Succession Planning: Ensuring Business Continuity and Growth
Succession planning is one of the most critical aspects of business continuity, yet it's often overlooked by business leaders until it's too late. In fact, according to a report by the Association for Talent Development, only 35% of organizations have a formalized succession planning process — and this comes at a time when CEO turnover is the highest its been in 20 years.
I have seen firsthand the difference between organizations that prioritize succession planning and those that scramble to fill key roles when a leader departs unexpectedly. The truth is, succession planning is not just about filling vacancies—it's about ensuring the longevity, stability, and growth of your business.
Why Succession Planning Is Important
Succession planning is the proactive process of identifying and developing employees to step into key roles as they become available. This is important for several reasons:
- Business Continuity: The sudden departure of a key leader can disrupt operations, drop revenue, slow decision-making, and create uncertainty. Succession planning ensures that you have a plan in place to keep the business running smoothly.
- Talent Retention: Employees who see a clear path for advancement within the company are more likely to stay. Succession planning demonstrates your commitment to their development and future, which can boost morale and reduce turnover.
- Knowledge Transfer: When key employees retire or leave, they take valuable institutional knowledge with them. Succession planning allows for the transfer of knowledge and expertise from one leader to the next, minimizing the risk of a knowledge gap.
- Strategic Growth: With the right talent in place, you can focus on growing your business. Having future leaders identified and prepared allows you to make bold moves without worrying about who will lead the charge.
How to Approach Succession Planning in Your Business
Succession planning doesn’t have to be a complicated process, but it does require intentionality and commitment. Here are a few points to consider when developing your succession plan:
Know Your Talent
The foundation of any good succession plan is understanding the talent within your organization. Twice a year at Midwest BankCentre, we review our talent across the organization. This allows us to identify which employees have the skills, potential, interest and drive to step into key roles.
As a business leader, you need to know your people well. Start by regularly assessing your employees' performance and growth potential. Who is ready to move to the next level?
Align Visions
It's one thing to identify someone as a successor, but it's equally important to make sure that your vision for their future aligns with their vision for their career and interests. This alignment will increase the likelihood of success when they do step into a new role.
Sit down with potential successors and have an open conversation about their goals and aspirations. Questions to help understand their interest in moving into leadership or to advance technically can be important to gauging future aspirations. Asking where they see themselves in 5 years can also provide insights. A caution is to stay away from specific roles or titles, as that can sometimes be misconstrued as the next step, instead of a general inquiry.
Develop Their Skills
Once you've identified your potential successors, the next step is to start developing their skills and giving them exposure to the tasks they will face in their future roles. At Midwest BankCentre, we have career-pathing processes where we advertise different career paths for roles within the organization. This demonstrates the opportunities available and encourages employees to see a future with the company.
You can also create formal development plans. A simple written plan that outlines the steps needed for the employee to grow into a new role can be very effective. For example, if an employee needs additional education, such as a master’s degree, include that in the plan. The key is to commit to the development process together—the leader and the employee should both be bought in to it..
Stay Ahead of the Curve
Succession planning isn’t just about preparing for planned retirements or departures; it’s about being prepared for the unexpected. What happens if a key leader leaves tomorrow? If your board isn’t asking for a succession plan, get ahead of it. You need to know what Plan B is for those critical roles.
A solid succession plan doesn’t just benefit the organization; it brings peace of mind to leadership and ensures that your business is equipped for continued growth. Don’t wait for a key person to leave before you start planning—be proactive, and your business will be better positioned for long-term success.
Originally published in Small Business Monthly's September issue of 2024 by Julie Tuggle-Nguyen, EVP of Human Resources