Does your company have a succession plan in place? If not, you will want to correct this as soon as possible.
Without careful thought and consideration, a business can be hit hard when an employee retires, resigns, or has to be let go. However, if you dedicate the necessary time and effort into constructing a succession plan, your company will enjoy a whole host of benefits, while sparing unnecessary stress, frustration and expense.
Put simply, succession planning is the process of deciding who will take over when an executive or a similar key leader has to move on. As times change and job requirements evolve, the succession plan will have to be readdressed. As such, leaders should always keep an eye out for dedicated, enthusiastic employees with leadership potential.
A succession plan is key to leadership development, and it is an important performance management tool, but what are the specific advantages that arise when companies put in place a carefully considered succession plan?
Having a succession plan in place boosts employee engagement levels
We all want engaged, enthusiastic employees, and a succession plan can be a helpful tool when it comes to boosting employee engagement levels. One source suggests that employees, particularly those from younger generations, are much more likely to remain engaged when you consider their strengths and interests and match them to opportunities provided through succession planning.
This is backed up by a study which showed that 62% of employees strongly believed that they would be significantly more engaged if their organizations had a succession plan in place. This same study showed that a remarkable 94% of employers agreed that succession plans positively impacted engagement scores.
We should also keep in mind that, more often than not, a succession plan involves promoting employees from within the company — a move that has been shown to keep employees engaged and motivated.
A succession plan improves staff retention rates
As well as improving employee engagement scores, promoting from within and creating a succession plan can do wonders when it comes to lowering staff turnover rates. Showing your employees that there are opportunities available to those who perform effectively and those who remain loyal motivates employees to work harder. On the other hand, employees who are certain that they will never climb the ranks, regardless of effort or perseverance, will likely look for opportunities elsewhere.
For this reason, not only should your succession plan be structured and regularly readdressed, but it should be openly discussed with employees, too. Let them know your leadership selection process, and what steps employees should take in order to be considered for a promotion.
A succession plan can save your company a lot of money
All organizations need to keep an eye on the bottom line and be wise with expenditure. Without a succession plan in place, you might find yourself in the situation where you need to swiftly fill an executive position, but you don’t have any existing, qualified employees to fill the role. As such, you’ll have to turn your attention to external candidates.
While your recruitment selection process might reveal a number of exciting prospects, the costs of external hires tend to be much higher than the cost of training existing employees. On top of this, they are unfamiliar with the company ethos, values, and procedures. As such, it takes longer for them to get up to speed (which costs you money in lost productivity). In addition, external hires tend to receive lower marks in performance reviews and are more likely to be laid off when compared to internal hires. For this reason, it benefits you to make the most out of existing talent, and plan for their succession.
A succession plan can also save you stress and frustration
Nobody likes to be caught out unawares, but if you don’t have a succession plan, you are almost guaranteed to suffer the stress and frustration that accompanies lack of preparation. From the moment an executive hands in his or her notice, the pressure is on to find an appropriate replacement, and you have limited time to do so.
Decisions made in haste can often prove unwise, regardless of how determined you are to be thorough and careful in your selection. Companies often choose to preemptively create a succession plan to allow for a smooth transition that will ease company-wide stress and confusion.
A succession plan means your business will be alive and well for years to come
Executives have spent a lot of time, energy, and dedication to help their companies climb to the top of their field. But if you want your business to remain competitive, you need to look to the future. Without a succession plan, the business has no clear direction. You haven’t taken care to ensure that the company will be in good, qualified hands, should the unexpected happen. In this respect, you should think about a succession plan as a kind of insurance. With any luck, it will be business as usual, but if the worst should happen, you are prepared.
If you’re looking for advice and assistance on how to create a succession plan, there is a lot of information online containing step-by-step instructions and words of wisdom. You’ll likely have to go through a period of executive assessment and coaching, but once you have a succession plan in place, you’ll benefit from the feeling of security and satisfaction, knowing your business will be around for generations to come.