People are more likely to stay with a business that offers clear paths for career advancement. Succession planning shows a commitment to people development and growth. People can then see a future for themselves within the business.

Succession planning is a contingency plan. It is not a one-time event.

Succession planning identifies skills gaps within the business and provides a roadmap for people to get the necessary skills and competencies to move up the ladder. Investing in your people’s training and development not only prepares them for future roles but also improves their current performance. When people know they are being considered for future leadership positions, they tend to be more engaged, committed, and aligned with the business’s goals.

One of the things that I’ve learned the hard way has been to ensure that not only do I have a Plan A in place, but that I also have a Plan B ready to replace Plan A. And then, that I also have a Plan C that can replace Plan B.

If you have already earmarked people to move up a level on the ladder, you can ensure that succession planning works.

This strategy does require extra time, energy, money, and investment as a business leader and owner to budget for these changes in the business, but the return is well worth the effort as succession planning takes away a lot of worries and concerns while you’re leading and growing your business.

The extra costs are to ensure that the person earmarked for progress can develop the competencies, capabilities, skills, and, more importantly, the confidence to step into person A’s role as and when needed. You then need to repeat that process ready for person C to step into person B’s role when the time comes.

You can test whether person B has the skills to do the role of person A by asking them to step up in the absence of person A (who may be on annual leave, for example). This temporary secondment gives person B some confidence if they perform the more senior role successfully or it may provide you and person B with an opportunity to do additional training or receive extra coaching.

Many advisors say that succession planning should be started five years before the business leader or owner plans to retire. In reality, however, business owners often want to sell the business when the business owner is feeling ‘burnt out’ and has had enough.

In such instances, a business owner may not be able to get the full value of their business during the exit process. Other risks of not having a succession plan in place include potential successors leaving due to lack of transparency, putting the business at risk; increased difficulty in obtaining financing; a shortage of the right people; loss of knowledge with the people that leave; and low morale in the remaining team.

Being proactive ensures that the right people are going to step up and that they have enough knowledge and experience to take on the full range of responsibilities, and that in advance of this transition they can build their leadership abilities in readiness.

Having good succession planning in place allows for a smooth transition of leadership and people, promotes business stability and continuity, enhances people development prospects and reduces the risks associated with leadership gaps.