What is succession planning?
Succession Planning, also known as ‘replacement planning’, as the name suggests, is when an organisational leader foresees his or the demise of other key stakeholders. It’s a strategy for immediate action in the event of an ongoing crisis. The leader decides on his/her ‘heir’ well in advance to ensure the smooth continuity of business if a tragedy were to take place. The business leader picks out an employee or a group of employees to pass on leadership roles.
How is it an answer to the uncertain future?
Death is all around due to the second wave of covid-19 and it’s not sparing anyone including the top-level executives in business. A lot of sudden deaths have led to voids in key roles within organisational structures. Businesses are losing valuable employees and during such a time, they are unable to grieve. This is because they are scrambling to fill up the leadership position to prevent business impact.
Several companies are creating succession plans for board level functionaries and top executives. Succession plans are an answer to the uncertain future because they create a sense of clarity for the upcoming generation of leaders. Stability is almost non-existent amidst the second wave and nobody is sure what to expect soon. Which is why small businesses and budding entrepreneurs need to be ready with a roadmap to their business, if for any reason they become unavailable.
Succession plans are an answer to the uncertain future because they create a sense of clarity for the upcoming generation of leaders.
How does succession planning help small businesses?
Ever since the RBI (Reserve Bank of India) capped the tenure of MD’s and CEOs to 15 years, a number of institutions including the Kotak Mahindra Bank is focusing on succession planning responsibilities. This has come at the right time for them since Covid-19 has clearly demonstrated the urgent need for this exercise. Kotak Mahindra has already created a tenure for their CEO Uday Kotak, and they are working on ensuring long-term stakeholder and shareholder value.
Build confidence among your staff and family.
It’s a given that as a business leader, you plan on being active within your business for a long time. But succession planning is more about creating a sense of confidence than it is about anticipating the worst. A well thought out succession plan will give confidence to your clients, family, and staff if you are suddenly unavailable.
Preserve your business.
Small businesses in the growing stage need a lot of preservation otherwise they crumble down to the foundations. Unexpected events especially threaten to topple down small businesses. Succession planning will help both your loved ones as well as your most trusted customers to continue their associations with the business should something happen to you.
Facilitate smooth successions
If key leadership roles are suddenly left vacant, a crisis shouldn’t occur within your business. Instead, successors should be able to easily fill in their shoes and step in to take on the roles and responsibilities confidently. This is how succession planning will help you survive in the face of adversity.
Increase business value.
Businesses that put their Intellectual Capital into writing see an increase in their valuation. A well-documented succession plan improves the transferable value of the organisation and will allow you to leave your legacy behind. It will also give you the power to retain your most valued and trustworthy employees who you think are most deserving of leadership roles in the future. Small businesses are under immense stress currently because of all the disruptions and the deaths caused by the second wave. Working on a succession plan will ease your worries and give you the much-needed peace of mind which is so hard to achieve in the current climate.