Regardless of company size, age or industry, having a succession plan in place is a necessary strategy and a critical part of doing business. In fact, even for small start-up organizations where top leadership positions include “Chief Bottle Washer” or “Vice President of Sweeping”, knowing who will be ready to step in and continue the work is simply part of running a successful business. A succession plan doesn’t have to be complicated to be effective, but it does needs to exist.
Succession Plans Come in all Shapes and Sizes
Succession plans don’t always have to be overly complex. In fact, for small business, it might be as simple and straightforward as knowing that if one or the other partner dies or moves on, that the business will no longer exist. Larger, more established organizations have more comprehensive strategies for succession planning and often have very detailed recruiting and development procedures in place. In most large organizations, there is generally a clear line of succession that extends three, five or even ten people deep into the organization.
Ensuring Leadership Continuity
When executive level decision makers or high level employees leave an organization, things change. Often, when long-term strategic goals are tied to executive level objectives, it’s difficult to simply replace critical people and move forward. Organizations use succession planning for ensuring leadership continuity by filling key leadership positions with people who are well prepared to continue operations seamlessly.
Some larger organizations will actually take out insurance policies on senior leaders and those whose untimely absence would significantly disrupt operations. While an insurance settlement does nothing to help operations, it can help to offset some of the financial burdens encountered if an organization experiences a loss of a critical employee.
Succession Planning Versus Replacement Planning
Top executives often use succession planning and replacement planning interchangeably but they are not the same at all. Replacement planning is generally the process used to fill a vacancy on a short term, informal basis. It assumes the organizational chart will remain the same and basically identifies people who would serve as good “backups” or “fill ins” for leadership positions. For example, if an employee is coming in from another location, often there is a need for someone to oversee operations temporarily.
On the other hand, succession planning is more complex and is focused on the long-term replacement of critical positions in the organization. Succession planning often involves development and training as well as replacement, and is geared towards long-term sustainability and viability. Effective organizations realize the strategic benefits of focusing beyond replacement planning to move into succession planning so the organization will continue to run smoothly and thrive.
Organizations and businesses of all sizes rely on operations running smoothly to succeed. When key leadership positions go vacant unexpectedly, having an effective, well documented succession plan in place is not only easier, but also essential for moving forward.