Around 10,000 individuals are retiring every day. HR professionals are already realising the importance of effective succession planning. But not every organisation is operating the best succession plan. Is your organisation one? This blog will guide you in setting up a competency-based succession planning process.
Competency-based succession planning is a strategic process. The employees with the potential to take up leadership roles in the future are identified. These employees are developed to be able to take up the expected leadership positions. Knowledge and skills needed for various leadership roles are assessed. A talent pipeline is created for smoothly transitioning competent employees once current leaders retire.
Why Is Competency-Based Succession Planning Important?
Almost 64% of HR professionals report having some sort of succession plan in place. But competency-based planning is particularly important. It ensures that the future leaders are prepared based on talent gaps and developmental needs. Leadership positions are filled based on skills and performance rather than tenure or title.
So, a competency-based succession planning process secures business continuity. It ensures leadership readiness. It ensures that the right people have taken the lead. It increases the overall organisational strength in the long term. But still, 46% of the HR professionals are from small firms, and they reveal that their organisation does not even have a succession plan.
If you too face the same challenge, keep reading to learn how to implement a competency-based succession plan in 6 steps.
Step 1- Define The Organisation’s Strategic Goals
First, you need to have the organisational goals defined and communicated.
Alignment With Business Vision
You must ensure that the right people are assigned to the right roles in the future. So you must first define the organisation’s vision. It should be your first step to the competency framework development process.
Identify Future Leadership Roles
So you have a well-defined vision for the future. Next, you should identify the key leadership roles needed to guide the organisation towards strategic business goals. Identify what the business wants to achieve in the upcoming 5 to 10 years. Identify what leadership positions are critical to the goals.
Around 59% of the HR professionals feel that the impact of the leadership role on the company’s success is an important consideration during succession planning.
Define Measurable Indicators of Success
You need to understand if your succession planning process is effective. You can use indicators like the number of roles internally filled. Or you may refer to the time-to-readiness as a success indicator.
Step 2- Identify Core Competencies For Key Roles
The needed core competencies must be identified once leadership roles are determined.
Use Job Analysis & Performance Data
You must establish a clear understanding of the essential skills and knowledge required for each determined future leadership position. Also, identify the desired values and behaviours. Analysis of job requirements and employee performance can help you pinpoint talent gaps. This will inform you of the specific competencies to be developed.
Differentiate Technical & Leadership Competencies
Future leaders must have specific working skills as well as leadership qualities. So you need to identify both technical and leadership competencies needed to fill each future leadership position.
For example, a leader in a technology company may have subject knowledge and software development skills. But they must also have the ability to lead and motivate teams. You can also measure an employee’s knowledge of organisational culture before assigning leadership roles. Around 41% of business leaders think it is an important consideration.
Tailor Competencies By Department
You may also choose to identify competencies on the basis of the department. Leaders from individual departments focus on different aspects of the business. Hence, departmental leaders must have function-specific competencies as well. You need to consider it when identifying core competencies expected from future leaders.
Step 3- Assess Current Talent Against Competency
The third step in the competency framework development process is all about identifying skill gaps and potential successors.
Conduct Reviews & Evaluations
So you have already identified the competencies expected for future leaders. Now you must assess the gap between existing and expected competencies in your organisation. Start by conducting 360-degree reviews. Evaluate the current performance of employees.
Identify Skills Gaps & Potential Successors
Performance evaluation and reviews will give you a picture of the current competencies. So you must identify the developmental needs. What skills must be developed by employees to be successful in their assigned specific leadership position?
Performance evaluation and gap analysis will also give you an idea of who the best people are for future leadership roles. You may choose to focus more on the development and transition of these best-fit employees.
Create Competency Profiles
Create a competency profile of your current employees. List the strengths and improvement areas of individual employees. Also, consider the behaviours and traits along with skills and expertise.
Step 4- Build Personalised Development Plans
Once the skill gaps and best-fit employees are identified, it’s time to create tailored development plans.
Offer Targeted Mentoring & Training
You already know who the best potential successors are. You know what overall core competencies are lacking across the workforce. So now it’s time to take action. Develop training and mentoring plans tailored to each anticipated future leadership role. The goal at this point is to close the skill gaps and prepare potential successors for transition into leadership roles.
Align Plans With Skill Gaps
You need to review the development plan to ensure it is aligned with the identified skill gaps. Consider the skills needed for the future. And now review the extent to which people have those skills. How much more training is needed? Need mentors to shape certain behaviours? Need to develop a skill from scratch?
Aligning successor developmental plans with skill gaps is important. Ineffectively managed C-suite transitions in the S&P 1500 companies result in a loss of $1 trillion in market value every year.
Track Progress With Milestones
The progress of the people developing their skills must be tracked and measured. You can do this by setting out learning paths. You can also set milestones. The learning progress must be continuously measured to know if the skill gaps are closed. It will also help you understand if the potential successors are ready for transition.
Step 5- Create A Succession Pipeline
Keep an eye on employee readiness while you measure learning progress.
Categorise Employees Based On Readiness
Categorise the employees based on their readiness for succession. You may create categories for employees who are ready now. You can create categories for those who will be ready in the mid and long term. These categories will also help you determine who needs extended development.
Ensure Inclusiveness In The Pipeline
Do not overlook the importance of diversity and inclusion in the competency-based succession planning process. A culture of inclusion will further ensure fair promotion. And diversity also leads to innovation through multiple perspectives.
Analyse data on how different groups are represented in the workforce. Identify diversity gaps and focus on closing them. Ensure that there are no disparities in compensation. Development opportunities must be accessible to all. Around 61% of the business leaders consider diversity and inclusion important in succession planning.
Visualise Talent Movement
Your competency framework development process will benefit from visualisations on talent movement. You can create succession maps to get a view of how people are transitioning to leadership roles.
Step 6- Monitor, Evaluate, And Adjust The Plan
Identifying the ready-to-transition employees and extending development for others is not the end of the process. You also need to make continuous improvement.
Establish KPIs & Review Intervals
Establish performance indicators to understand if the transition process is succeeding. Use the indicators you set out in Step 1 to actually measure the success now. Also, define the intervals for regular performance reviews.
Adapt The Plan To Changing Needs
Business needs and workforce capabilities can keep changing. Market conditions may call for new processes and strategies. Hiring and the exit of employees can alter the workforce constituency. So, adapting the plan as per changing needs is important.
Collect Feedback
You can further refine the succession planning process by incorporating feedback from employees and other stakeholders. Such feedback can help you make improvements that you would have otherwise overlooked.
Final Thoughts
Competency-based succession planning can help you align leadership positions with business goals. It will ensure that leadership positions are filled internally based on skills and not position. It also helps develop employees before they transition to leadership.
You can start small and gradually scale up your succession planning process. Build a plan based on future business vision. Track progress and measure performance. And remember that evaluation of current competencies and skill gaps is a critical step.
