Build Your Business with Succession Planning Part 2
Identifying competencies is only the start of a succession plan. What a company does with the information gathered through performance management software makes all the difference in whether or not employees can be successfully moved from one position to another.
Successful Businesses Need a Plan
Australian accounting firm BDO reports that only one in three small to medium sized businesses are able to pass ownership on from the founders to the next generation. By the third generation, that number drops to ten percent.
Additional statistics suggest a lack of proper succession management:
- 55% of businesses and CEOs with plans to recruit new leaders within three years report not feeling confident in the abilities of their successors.
- Only 21% of businesses currently have plans in place for upcoming changes in leadership.
- Only 8% of businesses consider their succession plans to be “robust.”
However, the odds are improving. In a 2014 report by PwC, 42% of family businesses had already implemented an estate planning program, and 47% had next-generation family members working within the company, giving them access to a pool of potential leadership candidates.
Essential Training and Development
Most companies wait until their yearly performance reviews to see if employees are growing, but these reviews are more useful when conducted on an ongoing basis with career planning in mind.
Company executives can get more out of reviews and provide better feedback to employees by:
- Using Cornerstone software to continually monitor employee performance in key competencies
- Identifying strengths, weaknesses and gaps in skill sets to see where training is needed
- Collecting 360-degree feedback on all employees and managers across departments
With this information, it’s easy to identify candidates who are ready to move into new positions and those who possess the right talents but need further guidance to become fully equipped.
Improving Employee Development
During performance reviews, it’s critical for Australia and New Zealand executives to align employee goals with their company’s mission. This allows for employees to understand how they are contributing to the company, and for executives to determine the direction of departments to best optimise their workforce. By understanding the direction of the company and the contributions that employees are making managers can also get a better idea of what employees are contributing most to the company’s bottom line.
For this to work, communication must be open in both directions. Employees need to feel comfortable talking about their goals, and supervisors need to translate this information into ongoing training and development strategies. Setting both short- and long-term goals helps staff members see their progress and supports the business by creating a healthier, more productive work atmosphere.
Having a ready pool of internal candidates creates a streamlined internal hiring system designed to ensure future success. With Cornerstone’s suite of software for succession planning, employee development, learning management and talent acquisition, businesses can begin to implement and manage effective succession planning processes and support ongoing growth.