Do You Know Why Succession Planning is Essential?
50% of today’s big companies do not possess a suitable owner or chief executive succession plan. More so for smaller business. The recent unprecedented public health and fiscal crisis has spurred a lot of business exits. Some business will fetch premium valuation because the system, process and people are already in place and it is easy for the new owner(s) to transition in. They do it right. But how?
Why Are Succession Plans Important?
A lack of succession plans has the following consequences:
Your brand is at stake as the risk factor increases.
Stakeholders, such as employees, partners, suppliers, investors, become doubtful regarding the company’s future.
Stagnation can creep in for lack of CEO designation. Crucial business decisions and activities become delayed.
Have the right plan to achieve SUCCESS!
In order for the business to have longevity, even after the original founder(s) are gone, a succession plan needs to thought out strategically, vetted by advisors who will benefit from the success & succession of the business, and implemented.
The benefits of doing all of the above are numerous, especially the following:
They help you have a clear-cut vision of where the business should go or is going currently.
Creation of leadership pool where a number of experts take up responsibilities and take charge of situations.
Has a positive effect on performance management. They not only ensure that the key positions remain intact but also make sure that they are designated by competent professionals.
Succession plans are great at reducing competency gaps if any. Such gaps are based on the present need of your company on whether you need new experts to fulfil the higher positions or what are the new competencies that the existing employees require.
Make sure that you have your succession plan/exit strategies all straightened up. Otherwise, the stakeholders are going to grumble and look elsewhere. Having a definite plan helps you save the costs of external hiring too. So, get started now!