Preparation is one of the main ingredients to remaining successful in business. If you don’t properly plan, prepare and train people for key positions in your company, you might face a tough situation when those key positions become vacant. Your top employee may die suddenly, retire or simply quit. You can address these contingencies through succession planning.
Succession Planning Process
Succession planning must be included with your overall business strategy. Part of the process involves itemizing the required competencies for successors of key positions. You’ll also need to figure out how you can develop these competencies, which are the skills, abilities or knowledge that the replacement person must have so that they can successfully take on their new position. These skills can include the ability to lead diverse personalities and groups or the ability to succeed even under the most difficult situations. You’ll need to determine which job is critical and what methods you’ll adopt to fill these slots. Your senior managers must be involved in the process as you’ll need them to coach their successors. You also need to assess your existing talent pool to see who has the potential for immediate promotions. You can also use your assessments to flush out key competencies that might be missing in selected successors.
Human Resources Role
If you have a human resources department, or even just an HR person, they’ll usually play a pivotal role in succession planning. They’ll help you identify career progression and the development needs of your work force. This includes identifying the skills required for future jobs and potential employees that might fill certain positions. HR is also helpful in preparing documentation about the succession plan, and they can circulate it to all employees, update it regularly and ensure its proper implementation. If your succession efforts are meant for senior management, such as the chief financial officer or other top managers, HR must get the input of these key individuals.
Normally, small businesses rely heavily on the business owner, whose absence could be devastating for the business. Therefore, you need to prepare someone to take that slot in case of an emergency. If you operate a family business, several of your relatives might believe they are in line for the leadership position. When an emergency occurs, this might cause confusion and could hamper business continuity. Conversely, you might not have anyone immediately ready to take on your responsibilities. These scenarios make succession planning crucial for small businesses.
Promote or Hire
In succession planning, you make the crucial decision either to train a person from within your company or hire a new employee when the position becomes vacant. To make this decision, you’ll need to think about various factors, including the cost, time and effort required for hiring or training individuals. If the vacant slot is of a technical nature, you might prefer to hire a highly skilled replacement because training is time consuming, and, therefore, costly. If you bring in an external candidate, it can have a negative effect on your current employees, especially if some of them felt they were qualified for the position. Conversely, you can use succession planning as a retention strategy if you promote your current employees.