When it comes to running a business, it is not just about surviving day by day. Business owners need to think about the future of the company. As much as it is ideal to think that key leaders of the company will always be present, what will happen if integral roles and positions are suddenly vacated? Whether the reason is planned or unplanned, the absence of company leaders can leave an organization in a quandary. One of the things that companies can do to prepare is to have a succession plan. What is it?
What is a “succession plan”?
When we talk about a succession plan, this refers to a plan that is geared towards identifying and preparing employees to become future leaders of an organization. One of the main reasons why companies engage in succession planning is so that they can be prepared for situations when key positions in the company are left open.
As a business grows, a succession plan ensures that top talent and stellar employees are developed intentionally and allows them to eventually advance in the organization. For companies, internal hiring is more cost-effective than getting external talent to fill in positions in the company. Aside from saving resources and effort on the onboarding process, hiring from within ensures that internal employees already understand the company values and culture.
Why is it important?
At first thought, succession planning can be a complex and overwhelming process. While it is true that having a succession plan in place is not a requirement, the benefits of having one far outweigh not having one at all.
To ensure that business operations can run smoothly and efficiently even with sudden absences or a lack of key leaders, you need to prepare now. A succession plan is vital for long-term stability and success. Developing great talent is always beneficial for a company because these are the people that can be future leaders.
We have already mentioned that succession planning and hiring from within is cost-effective because it has lower hiring costs. The transition of internal hires to new roles is also shorter than how long it can take for external hires to acclimatize to a new position, new business, new company culture, and new colleagues. Because succession planning focuses on training, developing, and preparing existing employees, this can make them feel valued, trusted, and cared for, increasing employee engagement, satisfaction, and retention.
What are the different components of succession planning?
A succession plan is unique for each organization. Because each company has different needs, values, and objectives, no two succession plans are identical. Nevertheless, the common components of a succession plan include:
The company’s goals in succession plan
Specific skills, characteristics, and requirements needed in the succession plan
Budget and resources for succession planning
Strategies in implementing the succession plan
Developing a career path for existing employees
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