An important action to ensure long term success for your company is to create a succession plan. Succession planning is defined as identifying and developing employees into the appropriate leadership role at every level of the organization. Succession planning ensures that your current employees are discovering and developing their talents to eventually take over leadership positions.
Let’s put this into perspective.
According to the AARP, 10,000 Baby Boomers are reaching age 65 every day—about 7 per minute—and this trend will continue for more than the next 11 years (Frankel, 2017).
This impacts all sectors. It is estimated that more than 12 million Baby Boomers own businesses and that 70 percent of those businesses will change hands over the next 10-14 years (California Association of Business Brokers).
Implementing a succession plan engages employees, ensures both current and future customer satisfaction, and protects your business by building a positive work culture. In fact, 94% of employers surveyed report that having a succession plan positively impacts their employees’ engagement levels and over 90% of younger workers (age 18 to 34) say that working at a company with a clear succession plan would ‘improve’ their level of engagement (Team Hireology, 2015). Wow, interesting! The question is, “Do you have a succession plan in place?”
Customers appreciate stability in their suppliers and business partners. One way to provide this assurance to your customers is to have a succession plan in place for key positions in order to provide assurance to your customers.
“Failing to communicate succession plans clearly with clients, workforce, and shareholders can result in internal chaos, loss of current and future business, and decline in stock value” (Firestone, 2018).
Showing your customers your plans for avoiding risks associated with key employee turnover will help them see you as a reliable and worthwhile supplier.
Without a succession plan, there is more risk of sale and/or performance lapses if key leaders leave the company. Potential buyers are more cautious and less willing to invest money if they perceive there is too much risk.
Software Advice released a report in 2015 showcasing that both employees and employers see greater engagement from employees when succession plans are in place. A succession plan will allow a gradual transition and avoid contention and bitterness amongst employees. As we’ve discussed in previous newsletters, increased employee engagement leads to higher employee satisfaction and performance.
From a commonsense perspective, protecting your business through succession planning is vital—and smart. The future is unpredictable, and we don’t know what will happen until it arrives. If a key employee gets recruited by a competitor, it can cause major disruption. Every day businesses are impacted by key employees leaving, so it is a good practice to have a plan in place for these unplanned events.
The process of succession planning can be very involved or simple, but it requires the appropriate attention from all designated leaders. The process starts with identifying the scope of the succession plan, involves a review of the organization’s strategic plans, and identifies how the role of leaders may change now and in the future. A key component of developing a succession plan is identifying the leadership competencies that are most important to your organization. Consider what skills or knowledge a leader should have to help your organization be successful.
Next, you will need to analyze, document, and identify gaps in leadership competencies, and ultimately develop priorities and solutions to close those gaps, such as providing leadership training that addresses needed competencies. Finally, after implementation, it is important to have a process to evaluate and assess what part of your succession plan is working and what could be improved.
A succession planning process is a key element of a successful organization and helps companies meet the needs of customers, employees, and provide business stability. It’s just smart business. An outstanding leader not only focuses on the job they are doing now but recognizes that a well-thought-out succession plan is a part of his/her legacy.
For the Faith-Based:
Succession planning is a Biblical principle seen in both the Old and New Testament.
“A wise man thinks ahead; a fool doesn’t, and even brags about it! – Proverbs 13:16 ”
Effective succession planning is essential in the Kingdom of God. Without it, the teachings of Jesus would fade away. In order to spread the Gospel beyond the life of Jesus, His teachings and stories needed to be handed down to his disciples. Entrusting this responsibility was so important that Jesus spent all night in prayer the night he chose his successors, the disciples. Jesus knew that his success depended on succession. He invested the greatest amount of time teaching and developing the disciples. Paul reminds Timothy of the very same principle. Paul said,
“And the things you have heard me say in the presence of many witnesses, entrust to reliable men who will also be qualified to teach others.” – 2 Timothy 2:2
Paul gives Timothy a vision of leadership that included succession. Jesus’ message was succeeded by Paul; Paul by Timothy; Timothy by reliable men; and reliable men by others.
Success involves succession. Therefore, great leaders should begin developing successors long before they are expected to leave the office. We see this in the story of Moses and Joshua. In Numbers 27:12-23, God confronts Moses about his need to implement a succession plan. God chose Joshua to fulfill His promise to return the people of Israel to the Promised Land. God instructed Moses to mentor Joshua his role of leadership. In Deuteronomy 31, Moses commissioned Joshua to be his successor and publicly supported Joshua. Leaders need to create opportunities for those being mentored to put their skills to use. If Moses hadn’t let Joshua lead while he was still with him, Joshua wouldn’t have become the leader he eventually became. It is vital for the community to see the succession because without it people become confused and fearful, and workers become ineffective “like sheep without a shepherd” (Num. 27:17). Preparing a successor takes time and it is important to have a succession plan and an effective process for training and succession.
Frankel, M. “9 Baby-Boomer Statistics That Will Blow You Away.” 29 July 2017. Retrieved 7 August 2019. https://www.fool.com/retirement/2017/07/29/9-baby-boomer-statistics-that-will-blow-you-away.aspx.
California Association of Business Brokers. “Baby Boomers: Incredible Number are Buying and Selling Businesses (Part 1).” Retrieved 7 August 2019. https://cabb.org/news/baby-boomers-incredible-numbers-are-buying-and-selling-businesses-part-1-2.
Hireology Team. “5 Stats On Talent Management and Succession Planning.” 27 February 2015. Retrieved 7 August 2019. https://hireology.com/blog/5-stats-on-talent-management-and-succession-planning.
Firestone, K. (2018, November 14). Communicating Your Succession Plan with Customers, Clients, and Shareholders. Retrieved 4 August 2019. https://hbr.org/2018/11/communicating-your-succession-plan-with-customers-clients-and-shareholders