Why Your Business Needs Succession Planning
If a leader or key employee were to announce they were leaving today, would your organisation be prepared?
While situations like retirement or pregnancy give organisations reasonable time to prepare a successor, departures often come unexpectedly. With the standard resignation period being just four weeks, how can you best protect the skills and knowledge in your business, and ensure the smoothest transition possible when staff move on? The solution is succession planning, and it’s something every business should consider.
Succession planning is about building a safety net – a future-proofing strategy to prepare for the replacement of essential staff when they move on from the organisation.
What are the benefits?
Prevent knowledge loss
When you have just 30 days after an employee’s resignation, or even less with unexpected departures like illness, the transfer of knowledge between an employee and their successor can be limited and rushed. While explicit, technical job knowledge can usually be recorded and picked up quickly, tacit knowledge, developed through observations and experience is often more challenging to share through written or verbal communication.
Good succession planning solves this issue by creating the time and opportunity for mentoring and collaboration. Spreading out knowledge sharing over a more extended period gives potential successors the time to pick up tacit knowledge, ask questions, and iron out the kinks without the pressure of taking on a new role, allowing for a smoother transition when the job eventually does change hands.
Increase employee motivation and retention
Showing employees that the business values them and cares about their growth are excellent motivators and retention tools, which is why it’s a good idea to loop them in on the succession planning process. Let them know that they have room to grow in the business and share the options for where they could be one, three, even five years down the track, so they have a clear idea of what they are working toward. It’s always great for businesses to hang on to skills and knowledge where possible.
Cut recruitment costs
Recruitment can be expensive, so why not make the most of the talent you already have? Working with staff with existing knowledge of the business to build the right skills and experience is a smart move to save on costs and reduce the adjustment ‘lag’ that usually comes with being a beginner.
Steps to get started with succession planning
1. Identify high-risk roles
The first step is to think about the high-risk roles in the business. Think about employees nearing retirement, those with significant responsibilities or invaluable expertise- what would the impact of their departure be?
2. Identify future leaders
Once you’ve figured out which roles will need succession planning, the next step is to look to your current staff and identify those with leadership potential. Be sure to select a few candidates so that you have options.
3. Identify training needs
After selecting a few potential successors, it’s time to figure out where the gaps are in their knowledge, and what will be needed to get them from where they are to a place where they feel ready to step into the new role. Set out a plan to ensure the candidates are confident and prepared for when the time comes to transition.
The better and more prepared your business’ succession planning is, the smoother the transition will be when you experience unexpected departures. Here at CDL, we are experts in developing leadership and people management solutions for businesses across New Zealand and Australia. If you want to make sure you get succession planning done right for your business and need a helping hand, get in touch with us today.