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Significance of Business Succession Planning

Significance of Business Succession Planning

Business succession planning and management is a strategy to pass on the leadership roles, which means the ownership of the business to an employee or group of employees. It involves a systematic process of recognizing and making future leaders who can take the position of the old ones. It is a technique that ensures that the business continues to run smoothly after the company’s vital people move on.

What is the significance of Business succession planning and management?

When the business owner either is incapacitated or passes away, it becomes necessary to shut down the business abruptly. However, with succession planning, businesses can move forward during the inevitable changes that take place with running a business.

In case of small businesses, especially family businesses fail often after the departure of their leadership team, but succession planning can cause significantly improved chances for businesses continuation. Succession of small business focuses on how a business will function once its founder or leadership team retires or leaves the business.

No one can truly plan for a disaster, whether it’s an illness, natural disaster or a managements’ decision to retire suddenly. By not having an orderly business plan for succession, the business or the company can be devoid of a second chance if it doesn’t adapt immediately after a key managerial personnel leaves the company or passes away.

The reason why you should have the succession planning in place are endless. One can’t plan for the disaster, but one can certainly put into place a series of contingencies.  Hence, succession planning pertains to developing a substitute for a perpetual succession of the organization without any disturbance at the time of changes in the founder or the leadership team.  

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What are the benefits of the business succession planning?

Numerous businesses ignore the need to have a proper succession planning because of their day to day operations. These leaders tend to think that they won’t be hit by any severe illness, or they forget that key personnel can be lured away by another company that needs their services.

Succession planning is a step towards protection of the business or company. Some of the benefits of the succession planning are as follows:

  • Succession planning can bring about new gen of leaders, thus providing an exit strategy for the existing business owners/team leaders;
  • It helps in aligning the strategic goals and human resources to allow the right people at the right place and at the right time. Thus helps in achieving the desired business results;
  • It develops a qualified pool of candidates that are ready to fill up key positions of the company;
  •  It provides the opportunity for timely business skills/knowledge transfer;
  • It assists the business or the company to plan and grow for a long duration;
  • It assists in setting realistic goals for growth and planning for future talent;
  • Succession by people from within helps employees to progress in their careers. 

What is the process of Business Succession Planning?

It may be noted that planning for a successful succession plan and implementing the same doesn’t happen overnight. It is a process that should be repeated. Let’s take a look at the process.

What is the process of Business Succession Planning Process?
  • Planning

First step involves devising a strategic plan that can help you know how the succession plan is to be implemented.

  • Analysing
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The next step involves analysing. An analysis is made of the various challenges that the business or company is likely to face in the future and the skills that are required for it. You should determine the knowledge, talent and skills needed for the organization.

  • Identification

Once analysis is completed, the next step is to identify who can fill key business areas and positions. Here the competencies and the skill levels of the present workers has to be assessed. Various factors are taken into account while assessing the same.

  • Development plans

The next step involves creating development plans. This plan includes the formal development procedures, learning projects etc., that can help employees to gain the required skills and experiences. The progress of the employee will be monitored against the plan.

  • Execution

When the strategies have been identified, it’s time to document the strategies in an action plan. Implementing and executing the succession plan includes the retention strategies such as retention bonuses, promotions, etc. The progress of the succession plan should be compared with the upcoming personnel requirements of the company in order to ensure that a capable employee is ready to fill the post if it falls vacant expectedly or unexpectedly.

  • Evaluation

The final step involves evaluating the succession planning and management. This is done to ensure that all key areas of the business are covered under the business succession planning[1]. Systematic monitoring of the workforce and necessary adjustments should be made in order to ensure that the efforts of succession planning are successful. It will ensure that if there are sudden vacancies, key positions can be filled up and the successors effectively perform their functions.

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Even a well placed company or business can come falling down if there is no proper succession planning. Therefore ensure that you have a sound business succession planning in place at your organization.

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