If you run a business, chances are you’ve thought about what you want to happen when it’s no longer your top priority. A succession plan may help ensure that your company has the right leaders at the helm if a change occurs quickly. Of course, no one can anticipate a serious illness, disaster, or accident, but being prepared may make the situation more manageable.
The lack of a defined succession plan may create confusion and massive risk to an organization’s stability when a leader departs. Ideally, you should develop a succession plan before it’s needed to help avoid any issues should a crisis happen.
Continue reading to learn why a comprehensive succession plan is so important, what goes into creating it, and some of the benefits of having one so you can decide whether or not this kind of planning is right for your business.
The Benefits of Having a Succession Plan
Developing a succession plan might seem like a time-consuming process; however, succession planning may benefit your business in multiple ways.
Succession Planning May Help Mitigate the Risk of Sudden Leadership Changes
There are many reasons leadership positions become vacant — retirement, new job opportunities, termination, and sudden illness or death. Changes happen more often than you may realize. According to the Harvard Business Review, 10% to 15% of corporations must appoint a new CEO yearly.
Companies may have ample time to consider successors when a planned retirement is announced, and it’s inadvisable to wait to act. However, in the case of a sudden departure, you won’t have the luxury of time. That’s why you may want to plan for transition in advance.
Succession Planning Forces Long-Term Thinking
It’s easy to get caught up in the day-to-day operations of your business. Unfortunately, it can sometimes make it challenging to take the time for long-term planning. Succession planning may help you to think about the future of your business.
Which staff can fill a leadership position? How will you train them? Should you examine your hiring or training methods if no one comes to mind? Do you need to make changes? Working on a succession plan will help you to consider these questions and others. Developing answers may help you plan effectively for the future of your business and deal with existing issues.
Succession Planning May Save You Money
Without a succession plan, you may risk incurring significant costs. For example, unexpected vacancies can cause inefficient searches for a replacement and lead to rash decisions in the process. That could result in paying someone a higher salary. According to some experts, improper succession planning is the largest factor influencing bloated executive pay.
Even without “surprise” circumstances, having a documented succession plan may save you the costs of hiring outside people for key leadership roles. Likewise, if you plan to promote from within, you may avoid paying a premium to fill an important position.
Succession Planning May Motivate Your Staff
Employees can feel more secure when they know the business is planning for the future, which signals stability. They may also be inspired by the company’s commitment to developing staff members for future leadership positions.
Tips To Develop a Succession Plan
Make It a Priority
Taking the time to develop a succession plan and making it a priority is a protective measure to help ensure the future of your business is secure. Determine what types of skills will be needed and focus your attention on ensuring that the necessary training is provided. Then, you may consider creating a detailed and specific plan to make the transition smooth when a change in leadership is needed.
Identify How You Will Attract and Develop Talent
Developing a succession plan is critical, but you need a skilled pool of prospective candidates for success. Even if you plan to nurture successors from within your organization, you might want to be aware of external options.
Cultivate Talent To Build a Strong Succession Plan
Once you’ve identified potential replacements, consider nurturing these employees to take the next step in their careers. Again, providing educational and training opportunities may enable you to continue filling your talent pipeline.
Review, Adjust, and Repeat
Reviewing your succession plan to ensure it doesn’t become stagnant is critical. A plan that appeared to take into account everything needed a few years ago may no longer suffice.
Consider making the time to review and refresh your succession plan to address any significant changes before they happen so you can avoid the upheavals that arise from the vacancy of a critical role.
We hope this information helps you understand the importance of a succession plan and provides steps to build one.