What Is Succession Planning And Why Is It So Important?
He who fails to plan is planning to fail. Time and again, we have seen this play out in the professional world – often because no one can afford to steer their business blindly once a key player leaves.
Change happens quickly and usually without warning. That’s why a succession plan is important – you can fill any leadership or other key role gap before the company suffers a blow. You won’t have to look further afield either. Hiring within your own ranks is far more assured, limits disruption, promotes your best internal talent to a role they’ve been hungry for and is very cost effective compared to hiring externally!
Your culture stays the same. Processes aren’t thrown in the air. And the benefits kick in immediately. Plan for succession with an effective succession planning model , and you plan for success…
What is succession planning?
Quite simply, succession planning spots the individuals who can step up to a more senior role within your company. You can pre-emptively find and nurture those who may fit the bill, so they can take over once a current leader decides to move on or can’t work for any reason.
Investopedia suggests this is usually for ‘the ownership of a company’, but that’s not always the case. It could be for a member of the board. It may be a group of employees filling a high-level management responsibility collectively. Other sources define succession planning as a ‘smooth transition of power’, which really is the main, initial advantage – although of course the new senior leader’s style can mould the business over time.
Succession planning relies on a clear-cut, strategic talent pipeline, in which successors are identified far in advance. Planning ahead is crucial because, while you may have robust infrastructure in place, anything can weaken it without warning. If a key role becomes and remains vacant, then profit, morale and productivity may suffer. You can therefore view your succession planning process as a kind of insurance policy.
Why you need succession planning?
The leap from thought to action is a huge challenge for many businesses. Usually, it’s because the benefits of succession planning are vague and wrapped in necessity over specificity.
86% of business owners in a Deloitte survey believe that succession planning is ‘important’ or ‘urgent’, yet only 14% think they have the competency to do it well. Compounding this is the fact that a mere 8% of UK employees are actively engaged in their job, meaning they have little reason to challenge themselves and prove their potential future leader credentials.
Here, we isolate and examine the positive impact that succession planning will have on your organization:
1) Future-proofing the business
Companies are often left in the lurch when someone departs unexpectedly. There may be a professional reason - a business takeover or the sale of the business because an exit strategy had been implemented - or a personal one. It doesn’t matter. The risk of a sudden vacancy is real and ever-present.
When the position relies on an advanced set of skills (such as a qualification, hyper-organised characteristic or technical ability), it leaves a large dent in your day-to-day operations when it lies unfilled. Projects or deadlines will be challenged. Both long- and short-term business success can start to look more remote.
You can overcome these obstacles by finding and developing your key employees early, creating a talent pipeline and readying them for a takeover with their personalised development plan. Creating a career path for them enables you to loop them into the decision-making process, and find ways to enhance their skill set through training programmes and leadership opportunities.
2) The rational re-evaluation of current practices
Sometimes it takes looking to the future to realise what’s lacking now. There may be a problem with your business growth strategy , or any number of things unique to your industry, hierarchy or engagement with your market.
Succession planning is important due to the fresh eyes it can lay upon what’s working and what isn’t. Your potential leaders may flag this themselves as they delve deeper into the business. There’s a higher chance that a potential successor will point out any flaws, as they’ll be testing your ability to respond or adapt to operational shifts that are better for everyone.
Meanwhile, employee motivation will rise if you make the succession planning process a known quality. Leaders can emerge from people you’d never considered. You are effectively throwing the gauntlet down and seeing who picks it up.
3) Stronger employee retention
If we follow the logic of the point above, we realise something – employees will stay in your business for longer to have a clearer shot at future leadership.
Succession planning tells good, hard-working staff that their dedication will be rewarded. They have a reason to stay late; to read up on your key markets in their own time; to refine, push and experiment with their talent as far as it may go.
79% of people who quit their jobs reportedly cite feeling unappreciated as their primary reason. When you have an effective succession plan, you are making appreciation tangible.
4) A more consistent brand identity
In many cases, bringing new leaders in from outside your business can be very destabilising. It’s not just a matter of educating them and ensuring they are a good fit for your team.
Learning what a brand does and how it functions rarely happens overnight.
After all, your culture has been cultivated. If the leadership transition isn't effectively organised and the new leader doesn't have the requisite leadership skills or chooses to quit after a few months, you’ve sunk substantial avoidable costs. You could easily spend two or three times the amount of their original salary to secure someone who’s excellent, flexible and committed.
That’s another reason why you need a career development and succession planning process: the top talent is already familiar with your ethos and values. They probably have strengths suited for the role. And if there’s turbulence when they act on the extra responsibility, it could be a sign that your corporate culture is due a rethink. Of course, once we recognise these points, another question arises – how do you find the right individuals for a leadership role?
In our experience, the Harrison Assessments approach is just what you’re searching for. It’s a rounded, comprehensive analysis of the traits, skills and potential within your current workforce, as well as what to look for in anyone you hope to hire in the future. Read more about it here.
maxpotenti’s consultancy service uses the Harrison approach and builds on the discoveries it makes. Call us on 0161 4646 156 or email firstname.lastname@example.org to get started.