Large or small, the success of any business is typically down to the implementation of strong and driven leadership. The productivity of any company tends to flourish when employees have the right management who are prepared to motivate and support their teams. But what happens when those executives decide to leave or retire? In this blog we will take a look at how a business should best plan for the succession of those in executive positions and the importance of ensuring these plans are in place.
What is a succession plan?
The concept of a succession plan is a simple one. A succession plan is one that identifies those in executive positions who may potentially vacate these roles in the relatively near future and lays down a strategy for how internal candidates may fill these positions. Essentially, it is a plan which is devised to set out which potential employees may best suit the various management/executive roles in your business should any of those managers/executives decide to leave the business.
Identifying potential candidates is done by assessing the skills of the employees in your team, and in doing so your succession plan will also allow you to spot where you can upskill these employees to ensure they are ready for management should they need to be.
Why do you need a succession plan?
Not being prepared for your CEO’s departure can have a number of impacts on your business. The first is essentially financial. If you are ill-prepared for when an executive hands in their notice, their resignation triggers a rushed panic to fill their position to ensure your business is not affected. This hunt will cost a lot of money, time and resources which diverts the attention of important business figures away from day to day company processes.
In this case, your business will have to compromise for a candidate who may not fulfil all of the criteria that your departing CEO has set and more importantly is someone who is foreign to the business. Secondly, as they have no affinity to how your company works, there can be friction with the introduction of this new executive within the team and the processes that their role entails. This can influence both the production of your business and the turnover of staff as the team adapts to their new manager. Although this may seem melodramatic, a combination of some or all of these factors can affect your business should you be naive enough to think that your company doesn’t need a business plan.
What should be in your succession plan?
A succession plan will vary in some form from business to business, but they all require a company full of talented and ambitious employees. What this may mean for your business is relative to you, but the concept of a succession plan is to nurture and develop the skillset of your employees. Your plan should lay out a realistic and achievable progression ladder for your employees. This should be in addition to regular reviews of employees who have shown the potential to become an executive.
Being able to draw from a shortlist of employees who are already members of your business will also aid in finding out where these employees need to improve to be able to fill the shoes of any executive who may potentially leave. Once these gaps in learning have been identified, you can then put in place sufficient training processes – for example giving an employee extra responsibility, to ensure they have enough experience when the time comes that they are entrusted with filling an important vacancy in your business.
This assessment will also potentially identify any shortcomings in the business itself. The assessment should therefore take into account the vulnerabilities of your business with the absence of an executive or manager. Laying out these weaknesses will ensure that if your executive hands in their notice, you are prepared with a trained and experienced team of potential suitors.
Planning for succession is an important part of a successful business and could even be considered an important element of your business plan. If you would like help with putting together your business plan, get in touch today! Contact us online using the form on the right or call 01604 420 420.