There’s a new war for talent upon us as organizations face both planned and unplanned retirements coming out of the pandemic. We know that those companies with formalized succession plans are better prepared to respond to the increasingly competitive landscape for recruiting new talent and retaining existing talent.
Succession planning is the process of identifying and developing high potentials either as a pool of talent for future roles or for specific high profile roles within an organization. It is vitally important, to the success of any organization, to continuously identify and develop talent to fill critical roles in the future or in times of crisis. Let’s take a closer look at why succession planning is so important and its associated benefits.
Why is Succession Planning Important?
In addition to the current war for talent, according to CEOWorld Magazine, the median age of executives spanning all industries is 58. Likewise, CNBC states that most Americans plan to retire around the age of 62. This can cause some major hiccups in organizations as HBR reports that 53% of organizations do not currently have a succession plan in place. Yet, 90% of executives believe that succession management strategies are more important today than ever before. Without a succession plan, these organizations are at risk of harming their business performance as well as employee retention, productivity, and wellbeing.
The Benefits of Succession Planning
Investing today in tomorrow’s leaders reaps significant rewards. Let’s take a look at some of the benefits of formal succession planning.
Enhance Long-Term Growth
Without a succession plan in place, organizations risk not being able to deliver on strategic priorities. By having the right people in the right place at the right time, that risk is severely minimized. Think about succession planning as insurance. People are likely to get sick, move away, or find better opportunities elsewhere. Having a plan already set prior to any of these instances is key to establishing a strong organization, ready to face any challenge head-on. The truth is, the sooner you work on a succession plan, the better prepared your team will be for the future.
Since 2015, the average hospital experienced turnover of 89% of its workforce. Succession planning combats turnover by identifying key performers and putting strategies in place to invest in their leadership development skills. Ultimately, if you take the time today to invest in your high-performing staff, you mitigate the risk of filling a role with an outside hire that does not mesh well with your company culture or values. Instead, by focusing on your current best performers, you’ll be able to train and support them on their leadership journey within your organization — reducing turnover rates dramatically.
Create a High-Powered Bench
As discussed above, identifying top performers in your organization is critical to succession planning. Investing in high potentials creates a pipeline of talent to draw from when leadership positions open up. When it comes to filling leadership positions, best practice is to do so with employees that are showing enthusiasm and excelling in their current job placement. Ensuring that your organization has strong internal resources to fill key positions will create a high-powered bench. Only then, will your organization be prepared to overcome any organizational hiccup.
Avoid High Recruitment Expenses
If you have best-fit candidates for a leadership position already within your organization, there is no need to spend significant time and money on recruitment. Succession planning enables you to create high-performing leaders by promoting them from within the company. According to the Society of Human Resource Management, the cost for recruitment averages one to two times annual salary.
Align Your Team to Execute Business Strategies
Developing internal candidates today better prepares them to step into leadership roles in the future. Additionally, succession planning aligns your talent at all levels of the organization to execute your business strategy. For instance, properly instilling the values, mindset, and strategies in each of your employees aligns them on best practices and ensures that your organization is prepared to accomplish present and future goals.
The good news is… it’s not too late. To be positioned for future success, it’s time to begin strategically identifying and building your high-potential talent. Ultimately, your organization’s future success is dependent on your ability to identify future talent requirements and develop leaders who can deliver results. TLD Group can help.
Reach out to us for a succession planning consultation centered around your team’s and organization’s unique needs and goals.