What is Succession Planning?
Succession planning is the process of identifying and training successors for key positions in a firm. It has long been accepted as a best practice for businesses to have a succession plan, but it is often difficult to execute. There are many aspects of the business that need to be considered before implementing a plan, such as company culture, values, and demographics. Succession planning can be a top concern for firms of all sizes. The process is best thought of as a business strategy, rather than a one-off event, and it’s important to have the right succession plan in place to ensure the continuity of your business. In this article, we’ll show you how to develop or review your succession plan from start to finish!
Reasons Why Succession Planning Matters, Benefits
The first step is understanding why succession planning matters. It’s no surprise that succession planning is a top priority for most businesses – obviously, a company’s future depends on the health of its organisation. But why is succession planning so important?
Who is responsible for supporting and managing your business?
The first thing to remember is that – whether you’re an individual or a company – the buck stops with you. If something goes wrong, or things start to go wrong, then you’re ultimately accountable for resolving those issues as soon as possible. And, as we all know too well, sometimes life gets in the way and we can’t resolve those issues ourselves.
The solution? You need a plan in place that covers the who, what, where and when of your business. With a succession plan in place, you can slowly hand off key roles and responsibilities to your next generation of leaders. In doing so, you’ll be ensuring the continuity of your business as well as setting yourself up to enjoy a rich, full retirement.
Managing Your Business: A Leadership Shift Over Time
Any change takes time – this goes for big changes like retail expansions or changes to executive leadership positions. Many companies want to make sweeping changes quickly rather than gradually; however, succession planning is about ensuring slow growth over time. That way, you can adapt to changes in your leadership team and your organisation over time.
It may be tempting to move too quickly, but there are a number of steps that will help you better manage your business as a whole:
Identify who will lead the next generation of the company. In some cases, that may be you! In other cases, it’s vital that you identify those individuals who will take on more responsibilities as time goes on. Determine how each team member can grow their career – whether this means a simple career change or a full transition from one role to another. Step back and look at how your team is structured as a whole. It’s likely that you’ll find some roles that need to be filled or additional departments that you need to consider either growing or acquiring entirely. At the end of the day, decisions like this rest with the executive leadership team. So, they’ll be your central focus when it comes time to develop a concrete plan.
Knowledge Management: A Tool for Succession Planning
There is no doubt about it: knowledge management is a critical component of succession planning. A company’s success and strategy depend on its employees and their subjective intelligence and ability to think outside of the box. In many cases, years of business experience can go a long way towards helping a company succeed in that competitive marketplace.
How to Know When to hands off your knowledge?
You need more free time to enjoy life outside of work. If you’re not taking a vacation for a month or more, then it’s time to start thinking about stepping back from your business. You have an innate feeling that it’s time for you step out of the limelight and allow someone else to take charge. In some cases, this is hard – especially when you start to build strong relationships with your employees and colleagues. But, the best leaders are the ones who recognize when it’s time to pass the torch on to new leaders – and they’re the ones who build strong transition plans, just in case.
Examples of Succession Planning: Leaving Room for Growth & Transition
At some point, many companies decide that they need to move towards more team-based leadership. Often, these changes have already been planned for, but your future growth potential may still require you to transition into a leadership position that is more suitable for the times. At the end of the day, it’s really not about whether or not you can take on more responsibility – it’s about using your knowledge to build an organisation that is capable of responding to whatever comes its way.
For example, you could hand off key parts of your budgeting process to younger team members who are interested in pursuing a business degree at university. It’s possible that these individuals could help grow your company through their new degree, even if they’re still working in the same role with you!
Another example of succession planning involves keeping an eye on rising stars inside your company. You might know that you’re nearing retirement, but there’s no reason why that means that you can’t still provide mentorship to your employees. If one of your employees clearly has the drive and the knowledge to take over for you, then there’s no reason why they can’t be groomed for a leadership position while you remain active in the company.
As you can see, succession planning is a tricky process. But, it’s a critical part of running your business. Hiring an expert to handle the process will guarantee that you take the right steps towards building stronger leadership transitions for years to come.
Benefits of Succession Planning for Businesses
Many businesses believe that succession planning is purely about ensuring that they don’t run into problems with age or health – but it’s actually about so much more than this! Here are just some of the benefits that can be experienced by your company if you’re ready to prepare for the future:
A Better Place to Work – With good leadership, your employees can finally feel safe and comfortable in their environment at work. There are few things that can be as stressful as waiting to see whether or not you can hit your quota, or being forced to push yourself beyond your means. When you have a good succession plan in place, staff will be motivated to succeed – even if it means they have to take on more responsibilities.
Reduced Turnover Rates – Particularly for smaller businesses, turnover rate can be incredibly high. As the saying goes, “When you’re dealing with others’ lives, death is not an option.” It’s important that your employees feel safe and comfortable in their positions because they will often accept more responsibilities for this ‘security’. But, good employees will also want to remain on the business as long as possible.
Improved Financial Position – A strong company requires a strong leadership – and this is where succession planning comes into play! It’s often only a matter of time before some managers start to grow dissatisfied with their role or duties, and it’s important that they either begin to step down from their position or find a new opportunity elsewhere. This means that more money is going towards paying off your debt and can be used to make your business stronger by hiring new talent.
A Stronger Brand – It’s easy for a brand name like yours to become stale or lost in the long term. If the employees are getting more responsibility, then they’re also starting to show that they can act as your brand’s representatives. If you’re struggling to sell products or services, it could be because the company has lost its own identity. When you’re able to use your turnover rate to hire new talent, then you can rebrand without feeling like your brand is necessarily losing any meaning.
A Fairer Business Environment – One of the things that will keep your business strong for years is a good team culture. Using succession planning means that more than one person becomes responsible for all of these roles and duties. This is good for your company because it makes sure that you can always cover your responsibilities while giving your employees the opportunity to grow.
The best leaders create cultures where their employees are accountable for each other. If one of them goes down, then another can pick up the slack. And, if one of these individuals does end up leaving the company, then they will probably do so on positive terms with everyone else inside of their industry. This is because they have seen how successful they can be in their own right – but also because they have seen how success gets passed down from generation to generation within the company!
Succession planning can be a daunting task for some people – especially if their leadership roles aren’t acting as a springboard for future opportunities. If you’re feeling stuck or unsure of what’s next for you, Fintalent offers a one-stop-shop for your Succession Planning consulting needs. Fintalent Transition Management Freelance Experts can help develop your succession plan while leaving enough room for learning.