Top Five Reasons Every Business Should Have a Succession Plan

1. Succession Planning Can Help You Survive an Unforeseen Event

Unfortunately, there are a lot of ways you can suddenly lose one of your company’s top leaders. Death, illness, personal problems, abrupt resignation, and even arrest can leave you with an unexpected vacancy in one of your most important positions. While you can’t plan for disaster, you can plan on how to respond to such events. Without a succession plan, you will have to scramble to keep the business running smoothly. But with a succession plan, you will have a strategy in place for filling and backfilling even the most important leadership roles in your company. This can be the difference between whether or not you keep your company afloat during trying times.

2. Succession Planning Forces You to Think Long Term

Many of us spend our time focused on this week’s meeting or this quarter’s earnings. It’s not that anyone believes long-term planning isn’t important, it’s that it’s hard to make the time. Succession planning forces you to take the time to think about your company’s future. Who among your staff do you think can rise to fill a top leadership position? How will you bring them along? If you don’t have anyone who can be trained to take on various leadership roles, do you have a hiring problem or a leadership development problem? Do you need to make changes? These questions—and many others—will come up during succession planning. Developing answers won’t just help you with future successions, it will help you set a smart course for your company’s future.

3. Succession Planning Can Spur Intracompany Communication

Since succession planning is about laying the groundwork for the future, it’s typical for companies to involve the heads of every department and/or every member of the organization. Getting everyone together to talk about future plans is a great way to promote communication between departments and/or employees. Any intracompany communication—but particularly conversations about long-term plans—can improve the way everyone works together on a day-to-day basis. Human resource professionals in your office can be a great asset, especially if they are credentialed human resource professionals and are well versed in succession planning.

4. Succession Planning Can Save You Money

If you aren’t prepared for an unexpected vacancy, you risk incurring significant costs. Not only are you unlikely to be efficient in your search for a replacement, but you may end up paying a burdensome salary to the person you hire. Some experts believe improper succession planning is the largest factor influencing bloated executive pay.² It costs money to lure qualified people away from their current jobs. In addition, a new hire could bring along their own people, who may also cost you more than you would like. Even if there are no “surprise” circumstances for a leadership vacancy, having a documented succession plan in place for several positions can often save you the costs associated with hiring outside people for key leadership roles. If you have a plan for promoting from within, you can avoid paying a premium to fill an important position.

5. Succession Planning Can Keep Your Staff Motivated

Putting a succession plan in place can send a positive message to your staff. They will know the company is planning for the future, and perhaps more importantly, they will see that the company is committed to developing staff members for future leadership positions. By demonstrating your dedication to stability and internal promotion, you can increase your staff’s confidence in the company and motivate them to give their best effort.