Far too often, companies wait to address the succession of key management until the need is staring them in the face. For instance, they may learn their CFO is retiring this year and rush to find a replacement because they hadn’t already identified a successor.
You could argue that the company should have been much more prepared because retirement is a foreseeable event. But what about the proverbial “hit by the bus” situations? While your key employees probably (and hopefully) will not get hit by a bus, there are other unforeseeable events such as death, disability, divorce, and disagreement for which your business needs to be prepared.
Death and disability often come to mind when you think about unforeseen events, but divorce and disagreement can also affect someone’s ability to function properly in a management position. For anyone who’s been through a divorce, you know its impact to your life and the significant changes that can result. Disagreement is also a possible scenario, occurring when management and ownership reach an impasse on business matters and need to part ways.
Though it can be time intensive, proper succession planning only produces positive results. Said another way, nothing bad ever comes from proper succession planning. In addition to helping ensure your company is prepared for an unforeseen circumstance, here are four other benefits of succession planning:
- Helps the Business Today: When a company plans for tomorrow’s leadership, it is likely to consider in-house candidates first. Earmarking select individuals provides an incentive for the company to start developing their skill sets today.
- Increases Employee Morale: Planning for the future is exciting, and it can inspire your employees to stay engaged and loyal. It is not a secret that a plan is often put into place to avert a disruption, but it can also be a method of embracing the future.
- Provides Sufficient Time: Waiting until the last moment to find a replacement can lead to rash decisions which may not be best for the company in the long run. Worse, putting the wrong person in a management role can lead to detrimental results and be challenging to remove and replace.
- Develops Young Talent: The next CEO or CFO of the company may be in their 30’s and in a mid-level role today, but in 15 years you may need that person to step into an executive position. Identifying that individual today provides plenty of time to allow them to serve in various roles within the organization, which will ensure they will become a well-rounded leader for tomorrow.
Succession planning does not necessarily mean that you need to hire your future leaders today. Rather, it should simply be a well laid out plan to bring those leaders into the organization when the time is right.
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