Top Reasons to Have a Succession Plan in Place
Although it may be hard to believe, the day will eventually come when you relinquish your leadership post to a new generation. If your goal is to facilitate a smooth transition, things will go a lot better if you and your team have done some planning beforehand.
Should this not occur, several succession-related challenges will likely arise that could harm both the business’s reputation and its odds for continued long-term success.
According to Indeed, succession planning describes “the act of preparing a plan in the event of the departure of a senior leader or another important employee” within the organization. “It’s a sign of good management to create different plans… depending on multiple scenarios or circumstances that may arise.”
Here are other compelling reasons to begin your succession planning now:
Plan for the Unexpected
Savvy CEOs and business owners can often predict when they intend to depart their leadership role. But since life is unpredictable, it’s important to recognize that alternative scenarios are equally possible, ranging from sudden death or an incapacitating illness to a business-related scandal or major changes in one’s personal life. In such cases, an established succession plan will prove to be a great asset.
Enable the Search for a Successor
Knowing how succession will proceed (at the appropriate time) enables you and your team to begin casting about for a replacement. Without the urgency of an unforeseen crisis, there’s time to research, evaluate, and interact with promising leader-candidates.
Additionally, a well-coordinated search can minimize related expenses and resources. “It costs money to lure qualified people away from their current jobs,” notes Walden University. Having a plan in place “can often save you the costs associated with hiring outside people for key leadership roles,” or if the goal is internal promotion, “you can avoid paying a premium to fill an important position.”
Maintain the Business Legacy
When a trusted owner or CEO departs, there’s always the chance their successor will want to make dramatic changes to the company culture and workplace. In some cases, this can lead to a dilution of the brand or other consequences that undercut the company’s history or ways of doing business.
Effective succession planning aims to preserve institutional knowledge to keep a competitive edge. It also “safeguards a company’s legacy [and] ensures that the values, vision, and culture built over time continue after the current leadership steps down,” notes estate planning attorney Mary Conte.
Identify Organizational Shortcomings
Putting a succession plan in motion entails taking a close look at how well a business is being governed—and where an absence of leadership negatively impacts operations and sales. It also brings into focus where employee experience and skills may fall short.
By scrutinizing the capabilities and potential of the current workforce, then comparing that with what’s needed in critical positions, “the organization can determine where it needs to invest in training, development, and recruitment,” notes Euclea Business School. This approach bolsters efforts to create “a strong talent pipeline” and helps “prepare for future challenges.”
It’s clear that, where the issue of succession is involved, early and comprehensive planning helps maximize the opportunities and decreases the challenges involved in an inevitable leadership departure. It all starts with business leaders acknowledging that they’re not in charge forever, and then planning ahead to find the best options for a company’s future.
Written by Lee Polevoi