A tremendous proportion of the United States workforce will retire within the next several years, leaving a significant disparity in the number of employees prepared to fill these position vacancies. Not surprisingly, this impending crisis has sparked a growing interest in succession planning policies among scholars. Interestingly, however, while research has begun to illuminate the organizational characteristics that correlate with succession planning, it has yet to investigate whether governments that adopt and implement this managerial practice find any evidence of performance benefits.

High, or suddenly high, levels of attrition and turnover impose significant costs on organizations, including the loss of institutional knowledge and expertise, recruitment and retention costs, new employee training and development costs, and low levels of morale and commitment among remaining employees. Succession planning policy is explicitly intended to reduce turnover shocks and, at least some of these costs, through the strategic use of early retirements, as well as through forward looking hiring and training practices. It is reasonable to assume, therefore, that these policies may reduce employment volatility within organizations and the negative consequences associated with them. As noted above, however, there exists no empirical test of this assertion.

This paper offers such a test. It uses data on municipal and county governments from the ICMA’s State of the Profession (SOP) survey in conjunction with data on organizational employment levels and community characteristics gathered from other sources, in order to assess the impact of succession planning on the volatility of local government employment—defined as the standard deviation from the mean number of employees in a jurisdiction over a 4 year period. Results suggest that after controlling for organizational and community characteristics, the impact of the recent financial crisis, and other managerial behaviors, such as strategic planning and performance management practices, succession planning is negatively associated with employment volatility. We observe the same results when utilizing different estimators to deal with 1) the potential selection bias arising from nonrespondents to the SOP survey and 2) the potential endogeneity between employment volatility and the implementation of succession planning. The paper concludes with a discussion of the implications of this result for governments facing the impending wave of retirements among baby boomers.