Most companies have their “heads in the sand” when it comes to management succession planning. In fact, most companies don’t plan at all for who will succeed the current management team until the company encounters a crisis of some kind—a death, a disability, a problem inside the family business, a board of directors conflict, a financial default, etc.
But the result is the same—since they haven’t planned who will succeed the current managers, the business ends up experiencing disruption and instability.
There is often litigation, and the business that everyone worked so hard to build loses capital value. The relationships are lost, not to mention how much the employees suffer emotionally as they face the risk of losing their jobs.
These are only some of the effects of not utilizing management succession planning.
Advantages of Management Succession Planning
One of the biggest advantages is that the company gets to maintain the momentum of their business. They don’t have any disruption when/if a manager leaves the company.
As a company maintains its momentum, if they have clear goals—and not just for succession, but goals and objectives that are developed as part of an overall strategic planning process—these factors help them build value for the business.
Another advantage of management succession planning is that the company develops more options and stronger talent in the process.
It gives them more alternatives to consider, which is critical in today’s economy.
Using management succession planning, a company has a better ability to deal with unexpected and unanticipated events.
It also helps when it comes to companies developing “tunnel vision.” If the organization has a plan in place and has trained its employees well, regardless of what occurs—financial issues, temporarily losing sight of goals, running into a roadblock, etc.—the company won’t lose its competitive advantage.
This is important because if a company has a strong direct competitor, they won’t have to fear that they haven’t trained their employees enough, or that their planning has not been strategic enough, to still compete in their industry.
One final advantage to management succession planning—and probably the most important one—is that a company is able to survive a crisis and maintain stability, despite changes or challenges.
In my next Insight, I’ll explain some steps companies can take to develop a management succession plan.