The usual reasons given for business failure include illness, divorce, bankruptcy and closing down liquidation. However, when examined forensically, there often lurks a deeper truth behind these dismal explanations - lack of succession planning. Succession planning is a cornerstone of organisational effectiveness and a sure indicator of long term company health. Its absence may not always be immediately apparent, even though it has the innate ability to suddenly turn any business drama into an organisational crisis.
An astute business leader remains consistently future-oriented, and thus alive to the issue and advantages of succession planning. Even though leadership change at every organisational level is inevitable, it cannot always be foreseen or predicted. Therefore, the resilience to ride out any resultant short-term turbulence must be in-built-current business performance is rarely a helpful or significant indicator of readiness for leadership transitions.
Effective succession planning is systematic - continuously identifying, supporting and developing employees who have demonstrated the potential for leadership roles. This creates a pool of proficient and experienced staff ready to step up to assume vacant roles whenever, and however, the need arises.
This approach â€˜future proofs' a company. Investing in the training and development of carefully selected high-calibre staff ensures the organisation is well-equipped to meet operational challenges in future market conditions.
Good corporate training is a direct investment in human capital which is usually targeted on essential skills. This can be effectively delivered via short courses focussing on specific company and employee needs. Development, however, is a much broader concept aimed at promoting longer-term employee growth in a current role, often in readiness for more responsible and demanding company roles in the future. Internal development in healthy organisations encompasses:
- Coaching-to develop potential via knowledge/skill transfer from experienced colleagues.
- Job rotation-to motivate, challenge and broaden experience.
- Special assignments-to manage and graduate exposure to increased responsibility.
- Action learning-to enable employees to develop problem-solving skills.
- Courses-in-house and external short courses, to target specific skill requirements.
- Mentoring - to enable senior colleagues to advise on self-development.
The benefits of effective succession planning extend beyond merely protecting the company from the effects of sudden and unforeseen staff changes. Employees find the process motivating and see themselves as stakeholders, whilst Human Resource managers gain opportunities to both systematically develop competencies and discover other new, business-relevant staff skills. This, in turn, can often result in internal promotions which are always a low-risk and highly cost-effective alternative to the expensive and time-consuming process of appointing external candidates.
In-house candidates have multiple advantages to offer: they are thoroughly familiar with the company environment, workforce, products and services, rationale and much else. This reduces the role-orientation procedure, allowing the appointee to focus directly on the demands of the new job description.
Beyond the immediate economic benefits, internal appointments of staff trained in anticipation of promotion allow the business to cope with holiday leave, illness, sudden vacancies in busy periods and similar, without distraction and disruption of output.
The need for strategic succession planning extends to all levels and is a duty and responsibility for business owners too. Transfers of ownership and control are watershed moments in the life of a company. At such times, effective succession planning will guarantee it's just the owner who retires, and not also the business value.