There are lots of reasons why succession planning is an important part of your talent strategy. Explore the benefits of succession planning for your organization.
Enhance Business Continuity
Succession planning can help ensure continuity of management in the event that a key executive suddenly leaves the organization. Leaders can leave your organization at any time. Sometimes those are planned exits with months of preparation ahead of the transfer, but sometimes they catch you by surprise. If you aren’t prepared for that scenario, you may find yourself scrambling to fill a critical position at a time when you can least afford it.
Succession planning closes those gaps by helping businesses transition upcoming leaders quickly and efficiently into their new roles. Even planned leadership exits can disrupt the business if you don’t have a smooth transition plan in place. A succession plan encompasses new leader onboarding to begin the transition before the current leader vacates their role. That guarantees minimal negative effects when transition time arrives.
Fill Talent Gaps
Talent gaps are the differences between the skills, knowledge, and experience required for a job and the skills, knowledge, and experience that a potential employee brings to the position. Talent gaps at the leadership level can put the whole business at risk.
Say, for example, that a leader with lots of expertise in mergers and acquisitions has to step down soon after completing a deal. If the new leader stepping into that role hasn’t been trained to implement the change management plan, your business could lose the benefits of that deal. That’s not a risk any organization can afford to take.
Succession planning can help mitigate this risk by developing leadership candidates with the potential to fill these roles. If you’re aware of the skills, knowledge, and experience that are instrumental to the position you plan to fill, you can be proactive in finding and developing those qualities.
Pass Down Institutional Knowledge
Institutional knowledge includes processes, relationships, activities, and capabilities that may not be formally documented in manuals or other written documents. Institutional knowledge can be essential to the success of an organization because it provides insight into how the organization operates and how it’s addressed challenges in the past. Since it’s not formally documented, when key employees leave an organization, they often take a wealth of institutional knowledge with them.
Succession planning preserves institutional knowledge at the leadership level by passing it down to future leaders. A leader on the verge of retirement who spent many years with the company, for example, will have a wealth of stories and personal experiences to share with their successor that can help them make better decisions in keeping with the organization’s culture and values.
Institutional knowledge typically isn’t passed down through formal training. Instead, it relies on points of connection (through a mentorship program, for example), to give leaders and successors the chance to engage in meaningful conversations at a deeper level.
Succession planning can improve employee morale by providing employees with opportunities for career growth and development. When employees understand that their employer is invested in their professional development, they feel more valued and appreciated. For example, by offering employees the opportunity to take on new roles, employers demonstrate that they trust their employees and have faith in their ability to take on additional responsibility.
Additionally, when employees can apply for open positions (especially those at a higher level), they feel more engaged with their workplace and take pride in their contributions. This can lead to improved employee morale and increased job satisfaction.
Succession planning can benefit the morale of employees across the organization, even if they aren’t interested in taking on leadership roles themselves. Seeing that there’s a plan in place for moving the business forward through leadership transitions increases their confidence in the business’ longevity and helps them feel more secure in their own jobs.
Succession planning reduces employee turnover by creating a talent pool that can provide replacements for employees leaving or retiring from the organization. Succession planning also can help create a positive work environment by providing employees with a sense of security that their job positions will be filled with qualified employees if they decide to leave the organization.
By creating a pool of qualified candidates for key positions, organizations can reduce the time and money spent on recruiting and training new employees, which can help reduce employee turnover.
Increase Business Value
A robust succession planning program provides assurance that the business will be able to continue running smoothly even if leadership changes. By proactively planning for the business’ future, companies can ensure that their leadership and key personnel are replaced in a timely and cost-effective manner. This can help the company maintain its competitive edge and customer satisfaction as well as minimize the risk of disruption from unexpected changes in leadership and personnel.
Additionally, succession planning can help increase business value by providing a long-term strategy for growth, which can help the company stay ahead of its competition. By having a succession plan in place, the company can plan for future changes in the industry or customer needs and focus on developing strategies and processes that will help them maximize their business value.