In order to ensure your business will stay relevant for as long as possible, it’s essential to pay more attention to succession planning. No employee and no leader will keep their position forever. Because of that, it’s vital to be prepared for a transition to a new person that’ll keep the business going. The main purpose of the succession planning strategy is to define which employees have the potential to become rulers of the company in the future and teach them about all the aspects of your succession.
However, not all business owners consider this aspect of a company’s development to be so meaningful. It is actually pretty risky, and today, we want to talk more about where poor succession planning can bring you and the biggest risks you might face.
The Consequences of Poor Succession Planning
Financial hazards
Quite often, the change of a leader is quite shocking for the public if you don’t prepare them in advance. They become hesitant regarding the stability of your company. There were cases where the shares dropped drastically after the former owner left the position.
Taking risks like that is not really reasonable, as you never know whether you’ll be able to recover from all this loss quickly. Until you stabilize the situation, investors will be scared to give their money to your company.
Knowledge and expertise loss
Without a doubt, great leaders and other experienced employees that occupied the top positions have the most knowledge and insight about the business. They’re the ones who spent years building the company and creating a system that works like a well-oiled machine.
Without proper succession planning, they won’t be able to trespass all the necessary information to their followers. If you don’t come up with a strategy on how to share all that knowledge with your team members, all that valuable information will disappear. It becomes useless if you’re the only person who knows it.
Dissatisfied customers
Any successful business that has been on the market for some time has permanent clients. These people get used to certain treatment and communication style over years of cooperation. If the current management doesn’t pass on the details about those customers and their needs, future leaders of the company might not manage to find common ground with them.
A situation like that may lead to the loss of the most loyal customers, which is one of the worst losses any company can face. In general, we can say that poor succession planning usually results in poor customer service.
Other employees giving up their position
Just like customers, the workers also get used to a certain workflow and organization style. So, when a leadership change takes place, it may strongly impact the working environment in a negative way. If the new person that takes over the top manager position proceeds with the work in a completely different way, some employees might be uncomfortable with that.
Usually, it leads to:
- Conflicts;
- Demotivation;
- Mass dismissals.
You cannot teach your successor about all the management subtleties and policies that have been built throughout the years without proper succession planning.
Wrong candidate choice
Sometimes, the change of CEO and management can be totally unexpected. In cases like that, the position has to be filled as fast as possible. However, when you haven’t planned that out beforehand, it may lead to assigning someone who is not prepared to take over that position.
It doesn’t really matter if you hire someone new or choose a person from your company if that individual is not experienced enough. In order to pass the leading role, you need to pass all the knowledge and experience you gained over the years. Without it, the new leader is highly likely to fail and put the business at risk.
Conflicts within the company
When you don’t have a clear plan about the person you want to assign to the leading position, it might result in a battle for that spot between the employees. It can significantly ruin the atmosphere and the team spirit within the company, which in order will negatively influence all the working processes.
Missing out on potential talents
As we have already mentioned, succession planning is all about finding the best candidates and preparing them to take over the leading position. However, when succession planning is poor, there’s almost a 100% chance that you’ll miss out on the most talented members.
How to Avoid Poor Succession Planning
Above, we described some of the risks you might face because of poor succession planning, and now it’s time to discuss some measures you might take to avoid them:
- First of all, gather all your thought and plans and define the vision and main goals for the future of your company;
- Figure out which positions you would want to fill in the nearest future;
- Pay more attention to the working environment inside the company and the performance of each employee;
- Single out the candidates that, in your opinion, have the most potential (to do that, you may ask other employees for their thoughts about who has the necessary qualities to become a leader);
- Look for talents outside your company and offer them a higher rate and new possibilities to attract them;
- Conduct team-building activities from time to time to see how each team member performs the leading role;
- Gather all the important data and create a step-by-step plan for the preparation of your successor;
- Start challenging your candidates and slowly delegate some of your responsibilities to them;
- Prepare your team, customers, and clients for your departure to not make it shocking in the future.
By following these steps, you’ll be able to complete the change of management easier and avoid dealing with the negative consequences of that process. Proper succession planning actually really benefits both the future and the present development of your company:
- It is a great motivation for your employees to work harder and improve their skills, as they understand there’s a possibility of advancement;
- It’ll give you peace of mind, and you won’t have to worry so much about the future of your company;
- You’ll be able to create a better environment for communication and narrow the gap between younger and older employees;
- You’ll ensure that the investor won’t leave your side, as they’ll see you have a clear plan for the future.
Summing Up
The world is constantly changing, and any business industry has to keep up. No leader, no matter how great they are, can take this position forever. The transition to a new manager is inevitable. In order to make this process painless and smooth, it’s crucial to pay a lot of attention to succession planning. This strategy allows you to find the most talented people within or outside your company and prepare them to take over the leading position.
We hope our little tips will help you avoid some of the most common mistakes business owners make, and you won’t have to deal with the consequences of poor succession planning.
