Four Reasons Your Company Can’t Thrive Without a Succession Plan

Mergers, acquisitions, downsizing, and growth all require an unprecedented need for information about key executives and a framework for assessing the competencies required to lead people during extraordinary times. Yet, even with the revolving doors at the top of many companies spinning faster than ever, organizations still overlook opportunities to develop talent from the bottom up, and they continue to allow the selection of top leadership to turn into messy melodramas. Instead of leaving the future of your firm to fate, decide on a systematic, comprehensive course of action that takes the guesswork out of determining the future. Here are four reasons why you want to.

First, as the economy continues to recover, there will be more mobility of top talent, and you need a plan to keep yours. My clients who have been sitting on cash for the past four years have begun to explore options for growth. No one grows without talent, however. Therefore, these clients have started exploring both organic and acquisitive growth opportunities that will present unprecedented opportunities for expansion but also first-time challenges to the way they’ve made talent decisions.

Second, growing companies will want to attract the best and brightest in their industries, but these stars will expect a clear succession plan if they accept employment. Given a choice, they won’t gamble with the organization that hasn’t thought through how best to position them for success.

Many Baby Boomers will retire soon, sometimes with little notice, but too few have been getting ready for key positions. For several years the pipeline has been clogged with experience, corporate knowledge, and exceptional skill clustered at the top. Before these senior leaders leave, you will need a plan to harness their knowledge. Think about hiring their replacements early so the incoming or newly promoted can learn from the veterans.

Fourth, succession planning gives you options. If you systematically develop from within, you’ll have both emergency replacements and long-term plans to develop the bench for the organization’s future needs. Time will be on your side, so if you discover that you don’t have any internal people ready for a key position, you can begin the search for an outsider.

Having no internal candidates ready will be the most daunting challenge you’ll face, but there are others. Hiring from the outside offers its own set of problems. In addition to recruitment and hiring costs, you’ll have to base your hiring decisions on limited information.  Seldom do easy answers make themselves apparent; more often complicated questions steal the show.

The previously perceived quiet crisis of succession is now sounding its siren, and smart companies are responding by creating disciplined approaches to managing their futures. When circumstances usher in change, you should be ready with a carefully tended pool of candidates. Unfortunately, most of these talent pools are not deep enough nor well guarded, and too many could use a dose of the organizational equivalent of chlorine.