As much as you would like it to, things won’t stay the same at your company forever. Your favorite employees might move on to new roles or new projects at some point. You are likely to eventually decide to try something new, retire, or sell your business. Knowing who can step forward to replace managers and other employees and who can take of your company are essential for the ongoing success of your business.
Even if your company is brand-new, it pays to have a succession plan in place. Succession planning involves identifying the future leaders of your company and putting together a program that will help prepare them for their new roles.
Why Make a Succession Plan?
One of the most important reasons to create a succession plan is that doing so helps to guarantee that your business will continue on. With a plan in place, the company will be able to weather any storms that come its way and will be able to successfully roll with any changes. For example, if one of your company’s top managers suddenly needs to leave, due to an illness or another personal reason, you will already have someone waiting in the wings to take their place.
Succession planning does more than prepare your business for any ups and downs. It can also help you save money. It’s much more cost-effective to promote from within than to have to conduct a search for a new manager and make an outside hire. Having employees ready to move into new positions or ready to be promoted also helps to improve their engagement and commitment to your business. When team members understand that they have a chance to move up, they are move likely to be committed to your company and less likely to be on the lookout for something bigger and better.
How to Identify Potential Leaders
A critical component of succession planning is identifying the people who will step in and take over the company or the people who will move into management and leadership roles when the people currently hold those positions move on. You can start the process of identifying potential leaders early on, such as during the hiring phase. When you bring someone on, pay attention not only to how well-equipped they are to succeed in the role you are hiring them for but also how well-equipped they might be to thrive in a management position.
When identifying leaders, look beyond extroversion or chattiness. Your quieter employees might not be as talkative as the extroverts, but that doesn’t necessarily mean they won’t thrive in leadership roles. Some of the qualities to look for in potential future leaders include a willingness to continually learn and grow and an ability to adapt to changing situations. Good future leaders also have high levels of empathy and emotional intelligence.
Although you should keep management potential in mind when hiring people, it’s not something you need to commit to from day one. An employee who might not have seemed like a good future manager at the time of hiring might surprise you with their overall work performance. At the same time, someone who seemed to have “manager” stamped all over them might turn out not to be the future leader you thought they would be.
How to Prepare Employees
Ideally, your employees will be aware of and on board with the succession plan. Along with letting them know about the plan and their potential role in it, it’s a smart move to implement some sort of training program to prepare your team to move into leadership positions. You might start a leadership training program for new hires who have management potential or for people who are early in their careers and are interested in moving into management roles. In exchange for offering your team members management training, have them agree that they will work at your company in a management role for at least a certain amount of time. Providing the training not only ensures that your team is ready for the future but having an arrangement in place also guarantees that you’ll have people ready to become leaders when the time is right.
Developing a succession plan for your company will help it weather any changes, large and small. You don’t have to make your plan on your own, though. New Direction Capital’s virtual CFO team can help you decide what your company will need in the future and who at your business might be a good fit for a management role. To learn more, hire your virtual CFO today.