Succession Planning And How To Be Prepared
How Robust is Your Succession Planning?
Based on recent studies, about half of all companies say they have a qualified person ready to step in if the CEO or president leaves. Looking beyond lead individuals at the top of organizations to the broader C-suite, VP’s, and other layers of management; a considerably smaller minority of companies – only about 15% – feel confident about succession planning for any turnover—whether planned or unplanned—in those critical positions. How confident are you?
Lack of readiness can expose your business to several risks:
- The wrong replacement is hired
- There is an interim leadership void
- The incumbent overstay
Each of these risks can lead to direct and indirect business costs. To start, there are the simple recruiting expenses to keep replacing leaders. The cost of replacing leaders is especially important since higher paid employees typically cost more to replace in terms of offers, packages, and headhunter agencies in many cases.
Companies can also alienate potential successors. If companies have internal emerging stars waiting to step up but there is a sense of leadership chaos—particularly regarding a role the stars may want—the potential chance of those employees leaving a company can increase. Poor succession planning can also put a business at risk. If a business has a perception of ineffective strategic planning, it could experience difficulty in getting investment, financing, or closing key deals.
Finally, there are the cultural considerations. When companies have churn at the top, a ripple effect of anxiety occurs that filters quickly through an organization. A ripple effect halts internal initiatives or programs but more importantly it can cause unease with valued employees. Those valued employees may even be tempted to start looking around at opportunities outside the company for places they perceive as more stable.
If you’d like to learn more about effective succession planning strategies Ascentis offers free HR webinars monthly and on-demand webinars. Click here to learn more about our free HR webinars and how to earn free SHRM & HRCI credits.
To learn more about how Ascentis can help your organization effectively plan for succession, click here to learn about Ascentis’ talent management solution–Ascentis Performance Tuning.