Succession planning is imperative for the long-term success of any organisation. It is a very crucial aspect of business which involves identifying and developing future leaders for the company – big or small – for not just the CXO positions but across levels for all major roles. Every company needs talented people to take over the role of leaders when the opportunity arises. It is not just a one-time process but a well-planned strategy which requires investing time and money into it.
Why is it a good idea for every organisation to have a succession plan?
Succession planning not only helps identify the future leaders in the organisation, it has multiple advantages. Most successful companies recognise this and invest in a robust succession plan. Here are some important advantages of investing in future leaders and creating a succession plan for your organisation.
Advantage # 1 – Maintain Continuity
Not having a leader at the helm can be distressing for the company. The gap can be due to sudden demise or an illness, some unforeseen events like a competition luring your top talent. The abrupt exit of Vishal Sikka – Former CEO and MD, Infosys, put the company in a state of disarray.
Apart from financial implications like fall in share prices, it can also lead to negative publicity for the company. Employees feel demotivated because of the uncertainty. Hence it is crucial to identify and train future leaders so that the business can carry on smoothly even if there is a sudden change at the leadership level.
Studies show that around 40% of all new CEOs fail to meet the performance expectations in the first 18 months.
Identifying and training a leader internally, reduces the transition time, cuts down on huge hiring costs and reduces risk associated with a new hire. This is critical from the point of view of maintaining continuity in business.
Advantage #2 – improve employee experience
One of the most important advantages of succession planning is that it helps create great employee experience. It lets employees feel their hard work and sincerity is being noticed, appreciated and rewarded in form of growth and advancement. This keeps the employees motivated and engaged and improves employee experience. There is enough evidence to prove that great employee experiences lead to improved customer experiences & stronger financial performances.
As a part of the talent management strategy, it is important to have the foresight to recruit top talent, retain them and provide them with adequate experiences that prepare them for leadership positions.
Advantage #3 – Improve financial performance
Research shows that companies that rate highly on human capital investments show better financial returns than those that with lesser weightage on their human resources. Succession planning hugely relies on leadership development for its success. Leadership development initiatives powered by engaged employees leads to improved revenues, reduction in costs & improved customer experiences.
Advantage #4 – Improved company image
People like to work for companies that invest in their growth and offer them Leadership Development opportunities.
Investing in leadership development as a part of a strong succession plan shows that the organisation is future ready. Companies with good brand image & consistent performance not only attract top talent but also create successful business partnerships & have a substantial loyal customer base.
One such example of a successful company with a strong succession plan is Apple. As a part of the leadership development programme, Apple invested heavily on Apple University, which has a leadership curriculum based on Steve Jobs experiences. Moreover, the top management’s active engagement helped prepare the current CEO Tim Cook to take over when Steve Jobs stepped down. He took on a variety of operational roles like manufacturing, sales, distribution, apart from working directly with Steve Jobs to gain experience in leadership role.
“I see my role as CEO to prepare as many people as I can to be CEO, and that’s what I’m doing.”
Tim Cook, CEO, Apple Inc.
Here is how you can kickstart a succession strategy for your company.
- Identify the roles and positions that are most critical to your organisation
- Identify potential candidates who can take up those roles & become future leaders
- Let them know that they have been identified and why
- Work along with them and chalk out a growth plan
- Identify training & development needs
- Provide them with experiences & opportunities to lead
- Make succession planning an on-going process in your HR strategy
A good succession plan helps your company grow successfully as you identify and create plans to address the areas of vulnerabilities. It is never too late to prepare future leaders.
