When your business is running smoothly, and you don’t anticipate any issues, you’re very likely to put off any type of preparations for the future. Why put time and energy into succession planning when it doesn’t look like you’ll need it any time soon? Instead, you could focus on the here and now to really make your business grow. But what if, with very little warning, a key executive or manager decides to leave, becomes critically ill, or announces that they want to retire? Without a succession plan in place, this announcement could throw some major issues into your day-to-day operations.
Why don’t companies think about succession planning? Many fall victim to one or more of the myths about preparing for succession. They believe that it’s nothing that needs to be planned out or that they can’t start planning for succession until they have a viable candidate to promote. Others either think that the way to go with succession is to bring in an outside candidate or to always promote someone from within, neither of which is always true.
Even if you have thought about succession, you may have only considered how you would handle a C-Suite replacement. But while your key personnel likely do include the COO, CFO, and others in the C-level, they may also include certain supervisors, managers, or vice-presidents. What happens if one of these employees leaves unexpectedly? Succession planning isn’t just for upper-level employees. It can be for everyone. Let’s take a look at why succession planning is so important and where you should start.
Why Are Business Owners Interested in Succession Planning?
There are many different reasons why business owners are putting time and resources into creating retention and succession plans. As the baby boomer generation begins to retire, there will be more people leaving the workforce than entering it. Retaining employees is much more critical now because the pool of potential candidates is shrinking. People are also retiring earlier. According to surveys, 44% of employees between ages 45 and 59 have stated they plan on retiring before they reach 65, with 10% of those over 50 wanting to go part-time during their last few years of work.
It’s also more expensive to do an external search for new hires than ever before, costing companies money. It’s even harder to find talented, experienced executives. More than 70% of business owners anticipate having a vacancy in at least one leadership role within the next five years as older experts retire.
Preparing a succession plan has a number of benefits besides merely making it less stressful on you and the other executives who are left holding the company together while vacant spots are filled. First, because candidate searches are so costly, having a successor lined up saves you time and money. You can prepare successors to step up into their new roles, so there’s little to no period where you don’t have a trained leader in any position.
Having a succession plan is one way of identifying people in your company who will go far. You can carefully select those you know have the talents and skills needed to become key leaders. With outside candidates, you don’t always have this opportunity. You see only what they present on a resume and in a few interviews. Preparing internal successors allows you to watch their performance over months or even years, allowing you to see where they need to grow. You’ll also have a better understanding of your workforce overall, letting you better direct tasks and projects to those with the talents to overcome any challenges.
Preparing Your Succession Plan
Now that you know why you need a succession plan, it’s time to start mapping it out. There are a number of crucial things you must identify before you start. First, you need to have a list of every job you want to have a successor lined up to complete. You need to create an extensive list of the skills, attitudes, experience, and personality traits that someone in each position needs in order to excel in that job. This needs to be more than just a description of what the employee does—it’s what they need to do well.
You also need to consider what each job does and what key essentials it’s missing. The skills employees have today may not necessarily be the ones they will need to excel tomorrow. Evaluate each job to determine what may need to be added or changed for your company to grow, and then train successors for this future need.
You also can’t just put employees on a succession plan without talking to them first. Some may not want the responsibility that comes with these positions. Others may be interested in moving up but don’t feel like they’re ready yet. Make sure your employees are entirely on board with what you’d like them to do eventually.
Don’t Put Off Your Succession Plan
As you can see, succession planning isn’t something to put off. It can cost you money and leave you without key personnel in leadership positions. With fewer talented leaders in the job pool, you may find it very difficult to fill vacant positions quickly, leaving you shorthanded and without vital leaders and directors. By taking the time to prepare a succession plan for your upper-level executives, managers and other key players, you’ll be much better prepared for the future.
Uncertain where to start? Small Business Growth Partners can assist you with succession and retention plans along with plans for time management, improved internal systems, and business growth. Contact them today to learn more.