For any business owner, succession planning is vital. A well-thought-out succession plan allows a business or company to continue to thrive even after the owners, and other key personnel have left, retired, or passed away.
What Is Succession Planning? Why Is It Important?
In order for any business to continue to be successful in the long run, succession planning is of vital importance. Inevitably a day will come when the owner or a key employee will leave the company and someone who is ready will have to be there to fill in their shoes.
This is essentially what succession planning is. It is a strategy that allows a business to transfer key leadership and managerial roles to promising individuals to keep the business running efficiently without any interruptions. These promising individuals have to be identified early and are then trained and groomed to be able to step in should a vacancy occur.
Having a succession plan in place is an excellent motivator for employees as it allows for advancement, growth, and opportunity. Talented people will be more likely to stick around in a company that has identified them as a future leader or one that promises advancement and growth.
Businesses that do not have a strong succession plan in place will struggle with employee retention and find it much more difficult to fill in key positions which can inevitably hurt the business and disrupt operations.
This is why, no matter the size of the business, succession planning is simply a must!
7 Steps That Ensure A Successful Succession Plan
Many companies and businesses that do have a succession plan in place still struggle with employee retention, morale, and loyalty. This is because while having a plan in place is good if it is not designed or implemented correctly, it simply won’t work!
For a successful succession plan, the following 7 steps need to be followed to the tee.
1. Build a Talent Management Framework
The first and perhaps the most important part of succession planning is to have a talent management framework in place that helps identify employees that have the potential and talent to lead the business in the future.
Building a strong framework can help in the evaluation, identification, and mapping of talented individuals and how they would best fit future executive and management roles. Having a talented pool of employees in the pipeline to fill in key roles should a vacancy occur will ensure the smooth running of the business no matter the contingency.
2. Plan Career Paths & Training Programs for Talented Employees
A talent management framework will help you identify high-potential talent but in order to get that talent ready to take over key leadership roles will require a carefully thought-out training and development program.
For example, if an employee has been identified as a prospect for a future managerial role they must be trained for that role as early as possible as it will allow them to get acquainted with the work and responsibilities involved with that role.
Planning career paths for high-potential talent and designing training programs that will help them succeed in that career path is another vital step to successful succession planning.
3. Develop A Mentorship & Coaching Framework
Leadership and managerial roles are about more than just desk work or fulfilling key duties. Running a business requires you to think differently as your decisions impact not just you but each individual within that business.
Employees that have the potential for future executive and board roles have to be trained differently and must demonstrate leadership and intelligence that can help them motivate, and drive employees, as well as, effectively communicate with all stakeholders.
Having a mentoring and coaching framework in place ensures that future leaders are taken under the wings of current executives and groomed to fill in the role when the time arrives.
4. Establish Emergency Action Plans for Different Types of Contingencies
Always be prepared for the unexpected. Having emergency action plans for different types of contingencies such as short-notice vacancies can ensure little to no disruption in day-to-day operations.
For every key role in the business, an action plan must be put in place. This way in case of an emergency there is always someone there - ready to step in and take the reins.
5. Integrate Succession Planning Within The Very Fabric of The Business
Be vocal about succession planning. The more you communicate the values of future leaders and promote succession planning in the work environment the higher is likely to be employee morale.
Every employee wants to be appreciated and rewarded for their efforts. Nothing shows them that they are valued than preparing them for future leadership roles. Being communicative and open with employees will also help in identifying their goals and objectives giving you a better sense of which ones mean to stick around and which ones don’t.
Succession planning should also be integrated within the hiring process as it can help organizations only hire candidates that show future leadership qualities and can be trained from an early stage to take over key roles if required.
6. Always Be Proactive
Don’t wait for an employee to leave before finding a replacement. This is the easiest example we can give when it comes to being proactive. Always have backup solutions in place (even if that means accounting for your own replacement) and stay proactive when it comes to lining up replacements of key roles within the business, should a mishap or unexpected event occur.
7. Have A Transfer Strategy In Place
A lot to do with succession planning is trial and error. That is why test out a strategy once it's been developed to see if it works in the real world. Often business owners make the mistake of biting more than they can chew. This is why it pays to be patient and continue to try, test, and refine a succession plan adjusting it for future success.
Testing out succession plans can also shed light on how effective the transfer of roles was and what could be done to ensure a smoother transfer for future roles.
Succession Planning With Eastport Financial
At Eastport Financial we have substantial experience in helping businesses develop succession plans.
To learn more about succession planning and more call us at 902-474-5433 to speak with our amazing team of advisors and consultants.