The mark of a strong business is its ability to adapt and grow in a constantly changing environment. Whether it’s a shifting regulatory burden, new technologies changing established practices or the loss of experience or manpower, businesses rarely stay exactly the same for long periods of time.
The loss of leadership can often send a company into a period of inertia where the distinct forces of continuity, organisational identity and the need to adapt all seem to pull in disparate directions.
Effective succession planning is the best tool available to nip this conflict in the bud.
The importance of succession planning
Minimising uncertainty is an important benefit that an effective and well thought out succession plan can bring a company. If people know what is going to happen in roughly what time-scale and how they fit into the new arrangement, they will have confidence and the motivation to keep pushing forward when the time to enact the plan rolls around.
This leads to fewer costs and less ad hoc decision making.
Every succession plan is unique, but successful ones all stem from collaboration and inclusivity. To understand what is best for your business, and not just best for the careers of the people within it, it is important to let people have their say and voice any concerns they may have.
In our experience, there are a few other subtle details that if not addressed can often complicate and confuse the succession planning process.
- Timing is key
There are two important aspects to getting the timing right.
The first is making sure that you give yourself enough time to come up a good succession plan, make sure all the relevant people know about it and have had the opportunity to complete training and shadowing.
The second aspect is making sure that your succession plan includes a workable timeframe with milestones built in. Depending on whether you are bringing in new people from outside or simply promoting someone internally, there can be a sizable variance in what is realistically possible.
- Keep your external environment in mind
Your business is operating in a marketplace, a macro-economy and a regulatory environment, and all of these could have significant effects on your plan.
If, for example, your industry is seasonal then your succession process should take place in your quiet period. Or, if the government is going to be introducing new tax or regulatory liabilities that are likely to eat up time and resources, it would be advisable to not have your succession process coincide with this.
- Consider the financial impact
As with anything in the business world, different choices often carry different costs. Succession planning is no different. Obviously the biggest choice is whether you hire someone externally and train them into their new company role or you promote internally, but there are a number of other factors to be considered:
- stability is an attractive quality for lenders, investors, suppliers, vendors and customers
- a good succession plan can assure existing employees and stop them from leaving
- will the insurance liability of the company be affected?
- if the person leaving has shares and decides to cash out, how will this affect the company?
With all of the other parts of the succession planning process requiring your attention, it can be easy to forget about your customers. Luckily, this can be avoided by making sure that they are kept in the loop about the changes in personnel regarding their services. The person leaving should make a point of introducing their successor to key customers personally, either in person or by phone.
We can help you set out a solid plan for the changing of the guards which minimises disruption while making sure the best people get put in the right positions. Contact us today to talk to one of our experts.