What Is Succession Planning, and Why Is It Needed?

There are two forces at work today that are driving organizations to consider some form of succession planning as a component of an overall talent management strategy: the aging of the workforce; and a shortfall in the skills possessed by those available for recruitment. Both are projected to become more pressing. But what exactly is succession planning and how will it address these growing human resource issues?

Succession planning, sometimes called succession management to emphasize the active and continuous nature of the effort, is a process for preparing people to meet an organization’s needs for talent over time. As defined in a book titled Effective succession planning (2005, p. 10), succession planning is perhaps best understood as any effort designed to ensure the continued effective performance of an organization, division, department, or work group by making provision for the development, replacement, and strategic application of key people over time. Geared to developing the internal bench strength of an organization, succession planning is usually part of a larger talent management program that is intended to attract the best through recruitment, keep the best through effective retention practices, and develop the best people through well-targeted talent development efforts.

Why is succession planning needed? There are many answers to that question. One of the most important is the aging workforce. Demographers have long been aware that the U.S. workforce is aging, a result of population change. According to labor economist Douglas Braddock, “over the 1998-2008 period, more job openings are expected to result from replacement needs (34.7 million) than from employment growth in the economy (20.3 million)” [Occupational employment projections to 2008 (1999, p.75)]

What are the practical consequences of this massive shift in the average age of the workforce? Consider:

One in five of all senior executives in the Fortune 500 is eligible for retirement now.

About 50% of the entire U.S. government workforce is eligible to retire now.

55% of today’s registered nurses can be expected to retire between 2011 and 2020

Equally threatening is the current difficulty in finding qualified hires. A January 2006 study by Manpower [Talent Shortage Survey (p.2)], finds that 44% of employers are experiencing difficulty today finding employees with the right skills in particular, there are shortages filling the following roles:

1. Sales Representatives

2. Engineers

3. Nurses

4. Technicians

5. Accountants

6. Administrative Assistants & PA’s

7. Drivers

8. Call Center Operators

9. Machinists

10. Management/Executive

Next I’ll look at a new approach to Replacement Planning.