Succession planning – sometimes called exit planning, depending on the circumstances – is a natural part of the business lifecycle. Talented colleagues move on during the course of their working lives, whether that’s to new opportunities, career changes, or retirement.
When those changes happen, it’s important that your business isn’t put at risk as a result. To future-proof your success, you’ll need to think about identifying replacements for leaders and high-level positions (yourself included.)
Here’s why succession planning is important for organisations – regardless of your size, structure or sector.
It promotes long-term planning
By its very nature, succession planning encourages business owners and leadership teams to think about the future.
Whether it takes the shape of three-year roadmaps, ambitious commercial goals, or a clear strategic direction, planning for the long-term often drives business success: if you know where you want to go, it’s easier to map out how to get there.
By using succession planning as an opportunity to identify what could happen in future scenarios, you’ll be able to pinpoint what’s important to your ongoing operations. It can help to make sure you’re growing with intent, and creating clear pathways for any future transitions.
You’ll be able to identify future leaders
Before looking outwards, good succession planning means identifying any rising stars that are already part of your business and talking to them about their career goals.
Talented and ambitious individuals – who perhaps don’t yet have the experience to fill senior roles, but do have the values, skills and desires to become leaders – often thrive when presented with clear progression opportunities.
For this reason, succession planning can be an excellent tool for boosting retention and motivation.
By using it as a framework for training and development, and tapping into potential successors early, the insight you gain from succession planning means you’ll be able to proactively cross-train, mentor, or coach the colleagues you’d like to step up one day.
And, if you can’t find the right fit among your existing team, you’ll know it’s time to start thinking about filling that skills gap through recruitment.
It opens up opportunities for diversity
It’s no secret that executive teams with diverse backgrounds, different experiences, and varied approaches to leadership are advantageous for businesses looking to grow and succeed.
By looking closely at your existing workforce, you’ll be able to identify not just the skills you might be missing, but the diverse perspectives you don’t currently benefit from, either.
Succession planning offers a chance to be intentional about how you source candidates – working on inclusive leadership skills, breaking down biases in the workplace, and recognising the fact that diverse teams don’t build themselves.
Paving a clear route forward
Lastly, impactful succession planning helps you to chart a clear route forward for your business. You’ll know where any vulnerabilities are, what opportunities you could make the most of, and what talent you need to develop or hire to get there.
This is particularly important for family or owner-managed businesses, which can sometimes make the mistake of relying on informal or verbal succession agreements.
Going through a robust succession planning process will make sure everyone shares the same expectations, and give you time to make alternative plans with plenty of advance warning, should you need to.
How can an accountant help with succession planning?
As with all major business decisions, getting the right professional support in place – as early as possible – can make things a whole lot easier.
When it comes to succession planning, an accountant’s role is to help you analyse your financial situation and make sure you’re ready for any eventuality. That might include working on financial planning and analysis, creating profit strategies, or crystalising opportunities for growth and long-term success into a razor-sharp business plan.
If you’ve still got questions about why succession planning is important in organisations, or are looking for some help putting it into practice, we’d love to hear from you.