What should you do if you lose one of your company’s leaders? In the event of retirement, disability, or even death, who will take over your business? That may sound morbid, but no one knows what will happen in the future.
And unless you have a well-defined plan in place, such unforeseen events can create confusion and harm your company’s stability. Unfortunately, many organizations don’t think much about succession. So, when top talent leaves or tragedy strikes, business continuity and performance are likely to suffer.
If that’s the case with your company, it’s about time to take succession planning seriously. But what exactly is it, and why is it beneficial for your business? Read on below.
Succession Planning and Its Key Components
No CEO, manager, or employee will stay in a position forever. Even if people exit your company with plenty of notice, you can be left scrambling to fill their roles. It’s even more so when a sudden accident, long-term illness, or death occurs.
This is where succession planning comes into play. It’s a process of identifying and developing high-potential workers within your organization. So, when someone retires, gets fired, becomes ill, or passes away, you can be confident you have the right people to assume and perform their roles.
Having a succession plan will ensure to meet the future needs of your company. It’s even more valuable if your organization has fewer resources to handle critical departures.
While different circumstances may arise, succession planning aims to guarantee continuous business transitions and successes. It’s a proactive measure, enabling your company to carry on with minimal to no interference, whether leaders or employees leave unplanned.
When making a succession plan for your small business, consider the following key components:
A Competent Successor
Succession planning is not simply moving an employee up the organization ladder. You need to identify a competent successor with the right skills, talent, and vision to perform the role and carry the business forward successfully. Think about the ability of the next generation, determine any competency gaps, and have a development plan to address them.
A Comprehensive Transition Plan
Whether it’s retirement, the owner’s death, or a manager’s departure, having a comprehensive transition plan is crucial. While it should comprise the short-term and long-term goals, developing this may require experts from various fields.
An Estate Plan
Integrating your estate plan is an essential aspect of succession planning if you’re the owner. It would help to consider the tax implications when your role needs backfilling someday. Thus, ensure professional and legal advice for succession and estate planning.
Why Is Succession Planning Beneficial to Your Business?
As a small business owner, the significance of succession planning may not make sense right away. It may involve emotional decisions, like identifying a family member or an employee as your successor.
Like many others, you probably don’t want to think about the possibility of retirement, medical emergency, or death right now. However, preparing for such events by investing in succession planning comes with benefits, including:
Helps Your Company Grow With Intent
Succession planning enables your company to figure out where it’s going no matter the changes. Your business can also grow with intent as it forces you to think and prepare for long-term and future talent needs. And, by taking a hard look at your current organizational structure, you can detect points of weakness that can affect your business and take action to mitigate the associated risks.
Having a succession plan helps eliminate confusion in the business. When you’re no longer around or can make decisions, the person who will take on your role and carry on the legacy is already identified. There’s no need to second-guess who has the most relevant skills and values. The successor will also know what to do because of the transition period incorporated in the planning.
Preserves Company’s Reputation
Investing in succession planning also preserves the company’s reputation. Since you have carefully chosen the people to take on a leader’s role or yours, you can be assured that they understand what’s appropriate for the business, employees, and customers. The organization’s vision and values will remain, and they can live on even after you or an employee are gone.
Secure Your Company’s Future With a Succession Plan
While you don’t have a crystal ball of every roadblock your business may face, having a succession plan will help secure its future. You can be at peace and confident that your company will proceed under exemplary leadership if major disruptive changes occur.