What Is Succession Planning?
Succession planning involves identifying critical positions in your organization and creating a plan of action that allows individuals to seamlessly assume responsibilities if the individual who currently holds a said responsibility can no longer carry out their duties.
It can feel unnatural to think about the succession planning process when your business is chugging along, the economy is doing well, and it seems like your financial future is bright. But, a succession planning strategy ensures that you have the right people in the right job regardless of the future.
Some succession planning benefits include the following:
- Strengthen your organization by highlighting and identifying critical positions and potential vacancies.
- Improve organizational capability by choosing critical skills and competencies for business continuity.
- Foster talent by focusing on developing individuals to the point where they can meet future organizational needs
- Succession planning definition includes looking into the future, identifying future staffing needs, and finding the people who could carry out those roles.
Why Create Strategies for Succession Planning?
If you don’t have a succession plan, your company might struggle to function in unpredictable circumstances. It is in the best interest of your business to ensure that you have the right leaders in place if your business loses an executive or member of staff. The instability of poor succession planning, can affect profitability, derail short-term and long-term goals, and lead to employee attrition.
A succession planning strategy puts your organization in a position where it can react if there is an illness, pandemic, or accident. Everyone will know of urgent issues, who has the authority to do what, and what steps to take in the critical moments following an unforeseen event.
Implementing Succession Planning Best Practices
1. Start at the End. Ask yourself what you are looking for in the people who will fill the roles you need. What are their skills, core competencies, abilities, and other criteria? Be inclusive and include the strongest candidates in your organization.
2. Outline What to Include in Each Role. The idea of succession planning can make some people feel uncomfortable because they worry that their careers are in the control of someone else. Laying out what positions within your company will be affected by succession planning will help alleviate any stress among your employees about their future role in the organization.
3. Include Key Stakeholders in the Process. This process should not be dominated by the human resources department, but should rather be driven by business leaders. HR will facilitate the process and provide needed tools along the way. Senior leadership should be invested in the process. Including leadership at the beginning will help you get everyone to buy in each step of the way.
4. Forecast Your Workforce Needs. You need to have that “if I get hit by a bus” plan. However, you also need to focus on long-term planning. Identify mobilization factors for each level of management you are planning for. This includes considering:
- Voluntary and involuntary turnover
- Retirement plans
- Management readiness and training
- Monitoring satisfaction trends and employee engagement
- Evaluating competitiveness and compensation strategy
Succession Planning for Family Business and Nonprofit
Very few family businesses and nonprofits have written succession plans, yet it is critical for the future growth of these businesses. Both nonprofits and family businesses must be prepared for the departure of an executive or business leader, as there may be broader consequences for the continuity of the business, should swift decisions not be taken.
If you are a family business owner or run a nonprofit, it can feel overwhelming to develop a plan of succession. There are many factors and legalities to consider. Fusion CPA can help.
Fusion CPA is a supportive partner that can walk you through the complex financial process of creating a succession planning strategy. We can help you and decision-makers understand why succession planning is important while devising strategies for succession planning.
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