Build Your Business with Succession Planning Part 1
Succession planning prepares internal candidates to move up into positions that will soon be vacated. Companies trying to fill these positions from the outside risk losing time and money during the hiring process and miss out on developing existing internal talent.
76% of small, family-run businesses in Australia and New Zealand report planning to replace their CEOs in the next five years, and 72% are considering a transfer of ownership. For these companies to maintain continuity, it’s essential to begin a succession planning process long before the transition occurs.
Why Focus on Succession Management?
According to a report by Canstar
- 87 percent of Australian businesses are family-operated
- 60 percent prefer to pass CEO responsibilities to another family member
- 97 percent of New Zealand enterprises are small businesses
- 30 percent of New Zealand’s workforce is employed by companies with fewer than 20 total staff members
- Over 380,000 people in New Zealand are self-employed
- Self-employment numbers are increasing for those over 50 but dropping in the 30 to 39 age group
For family businesses to keep operations close to home and self-employment opportunities to open up to younger people, company executives have to train successors in relevant competencies to prepare them for the future.
Internal Employee Development
Sometimes employees don’t know they already possess the talent to move into a higher position. Successful career planning involves not only identifying desirable skills and traits but also empowering employees to become more active in their own growth and development.
The Succession tool from Cornerstone is designed to help businesses track talents across departments and pinpoint likely candidates to fill expected vacancies. When eligible individuals are identified, a development plan can be deployed to prepare them for promotion. This approach lowers the cost of hiring and preserves existing relationships between staff members.
Engagement for Successful Career Planning
Having a comprehensive list of competencies provides clarity for all staff members. Everyone understands what steps they need to take to learn and grow, and this increased engagement improves both enthusiasm and productivity. When all staff members are working toward the company’s overall goals, there’s a feeling of accomplishment and a sense that supervisors are invested in each individual’s success.
Employees working for companies with a policy of transparency are better able to understand how well they’re performing and are more likely to stay in their jobs. The lower turnover rate benefits businesses by making it possible to promote employees internally rather than struggling with the process of external recruiting.
Identifying Competencies in the Succession Planning Process
To determine existing competencies and align them with future roles:
- Gather information from workforce through employee reviews about what strategies they are using to excel within their position.
- Write job descriptions for upcoming vacancies based on upstanding talent available within the company and prospective expertise to drive workforce development.
- Create an “ideal employee” profile to illustrate each competency.
- Transfer this information into talent or performance management software to determine which employees possess the right competencies and which require training.
Using competencies to create a succession management plan requires a system of proactive performance reviews carried out on a consistent basis. Cornerstone software gives businesses the tools necessary to design and implement training processes based on competency information for each position.