Business owners seldom pay proper attention to the benefits of succession planning. When unexpected ill health or personal problems arise, business owners who have not appointed a successor face serious financial consequences. A company that depends heavily on its owner-operator has little value to a potential business buyer or investor.
Successfully and profitably selling a business or transferring ownership through a management buyout depends primarily on having a capable and confident senior management team in place. Their existence will ensure continuity, consistency and reliability, reassuring customers and employees about the company’s future prospects.
Enterprise leaders, in the public and private sectors, have a duty to ensure that the organisation they lead has a secure and sustainable future. That makes succession planning an essential priority. The share value of a quoted company and its appeal to investors will be adversely affected by a lack of confident leadership. Boards of directors must be vigilant in preparing for the departure of a CEO and have a replacement strategy ready to implement at short notice.
Succession planning is not confined to C-suite executive leaders. The management structure of every organisation is the glue that holds it together and the managers are the oil that lubricates the operational processes. Without formal selection, promotion and career development plans, the progression of internal candidates for leadership will stall and they will be encouraged to leave the organisation to improve their prospects. Reducing staff turnover, improving employee motivation and loyalty and ultimately increasing productivity and profits all flow from an inclusive approach to succession planning.
At Fernlea we have developed a framework for succession planning which focuses on the practicalities of retaining valued employees and being able to offer them lifetime careers with the organisation. We call it career path planning and it offers career path contracts to selected people who want to plan their future to achieve personal and professional fulfilment and the best possible work-life balance.