An often overlooked process for companies is the development of a succession plan. Succession plans are used to address the inevitable changes that occur when business owners, partners or key employees resign, retire, are fired, get sick, or pass away. This strategy for the identification and development of future leaders is necessary to ensure a company continues to run smoothly for many years to come.
Here are four reasons why you should have a succession plan:
- Creates a Long-Term Map for the Future
Creating a succession plan can do more than just create a strategy on future leadership positions. The process can help identify vulnerabilities, set new goals, and form a road map for future growth and innovation. Succession planning can start the conversation of developing new team members and facilitate a plan for filling knowledge and experience gaps. In turn, this makes everyone on the team a stronger asset.
- Can Keep Your Staff Motivated
When an employee sees that a company is committed to developing staff members for future leadership positions, their motivation is increased. The idea that the company will invest in them and continue to better them as an employee will keep morale up and motivation high. By demonstrating your dedication to the future of your company, you can increase your staff’s confidence in the company and motivate them to give their best effort.
- Training is Cheaper than Recruiting
Studies show that executives coming from another company will expect a bigger compensation package to make them feel comfortable in leaving the security of their current position. The biggest advantage of promoting internally is that you can choose a candidate who knows the business well and won’t be slowed down by becoming aligned with your organization’s goals and values. Another advantage to promoting from within is that the time it takes to transition is greatly minimized.
- Maintain Brand Identity
While innovation plays a major role in business development, it can also sometimes damage brand image. By pulling from the outside pool of new leaders, you are risking losing the core values and identity of your organization. Core values and identity both take one thing to develop: time. Because of this, new leadership could compromise your company’s brand identity, which in turn could confuse your customers. Promoting from within your company greatly reduces any chance of brand identity instability.
A succession plan should be a part of your company’s overall strategic plan. Submitted by: Dennis Gallant, Senior Manager, Tax Services, Thomas Howell Ferguson P.A. CPAs. If you have questions about creating a succession plan or some tools to aid in your succession plan such as business valuations or use of key person life insurance, please feel free to contact Dennis here.