What is succession planning?
Corporate succession planning is the process of identifying and internally developing talent with the specific objective of replacing key business leadership positions in the company.
However, to fully implement succession planning, we must first understand the following:
- What is succession planning really about?
- What are the advantages of succession planning?
- How is risk minimized with succession planning?
All of these questions and information gaps will be fully addressed by reading this article.
Reduce organizational risks by realizing the benefits of succession planning
The benefits of succession planning are numerous, but not always well recognized. Most corporate entities today, regardless of size and location, cannot do without a carefully crafted management succession plan. In order to minimize risks associated with the loss of valuable personnel, companies must engage in talent pool management by first realizing the benefits of succession planning.
Even though the concept of corporate succession planning is not new, it has received increased attention due to numerous advantages of succession management. These benefits are particularly important in a global business environment.
Want to get more key insights about leadership? Download this exclusive article
4 Benefits of Succession Planning
What distinguishes high-performing organizations from underperforming ones is that successful entities understand the benefits of succession planning and thus engage in it on a continuous basis. In other words, their leadership perceives corporate succession planning as an investment and not an expense.
Here are the 4 benefits of succession planning not to miss:
1st Benefit: Availability of capable individuals for management positions is increased
Effective corporate succession planning increases the availability of capable individuals who are prepared to assume such roles as they become readily available. Leadership roles can easily be filled as senior executives retire or if the senior management positions are vacated due to resignation of key officers.
It then becomes imperative to realize that effective talent management is not simply about a position-driven replacement. The succession planning process is a well-planned-out, long-term procedure building a number of so-called "feeder groups" of qualified candidates, able to fill vacancies as they emerge.
2nd Benefit: The risk of losing experienced corporate leaders is minimized
The most prominent potential benefit of workforce planning is associated with decreased risk of the loss of experienced corporate leaders. The existence of effective corporate succession planning diminishes the need for an external search of qualified candidates for a particular position.
Download your exclusive leadership article by IMD's world renowned experts
Leadership is the key skill for your career. Gain key insights thanks to this exclusive leadership article, accessible to our top-raking IMD leadership program students.
3rd Benefit: Fewer financial resources will be spent in the external search and development of candidates
It also minimizes use of time and financial resources looking for new people capable to run senior management positions in the company. In situations of abrupt personnel changes, the benefits of succession planning become very apparent. There will be less time and reduced financial expenditure on recruitment and leadership development as qualified internal candidates have been already identified and trained.
4th Benefit: HR departments can establish formal procedures to support the process of selecting top and middle management
One of the advantages of succession planning concerns the ability of the HR department to engage and establish formal procedures to support the process of selecting top and middle management. Such actions minimize random or rushed selections, and re-establish the much-needed degree of commitment to corporate succession planning from everyone in the firm.
Even though organizations are often dissatisfied with the manner of its implementation, they cannot operate successfully without a well-developed succession plan. The key to a successful leadership management approach is to continuously engage and implement corporate succession planning and talent management.
Still looking for the Benefits of Succession Planning?
Explore IMD's Leading the Family Business program, the world's longest-running family business program. Download the (NEW) program brochure now.