To most, succession planning is not an important consideration for their business. Some even believe that it is only for family-owned companies. This however, is not the case.
Succession planning should be considered as vital as the company’s biggest goal. It provides a strong basis in terms of deciding who will be the next leader of a company in case of a sudden loss or unexpected retirement of the current leader. No matter how immortal the current business status of a company, succession planning can be used to determine whether the company has a potential key leader already developed who needs continued development and to be nurtured for the future.
Much like any other corporate activity, succession planning has a number of advantages and disadvantages. More often than not, these are practical things one should consider.
On the positive side, succession planning provides a continuous supply of strong and skillful leaders to a company. It is an opportunity to retain these successors and make them feel that they are essential for the growth of the company.
One way of developing a succession plan is to assess the qualifications of current employees – what do they already have, what do they lack and how you think you can help them develop and grow. Then compile a list of future talents that you think you might need for your future employees. This is actually an extension of talent management; something that business analysts believe has a very big impact on a company’s returns.
Also, bear in mind that regular employees who are assigned to do the day-to-day tasks keep the business going. It is important to include them in your plans. Succession planning is not only for executives or senior managers.
During succession planning, there is also an opportunity to conduct a SWOT Analysis. It will enable you to see the company’s needs now and in the years to come and align with your strategic direction. Once weaknesses and threats are clear, it becomes easier to deliberate how they should be faced and resolved.
There also can be a risk that during succession planning, an unworthy person might be appointed for a key role. Risk also increases if planning is held too early. A better candidate might be available after the decisions of succession planning have already been made.
Succession planning performed poorly has worse consequences for a company than if not done at all. Plans should be made only when the business is mature enough. Poor succession planning will produce poor decisions, which will lead to a weaker business model that is not prepared for the long-term.
A perfect example of a good succession plan is what happened at Apple. Its iconic CEO Steve Jobs practiced a proactive succession plan. While he was battling pancreatic cancer, he reduced the chances of a power struggle and publicly backed his successor, Tim Cook. If a successor had not been chosen, it is unlikely that Apple’s core business would have been able to maintain its momentum two years on since the passing of Jobs.
Warm wishes, Donny