Succession planning is a necessary strategy that identifies and develops the future leaders of your company. An effective succession plan is advantageous to your employees, and boosts their self-esteem while producing long-term goals. As a result, employees are developed and prepared to meet the company’s needs as it grows. This also helps your organization’s endurance when the inevitable happens—an executive leaves the company.
Studies show that about 10% of corporations have to hire a new CEO each year. This is due to a variety issues—including retirement, resignation, health issues or expulsion. While leadership replacement happens more often than you would imagine, many board members still find themselves unprepared to replace their leaders.
KPMG recently conducted a global survey amongst board directors. Out of 2,300 board directors, only 14% had a detailed succession plan. Out of this 14%, only 12% of board members were content with their succession plan. Dennis T. Whalen, head of the KPMG Board Leadership Center, explains that many board members recognize the importance of a succession plan, but find it hard to execute one.
Succession Plan Tips
Staff turnover happens, so it is best to be prepared. Hardships and disruption can be managed through effective succession planning.
Here are some tips to create a strong and effective succession plan:
- Don’t procrastinate. Be proactive in defining and establishing the system. If you wait until an employee leaves, it’ll already be too late!
- Determine the key roles and candidates to focus on. Analyze the major roles in your company and determine how these roles will be best fulfilled over the years. Most importantly, take a look at the current employees and envision their growth and career path. Oftentimes, the solution lies with the most valuable people to the organization.
- Start preparing employees now, whether it be through training, mentoring, job assignments and/or other development opportunities.
- Make the succession process very clear. A fully documented and official process maintains consistency and eliminates mystery, thereby supporting the employee’s trust in and understanding of the system.
Many of us know the importance of succession planning, but don’t take the effort to execute it. However, it is a key ingredient for the growth of any company. Without it, long-term goals can hindered. Succession planning and employee development provides advantages for both the company and employees. Business continuity is better protected, and it is easier to recruit and retain the best employees when it is known that the company values its people and is diligent about development. No matter how small or big your company is, there is never a wrong time to plan for the future.