Succession planning is very important and can prevent many problems that arise after an unexpected parting from a company. Finding a new CEO or executive after someone suddenly quits or tragedy strikes is difficult if a succession plan has not been given sufficient thought.
What happens if attention has not been paid to succession planning?
If a person from within the company has not been designated to take over when a position becomes available, the company can be forced to resort to hiring from outside. Hiring from outside the company presents a large set of problems. When a newcomer joins a company, it takes time to become accustomed to the new environment. This can take away from the production of the company which can be very detrimental in such a high-speed and demanding business atmosphere.
Another problem with bringing in a brand new employee is presented in the form of wages. To hire someone with enough experience to be a CEO or executive can be very costly monetarily. A person generally will not leave a familiar climate for a lesser pay. This means that their salary and benefits need to be met or exceeded and the risks of leaving their previous company need to be compensated for. This is not only a problem for that one person, but the new hire may bring in other outsiders and the same financial issues develop with every new hire.
Hiring someone unfamiliar to the company takes a toll on productivity and poses fiscal setbacks. These impediments are not worth the risk, especially since efficacious leadership cannot be assured.
Why don’t all businesses develop effective succession programs?
The problems with lack of succession planning are apparent but some businesses tend to stray away from creating a successful program, whether they realize it or not. One reason for this is that internal competitions can stem from the idea of designating a successor to a large role in the company. However, if the company has a very confident manager, a success plan should be no problem.
Another reason companies do not have a succession plan in place is because on a day-to-day basis, it does not appear to be a very pressing matter. The short-term economic goals receive all the attention and the long-term, noneconomic goals do not become urgent until there is necessity for them. But by the time a company needs to fill a position, it could be too late. In the long run, succession planning can save a company a lot of time, money, and hassle.
What are some effective methods of succession planning?
In a successful succession program, executives should be expected to emphasize a plan and make it a part of their everyday routine. It is a good idea to present evaluations of management teams on a regular basis to distinguish succession contenders. These presentations should be made to the board, who supervise the executives’ succession plans.
Another component of effective succession planning is working closely with the human resources department of the company. Setting certain standards can make hiring new employees and promoting within the company a less daunting task. When hiring or promoting, employees should be chosen who have leadership qualities and are devoted to stay and grow with the company.
Learning the hard way that succession planning is vital can cause a lot of trouble. It is best to prevent crisis by having a plan set in place to help transition move swiftly and effectively. Succession planning really is in the best interest of the company, the employees, and the investors.
