine capability gaps and the learning pathway needed to close those gaps. Employees with a shorter learner journey (meaning a smaller gap between their current and desired capabilities) are more likely to be ready for succession compared to employees with more to learn.

Capability assessments can also identify your emerging leaders. These are high-potential employees—specifically, high-potential employees who also show natural leadership quality. Their peers likely look up to them as subject matter experts and a source of support in the workplace. And, because they’re employees who’ve stepped up to the task of leadership naturally, they’re more likely to garner the respect of their peers (which makes a smooth transition of power more likely).

Step 4: Determine development needs and pathways

This is the bit where you get to determine how you’ll develop capabilities to close specific capability gaps. If your successor is going to move into a leadership role, you’ll need to design relevant leadership development strategies to prepare them for succession.

The task here is to identify and create a relevant and achievable pathway from A to B. It’s helpful to use a training needs analysis here to determine the right learning content and methods to close capability gaps. If you’re focusing on leadership development for future leaders, training should focus on improving leadership capabilities like communication or collaboration. In that case, providing experiential learning programs might be a good way to build relationships between potential leaders and their peers.

If you’re setting up a candidate to take over a more senior role in their department, you may provide them with formal training, or even have them shadow the current position holder so they get hands-on training in how the role works. When it comes to developing more creative capabilities, less traditional and more hands-on, on-the-job training tends to be more effective, so make sure your chosen training methods are suited to the type of role.

Step 5: Evaluate the succession planning process

A comprehensive succession plan doesn’t end at identifying and training promising employees. Not only do you have to make cultivating internal talent a continuous process, you also need to evaluate how your succession strategy is progressing.

By this, we mean incorporating continuous feedback and monitoring to track the progress of potential successors in their development plans. This can be through regular performance reviews and one-on-one meetings between succession candidates and their managers to track how their competencies are progressing in their relevant capabilities. But we also recommend providing informal feedback from mentors and coaches to provide future successors with growth opportunities along the way. That way they can address any mistakes or areas for improvement at the time of need.

We developed a performance learning management system (PLMS) for this exact process. A lot of the time, learning and development happens but is never measured in any tangible way (“tangible” being measurable performance improvement). A PLMS links learning and performance so that you can track and evaluate candidates’ progress through their personalized development plans and measure their preparedness for succession based on capability improvement.

The other part of evaluation is measuring how well your succession management strategies worked. If the transition wasn’t smooth (e.g., productivity decreased or was significantly disrupted, or candidates had a long time to proficiency) then successors were out of their depth when they took over their roles. That’s a good indicator your succession plan failed to align with organizational needs, role-specific training, or providing strategic onboarding support. You can work this out with another capability assessment to determine successors’ competence.

Key takeaways

Building an effective succession plan is more than identifying key personnel for important roles—it’s about continuous capability development. If you embed capability development in every step of the succession planning process, you’ll easily be able to identify the right successors for the right roles (and create the right development pathways for those candidates to succeed in their future roles).

The important thing to remember about succession planning and capability development is that they need to be proactive. In other words, you need to prioritize and mitigate succession risks and potential capability gaps ahead of time so that your business is always prepared in the event of turnover. It’s the only way to build a healthy, sustainable talent pipeline.