by Rachel Faciana, Staff Accountant
In business, planning is key, but one critical type of plan is overlooked: succession planning. Investing in succession planning can aid in both financial and human resource efficiency for businesses. If done effectively, succession planning can have advantages for staff and management alike, by developing future leaders and giving employees peace of mind.
What is Succession Planning?
Succession planning is a strategy for identifying and developing future leaders who can replace current leaders when they leave, retire, or die. Succession planning increases the availability of experienced and capable employees that are prepared to assume these roles as they become available.
Eight Steps to successful succession planning
- Be Proactive
Even if you think you will not need a succession plan any time soon, it is better to begin developing leaders within the company who can provide an invaluable safety net.
- Keep an Open Mind
The second in command at your company may seem like the ideal first choice, but pay attention to other employees and their skill sets. You are looking for employees who will thrive in a leadership position, regardless of their current title
- Make the Vision Known
When potential leaders are identified, don’t keep your plan to yourself. Share your ideas with others who can provide mentoring or training opportunities, including human resources employees.
- Offer Regular Feedback to Proteges
Make sure to take notice when potential leaders perform well during assignments and let them know you noticed. Keeping this information in a file will be beneficial when management positions become open that you believe this person may be a good fit for.
- Provide training
Offer mentoring relationships, job training, and shadowing opportunities to the individuals you identify as potential leaders. This will help them to build and refine not only technical skills, but interpersonal skills and relationships as well.
- Compile an Office Procedure Manual
Have a thorough and up-to-date Office Procedure Manual that includes information documenting where data is filed or stored electronically, and how to access the information. This manual might include but is not limited to:
• Password manager program & access
• Login information for all programs and websites including email, social media accounts, banking, credit card sites, online banking, payroll processing, etc. Document User IDs, passwords, and security questions & answers for each.
• Website domain registration information
• Partnership / Operating Agreement
• Company Federal, State, Local Tax ID numbers
• Tax returns & supporting documents
• Bank account information including authorized signers for all accounts
• Safe deposit box information
• Benefit plan documents
• Insurance policies
• Vendor agreements & liabilities (rental/lease agreements, lines of credit, equipment documentation, service contracts, etc.)
• Schedule of assets
• Safe / lock box combinations
• How to access voicemail
• Post Office Box location
• List of who has keys to building
- Do a trial run of your succession plan
If you know that you are going on vacation or will be out of the office for an extended period of time, allow this employee to have the management role while you are gone. This includes making sure they are aware of security features like locations of keys and the location of the office procedure manual (see above).
- Use your plan to develop a hiring strategy
Once you have identified the individuals you will focus on for your succession plan, take note of their talents and where you feel your company may lack some talent. Use this information to focus recruitment for future employees to continue to bolster your company’s talent pool.
Although the type and extent of planning will be different, organizations both large and small need to have an established succession plan. Effective succession planning supports organizational stability and sustainability by ensuring there is a consistent process to meet staffing requirements. Last but not least, a succession plan is an investment worth making into your company’s future.