Establishing a strong nucleus is integral to your company’s long-term growth and sustainability. It’s essential for overcoming adversity, ensuring sound leadership and for continually adapting to industry change. One way that modern organizations fortify themselves is through succession planning.
Business Dictionary defines succession planning as, “The identification and development of potential successors for key positions in an organization, through a systematic evaluation process and training.” By selecting successors in advance, a company is better able to develop the right individuals so that they’re properly prepared to lead once they’re called to do so.
Whether current leaders are lost due to retirement, attrition or even death, there should be minimal friction to your operations. This should result in a relatively smooth transition and better overall business continuity. There are some key benefits.
Above all else, succession planning leaves your company prepared in the event that an integral position is evacuated. A 2015 study by Indeed found that 40 percent of job openings take 2-3 months to fill and 33 percent take 3-4 months to fill. It can be especially difficult to fill key leadership positions because they require extensive knowledge and skills.
With no advanced planning, this leaves your company vulnerable. Lacking strong leadership for this length of time could lead to ruin. However, succession planning ensures that you’re prepared no matter what. You can make a seamless transition, which increases your company’s stability during a normally turbulent time.
Recruiting, interviewing and training can be costly, especially when it comes to high level positions. You can’t expect to instantly replace a linchpin leader and keep things on track. Forbes reported, “Among the world’s top companies, a single unplanned CEO departure costs $1.8 billion more than a planned CEO departure in shareholder value.”
A successor waiting in the wings spares you from spending money as well as funneling other valuable resources into finding a replacement. Therefore, it’s a very economical strategy.
Stronger Culture/Increased Brand Equity
An added benefit is the boost in loyalty you’re likely to see from your workforce. Not only does promoting from within make sense from a financial standpoint, it tends to be encouraging for employees. Knowing that it’s possible to move up the company ladder and potentially earn a key leadership position can be incredibly motivating.
This often translates into a tighter culture where employees go the extra mile. On a larger scale, it can help bolster your brand and send your equity soaring through the roof. You’ll be seen as a desirable employer who believes in their workforce. In turn, this can aid in future recruiting and set off a positive cycle.
Besides the obvious advantage of improving business continuity, succession planning helps your company in several other ways. More and more organizations in the 21st century are using this tactic.