Why Succession Planning is Important: 10 Reasons to Future-Proof Your Organization
Succession planning is more than just a strategic imperative; it’s the cornerstone of long-term organizational success. Imagine the sudden departure of top talent with no plan in place to fill the void. The impact on business continuity, morale, and productivity can be devastating. By implementing a robust succession planning strategy, organizations can prepare for the future, fostering stability, growth, and resilience. Here are 10 compelling reasons why every organization should plan for succession:
10 Reasons Why Succession Planning Is Important for Every Organization
1. Generate a significant return on investment.
Investing in a robust succession plan can deliver substantial financial benefits. A succession plan can deliver a 510% return on investment (ROI) vs. filling a key role via an executive search firm, and up to 660% vs. filling a vacancy through a traditional hiring process. This can result in savings between $40,000 — $70,000 to fill an average leadership vacancy.
2. Ensure business continuity.
When key positions become vacant, succession planning ensures business operations continue smoothly without significant disruption. Without a plan, a key vacancy can lead to revenue loss, decreased employee morale, and damaged customer relationships. Think of succession planning as an insurance policy against organizational instability.
3. Retain institutional knowledge.
Long-term employees possess invaluable institutional knowledge. Succession planning ensures this expertise is preserved within the organization, preventing it from leaving when these employees depart.
4. Boost employee morale.
Investing in employees’ personal and professional development boosts their motivation and job satisfaction. When employees see a clear path to career advancement, they become more engaged and motivated.1, 2
5. Address compliance requirements.
A detailed succession plan ensures that human resources functions, such as recruitment, selection, and promotion, meet regulatory and compliance standards, thereby reducing legal risks.
6. Support leadership development.
A comprehensive succession plan identifies and develops future leaders, preparing them for larger roles within the organization. This creates an in-house talent pool that is ready to be called upon when needed. By ensuring a steady pipeline of capable leaders, succession planning helps to future-proof an organization against unexpected vacancies and leadership transitions
7. Enhance organizational resiliency.
Organizations with robust succession plans have well-prepared leadership teams that can implement new initiatives quickly. This ensures the organization remains agile and can adapt quickly to changes in the business environment.3
8. Strengthen organizational brand.
Organizations with strong succession plans are perceived as stable and well-managed, which can attract investors.4 Additionally, a strong succession plan enhances an organization’s brand as an employer, making it more attractive to top-tier talent.5
9. Foster innovation.
Succession planning fosters a culture of innovation by encouraging the identification and development of high-potential employees who are likely to bring fresh perspectives and creative solutions to the organization. This proactive approach to talent development empowers future leaders to innovate. Moreover, as part of their preparation for leadership roles, these individuals are often exposed to cross-functional training and diverse projects, further enhancing their ability to innovate. By integrating innovation into the leadership pipeline, organizations can maintain a dynamic and forward-thinking culture.
10. Promote diversity and inclusion.
Studies show that more than 75% of today’s job seekers consider organizational diversity when evaluating potential employers and job offers.6 Succession planning can be an effective tool for promoting diversity and inclusion by objectively identifying and developing diverse candidates.
Succession planning is not just a best practice; it’s a necessity for ensuring the longevity and health of an organization. From enhancing employee morale and retaining institutional knowledge to ensuring business continuity and fostering innovation, the benefits are extensive and compelling. By investing in a robust succession plan, organizations can safeguard their future, remain agile in the face of change, and maintain a competitive edge in their industry.
Ready to Get Started?
If you’re ready to start your succession planning process, explore SIGMA’s Succession Planning Launch. We will evaluate your current talent, identify potential leaders, and create a structured development program to ensure your organization is prepared for any eventuality. Contact our team of experts to learn more about how we can assist you in crafting a succession plan tailored to your unique needs. Secure your organization’s success by planning for tomorrow, today.
Speak with a Succession Planning Expert
Glen Harrison is an organizational transformation consultant and succession planning expert. Over the course of his career, Glen has worked with one-third of the Fortune 500 list and with every level of government in Canada and the United States. Having worked with numerous clients to build robust succession plans from the ground up, Glen has extensive experience in the application of SIGMA’s products and services to help organizations realize their people potential.
[1] Why do employees stay? A clear career path and good pay, for starters. Harvard Business Review. (2024, March 26). https://hbr.org/2017/03/why-do-employees-stay-a-clear-career-path-and-good-pay-for-starters
[2] Martech, A. (2023, March 6). How professional development can boost employee engagement. Wharton Online. https://online.wharton.upenn.edu/blog/how-professional-development-boosts-employee-engagement/
[3] Aghina, W., Ahlback, K., Smet, A. D., Lackey, G., Lurie, M., Murarka, M., & Handscomb, C. (2018, January 22). The five trademarks of Agile Organizations. McKinsey & Company. https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/the-five-trademarks-of-agile-organizations
[4] The high cost of poor succession planning. Harvard Business Review. (2021, April 13). https://hbr.org/2021/05/the-high-cost-of-poor-succession-planning
[5] Best in class succession management white paper. (n.d.). https://www.aon.com/attachments/human-capital-consulting/2013_Best_in_Class_Succession_Management_White_Paper.pdf
[6] Watts, A. (August 9, 2021). 4 Statistics Highlighting the Importance of Diversity and Inclusion in the Workplace. Edume. Retrieved from https://edume.com/blog/workplace-diversity-statistics