A solid glimpse of the future – who doesn’t want that? Many would pay a great price to be able to see what lies in store. One way that business owners can predict the future of their companies is by building business value through succession planning. When properly implemented, succession planning allows companies to shape and mold their leaders who will then shape and mold the company’s future.

All businesses rely on talent to run. The current tight labor market reveals exactly how dependent companies are on finding good employees. For many businesses, their most important asset is their staff. This is why succession planning is so important. A business that has talented people in leadership and other positions is strong and successful only as long as those employees remain with the company.

How Does Succession Planning Build Value?

Succession planning creates a way to identify key roles within the company, the people with the right skills for these roles, and the positions that will need filling either in the short term or the long term. It is an important part of the talent management process.

There are three phases involved in succession planning. They are the assessment phase, the evaluation phase, and the development phase. What do these involve?

Phase 1: Assessment

During the assessment phase, company leadership needs to do a thorough assessment and identify:

• Larger business challenges they foresee for the upcoming 1-5 years
• Critical positions that will need to be filled to ensure business continues to operate
• Skills, abilities, and institutional knowledge needed for success

Essentially, what do they predict will happen in and for the company in the next 5 years and can their employees meet these challenges? If they do not have the leadership and staff in place, it doesn’t matter how profitable the business is right now. It’s vulnerable.

Phase 2: Evaluation

During this phase, the company assesses its current pool of employees and considers the ones with high potential for development. It also looks at what those employees will need to be successful in the roles they need them to fill. If the company concludes that they do not have people already in the organization who could eventually fill those positions, they will need to hire them. Any HR department should be made aware of the kinds of people they are looking for and what skills they should possess.

Phase 3: Development

How effectively the company prepares during the development phase will directly impact its future. They need to meet two key goals. The first is to extract the knowledge that current employees and leaders have before they leave the business. The company needs to retain as much of its intellectual capital as possible. This may involve having employees record the specifics of what they have learned or know or transferring it to other employees through training or mentoring.

The second goal is to develop the pool of talent they have available so they can step into critical roles when needed. This can be accomplished through targeted career strategies like education, certification, and training. Whether they acquire their knowledge from other employees or from outside the organization, they need to be fully prepared so they can hit the ground running if the company loses a key member. One advantage of succession planning is that it identifies talented people, so they are not left in back-office positions wasting their talents and considering other opportunities.

Once the company has developed and implemented a structured succession plan, it’s a good idea to review it periodically so that there are no surprises down the line. How well does the developed talent do once they are given leadership roles? If they struggle, the company should reevaluate its development phase and fine tune it.

Building Business Value through Succession Planning

When done right, succession planning ensures that the business has a pool of trained and talented people who can step into leadership roles as they are needed. This increases  stability and builds confidence about the company. This developed talent enriches the business’ value both in the present and the future. Company morale improves, and interest from potential investors or would-be buyers is piqued. It’s a win-win situation.

Create the future of your company today with succession planning. If you would like to discuss your company’s success planning, Prometis Partners is always available to talk and develop strategies for success with you. Call us if you would like help.