Succession planning is often something that businesses will delay until times of crisis. However, without a firm strategy and prudent time management, it can be a costly and difficult process.
A succession plan is a key component of a successful business strategy, ensuring smooth leadership transitions with minimal disruptions and maximum business stability.
We’ve compiled seven best practices for succession planning to help your business develop a tailored strategy and maintain longevity.
1. Plan ahead
Developing an effective succession plan can’t be done overnight. It is vital to consider the short, medium and long-term impacts of succession in key leadership roles, and address them with a tailored strategy.
Rather than waiting for the need to arise and having to make rushed decisions at a crucial hour, invest the time and implement a succession plan as part of a holistic business strategy.
2. Identify key positions
An effective succession strategy should include a list of key positions within the business that are critical for the organisation’s success. These key positions will have a direct impact on operational efficiency, business strategy or the overall bottom line. These are the positions that must be effectively planned for to ensure long-term business prosperity.
Conduct thorough analysis across each department of your business, identify key roles and assess skills necessary to perform these roles to a high standard. Once these attributes have been identified, you can develop a recruitment and training strategy tailored to your business needs.
3. Expect the unexpected
Despite your best efforts, you may still be caught off guard by unexpected vacancies. These scenarios can place a heavy burden on your business, so it’s important to address them as part of your long-term succession strategy.
Ensure that you have an emergency strategy for immediate departure of a key position to minimise disruption, inclusive of notice periods, interim replacements and recruitment.
4. Professional development
If your business has a strong recruitment strategy, it’s likely that potential successors already exist within your workforce.
Investing in professional development and mentoring programs for these potential successors can alleviate recruitment pressure and strengthen organisational culture by developing ready-made leaders at every level.
Direct mentorship programs with key leadership roles in your business also allow for direct knowledge transfer, which is highly effective for succession.
5. Stakeholder engagement
Any stakeholders that will be directly impacted by a succession should be involved in the planning process. This will ensure that key leadership is aligned with the strategy and will eliminate roadblocks further down the pipeline at crucial stages of succession.
6. Communication is key
Succession plans don’t need to take place exclusively behind closed doors. Being transparent with employees and stakeholders during this process will not only develop trust and improve retention, but it can help you canvas potential suitors for key positions by having open discussions about their prospects.
7. Understand your obligations
Your succession plan should address the legal, financial and tax obligations of your business. There may be scenarios where restructuring the business or making significant entity changes will be the best course of action during succession.
If you fail to address these obligations during succession, your business and personnel could be exposed to significant financial ramifications. For example, a company director may be deemed liable for business non-compliance at any point during their tenure, and thus personally assume the debt.
8. Expert advice
Even with these best practices in place, succession planning can present significant challenges regarding employee relations.
Our partners at CCIWA have exclusive offers for non-members, including one free phone call with their experienced Employee Relations Helpline.
CCIWA’s skilled and trusted advisors are ready to help you manage the HR support needs for your business. Click here to have your business questions answered.
