10 Key Succession Planning Metrics for Organizations
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Strengthen your company with succession planning
Lack of talent. Surprising layoffs. Growing skills gaps.
This is all part of today's turbulent working life. One way to strengthen your business so it can continue to operate as usual is through solid succession planning.
Succession planning, defined by the CIPD as “identifying and nurturing talent to fill leadership and business-critical roles in the future,” is an essential element in today’s corporate landscape.
In this blog post, we'll look at how to measure succession planning, some key succession planning metrics to track progress, and how succession planning helps set the stage for a resilient and prosperous future.
Why measuring the success of your succession plan is important
According to Gartner, succession planning can help ensure the company has the right leaders with the right skills at the right time.
As with any plan, it's important to know what success looks like so you can maintain a benchmark for the accomplishments and issues of your succession plan.
First, tracking measurable progress metrics, consistently reporting results, and setting manageable goals means your succession plan can demonstrate your successes over time. Even if you only track a single metric - and ideally assign a dollar value to it - this is a tangible way to demonstrate your successes to stakeholders.
Many companies use this approach to compare year-to-year progress and help teams allocate the right resources to continue to be successful in the years to come. This is particularly important for training and further education because it helps human resources managers identify key managers and promote internal talent for future leadership roles.
When promotions and talent are retained internally, the costs associated with recruiting and hiring talent from outside are reduced.
Identifying internal talent early also allows HR managers to plan ahead, prepare their company for future leadership changes and develop exit strategies in the event of disruption.
How to measure and track succession planning efficiently
The key to succession planning is to align succession management metrics with company goals. First, clearly define the company's goals as part of your formal plan. You can use this as a guide when selecting the measurement variables.
There are two types of metrics: objective, which provide quantitative values (e.g. time-to-fill and retention metrics), and subjective, which provide qualitative values (e.g. company culture and team satisfaction).
Regardless of which metrics you choose, you can leverage all existing hiring, promotions, and retention data to create decision-making and data collection processes.
Once you have your goals, metrics, and processes in place, there are a few more tasks to help you with succession planning in your company:
- Identify critical roles
- Define succession criteria
- Evaluate your talents
- Introduce development and training
- Increased mentoring, coaching and one-on-one efforts
- Refine knowledge transfer processes
- Continuously track, review and update your succession plan
Most important key figures for succession planning
There are many different metrics - both qualitative and quantitative - that you can use to measure the performance of your succession plan. Here are just a few examples of the most common metrics.
1.Strength of the bank
The strength of the replacement bank is the crucial key figure in succession planning. Based on the sport of basketball, it is a measure of the talent sitting on the bench - people who are not playing but are capable of playing.
Talk to your managers and ask them who on their team shows promise, who is interested in leadership roles, and who is capable of advancement. The strength of a bank lies in having strong team players who can also take on more demanding positions and tasks if necessary.
Without these employees, you're forced to recruit from outside - an expensive and time-consuming process.
2.Proportion of critical positions filled internally
This metric provides insight into your company's ability to develop internal talent by looking at the percentage of critical positions filled internally compared to external hires.
The higher the percentage of critical positions that are filled externally, the more likely you are to need to reevaluate your internal training and development efforts to support your succession plan.
3.Time to fill
Time to fill a position is the time it takes to find and hire a new applicant. It is usually calculated as the number of working days between the advertisement of a new position and the acceptance of the offer by an applicant.
This metric measures the efficiency of your company's recruiting efforts and hiring processes. When creating a succession plan based on external hiring, reducing time-to-fill is critical to the success of that plan.
4.Career relationship
The career path metric measures the growth rate of your employees based on vertical and lateral movements within your company.
To calculate it, divide the total number of promotions in your company by the sum of all role changes (both upward and lateral) to get a number between 0 and 1.
A high career rate - any number above 0.7 - means frequent promotions and the opportunity to take on greater responsibility. Low values - less than 0.2 - signal problems with the promotion process or too many lateral moves.
Aim for a score close to 1 to ensure your employees continue their training and are better prepared for promotions.
5.Diversity metrics
Diversity and inclusion initiatives have countless benefits for your business, from better representation to better decision-making to increased revenue. Ultimately, DEI&B is critical to setting your teams up for future success.
You can measure the diversity of your workforce by looking at your company's values:
- Wage gap
- Relationship between gender, age and race
- Regional diversity benchmarks
6.Employee retention
Does your company look like a revolving door that keeps opening and closing? Then there's a good chance your employee retention rate is low and you need better succession planning.
Employee retention is an early indicator of employee satisfaction. The goal is to ensure that your organization is happy and functioning at all levels.
7.Critical positions with 3 or more successors
Are there multiple candidates who are being considered for promotion to a higher position in the near future? This bodes well for your succession planning and suggests that your organization is in a more stable position and has multiple talent options, such as: is prepared for sudden departures.
This metric can also be used to measure how effective your leadership development programs are. A successful development program demonstrates that candidates steadily advance through the readiness levels.
8.Readiness
Speaking of readiness, this metric measures how well a company is prepared to fill new critical positions - typically leadership and C-suite positions.
To measure this readiness, hiring managers can look at a candidate's skills, past experience, and potential to assess whether that person is ready to advance into the new role.
An easy way to assess this qualitatively is to ask managers if the person in question is ready. To assess this quantitatively, you can also look at the average number of years it takes a team member to be ready for a new role. Ideally, the average number should decrease, indicating that candidates are taking less time to transition into a future role.
9.Risk of Loss
This metric, also known as "flight risk," measures how likely a person is to leave the company within the next six months based on their commitment to their current role.
Although this metric is difficult to measure, there are some possible indicators of a potential increase in loss risk:
- Dissatisfaction with salary
- Sudden unwanted changes in her role
- Major life changes, such as moving or the sudden loss of an important person
You can also measure this satisfaction through one-on-one conversations with managers, annual surveys, and compensation analysis to ensure your employees are always satisfied with their compensation.
10.Performance
Last but not least, employee performance is an important key figure for succession planning. This applies to every individual, and leaders need to know how well their employees work together, how well they work with their customers, and how well they do their jobs.
For example, you can measure the performance and productivity of employees taking on new leadership roles - or even that of the entire company over the same period.
Plan to be successful, be successful to plan
Succession planning is the key to remaining resilient as an organization, weathering the storms of everyday life and ensuring your business can continue to operate. However, succession planning goes beyond risk mitigation and represents a commitment to your employees, creating an action plan to identify and retain top talent within your organization.
In today's volatile workplace, it is imperative that companies take a long-term approach to succession planning. The best succession plans are not limited to filling positions, but rather empower, engage and retain valuable talent for a successful future.
Succession planning is pivotal for organizational resilience and talent retention. With IceHrm's support, empower your workforce for a prosperous future.
