These shortfalls reveal opportunities to improve succession planning so both employees and employers win. Attracting and retaining top talent is more critical than ever given current labor and skills shortages. In fact, Ceridian's 2022 Executive Survey found that 95% of respondents said their organizations are seeking boomerang talent – former employees – to fill job vacancies.

Investing in a leadership pipeline

By taking succession planning steps to heart, and translating them into actions, companies will have more luck keeping employees in the first place.

While pay and benefits are key to retention, the benefit of succession planning—helping employees build careers at the same company—is also a key retention tool. Recent research indicates that many companies are on the right path, but that there's more work to be done.

For instance, 4 in 10 employees, 37%, said opportunities for career advancement would convince them to leave their current job for a new role, indicated by our 2022 Pulse of Talent survey of 6,800+ employees from around the world. Another 27% said they would leave for opportunities to learn and develop new skills.

Flip that around, and one can assume that companies that offer such things will be more likely to retain that talent.

However, our Executive Survey indicated that just over half of the companies surveyed create internal training programs, move skilled employees to higher impact roles, or invest in technology to track sills gap. What's more, only 51% have manager training programs to support middle managers, who are key to building organizational strength and agility.

Avoiding pitfalls

In addition to boosting learning and development opportunities, there are ways to avoid succession planning pitfalls.

No doubt, hiring external candidates can make strategic sense in some cases. Outside hires will provide a fresh perspective, for instance, or provide a competitive advantage. But employers, like employees, want choices when finding the right workplace fit. Oftentimes, the right choice is already present in your company but your succession planning is falling short.

Succession planning pitfalls to avoid include:

Not involving anyone outside of HR in the process. HR will play a central role in succession-planning strategies and initiatives. But it can't be solely responsible. To be effective, succession planning must be a company-wide initiative that is seen as an evolving process. For instance, front line managers are often the first to know if an employee is leadership material. Involving those managers early on in succession planning can help make sure talent stays engaged and looking forward.

Focusing only on senior leaders. While 73% of executives surveyed said their organizations use succession planning for senior leadership roles, that dropped to 62% for critical technical experts, 58% for subject matter experts, and 49% for people leaders.

Succession plans should be broad and provide career paths and talent development for employees throughout the organization. After all, those people may eventually succeed senior leaders. Employers should also avoid considering only one successor per role. That successor could take a different internal position or jump to another company. Rather than focus on one, build talent pools for succession.

Relying on intuition and anecdote versus data. The right technology tools can help leaders create coverage plans for key roles to reduce organizational risk and regrettable turnover. It can help track readiness for promotion and support employees' ongoing development. Succession-planning software allows organizations to make more informed decisions about employee career paths based on performance, flight risk, compensation, and other data. It also helps keep succession planning top of mind, rather than only when a successor is needed. More than half (52%) of survey respondents use technology to map talent/identify leaders, which lessens the subjective part of the process in favor of a data-driven one.

Comprehensive succession plans are an effective tool for improving employee retention at all times, but they are especially critical in today's hyper-competitive talent market.

Steve Knox is VP Talent Recruitment at Ceridian.