When your business is thriving and your financial future looks bright and stable, it may seem scary to stop long enough to consider what might happen to your company if you suddenly weren’t there.
A purpose of planning succession is to guarantee that your startup, family business, or any other self-employed company will continue to run successfully if you or the other leaders or owners were to leave, retire, become incapacitated, or die.
The long-term survival of the company and its future success will likely depend on getting through such changes efficiently through strategic succession planning.
The truth is you can’t predict when a disaster, accident, severe illness, or pandemic will happen. Still, you can take care of how your company will respond should one of these situations occur.
The benefits to starting succession planning at the start of your business are numerous. Here are some of the most important advantages.
Protects the Harmony in Family-owned Businesses
Succession planning is an essential concern for all companies. However, for family businesses, there is yet another layer of complexity. Even with clear boundaries in place, conflict among business and personal concerns may occur when the time for the change comes.
Family business owners should address most succession planning issues from all these perspectives early on.
When it isn’t clear which interests are driving things, the decision-making can seem inconsistent and confusing. Family relationships can decline, the business may suffer, and the succession plan may be hindered.
As the family business is often the main source of family income and future wealth, succession decisions will affect every family member, including those with no leadership role or formal employment in the company. A success plan can take all these issues into account and safeguard both the family’s status and the company’s fortunes.
Grants Survival of the Business
Many business owners and leaders are so overwhelmed with day-to-day operations that they fail to prioritize succession planning. These leaders may think they’re too young to become severely ill. Or they may overlook that a key professional could leave for another company willing to pay much more for their skills. These scenarios can leave a business extremely vulnerable.
A succession plan is a vital part of leadership’s strategy to protect the company – whether you will physically witness its long-term success or not. Starting the discussion on this topic may seem overwhelming. Still, the sooner you start working on the succession plan, the quicker you will prepare your company for the future, as you will have a strategy for appointing and backfilling even the key persons in your company.
It Motivates You to Think Long Term
Many of us spend our days thinking about this quarter’s earnings or tomorrow’s meetings. It’s not that we don’t realize how crucial long-term planning is; it isn’t easy to find the time.
Succession planning will make you take the time to consider your company’s future. Who among your employees can rise to fill a top leadership position?
If you don’t have anyone trained to take on leadership positions, where does the problem lie? Do you need to change something? How will you groom the candidates?
These questions, and similar, will all come up during succession planning. Finding answers won’t just help you with future successions. It will ensure your company moves in the right direction.
You Can Prepare Your Successors
Once your company has identified persons interested in moving into senior roles, you can determine any competency gaps and groom potential successors for the planned position.
Their professional advancement may come in the form of mentoring, coaching, or job shadowing. Some candidates will need to go back to school to get a professional certification or further education.
They will also have enough time to gain skills and experience, and progress to more advanced responsibilities gradually. By planning succession, you will also let employees know that you’re willing to invest in them and the company’s growth.
Saves You Money
If you don’t plan for a sudden vacancy, you also risk high costs. First, your search for a replacement can hardly be efficient. Still, it will cost you money to attract qualified people away from their current jobs. You may end up paying an enormous salary to the person you hire.
Furthermore, a newly hired executive could demand to bring along their people. They may cost you much more than you are willing to pay.
Even when there are no sudden circumstances, a succession plan for specific positions can save you the expenses of hiring outside persons for essential leadership roles. If you have a system for promoting from within your company, you can avoid spending a fortune to fill an important position.
Since succession planning is about setting the foundation for the future, it’s common for companies to include the leaders of every department and every company member. Encouraging everyone to talk about plans is an excellent way to promote dialogue between departments and employees. Any communication, especially discussions about long-term goals, can enhance the way employees work together daily.
How Do You Begin Succession Planning?
When planning for succession, there are quite a few questions you need to try finding solutions for. You can best begin with these:
What are the crucial roles to be considered when planning succession? You need to determine what positions will have priority in your plan and define the duties of each one of them. Also, you need to identify the necessary skills to perform these roles individually.
What are the criteria for choosing your successors?
It might happen that you already have a clear idea of potential successors for leadership roles in your company. Nevertheless, it is a good idea to list key criteria for choosing a person for a leadership role, such as their skills, training, etc.
How will you groom the candidates?
Once you’ve listed the criteria, it will be much easier for you to plan how to prepare the candidates for taking on their roles. Coaching and mentoring are the methods most companies use to develop succession candidates, so you can consider improving these practices. It will also be much easier for you to spot any gap in your training system if there are any.
Do you have documented procedures and processes?
The best way to enable effective succession is by having key processes and procedures written down so that a trained person can smoothly step into a role.
While we mostly link succession planning for leadership positions, it’s always a good idea to have “backup” options for all other critical positions in the company.