Across all industries and types of businesses, owners and others in key positions are aging. According to Census statistics, the average age for finance, insurance, and real estate business owners is 54 years. Older people are also found in other industries like wholesale trade, agriculture, forestry, fishing, mining, services, public administration, and manufacturing.
Succession planning is an important, if oft overlooked, step for business owners. It can not only place a business in good stead for the future. It can also benefit younger individuals at a business. A 2015 Software Advice survey concluded that 94 percent of employers said a succession plan positively affects employee engagement. Despite these benefits, about a third of businesses in the US do not have a clearly defined succession plan. The cost of poor succession planning can be high, putting a business’ stability and future at risk. What can help? Taking a few key project management steps, including ERP implementation. While the subject of succession planning may seem as far apart ass day and night, they actually go hand in hand. Keep reading to discover how and why.
Successful succession planning requires careful consideration and systematic execution. By following a well-defined process, businesses can minimize the risks and costs associated with poor succession planning. Here are the key steps to consider when creating a succession plan.
Assess Current Leadership and Talent
Begin by evaluating your current leadership team. Identify key individuals who have the potential to fill critical roles in the future. Consider their skills, experience, and performance to determine their suitability for higher positions.
Identify Future Needs
Start by assessing your current leaders and identifying key individuals with potential to fill important roles in the future. Take a forward-looking approach. Consider the evolving industry trends, technological advancements, and strategic goals to determine the skills and competencies required for future leadership roles.
Develop a Succession Strategy
Based on the assessment of current talent and future needs, develop a comprehensive succession strategy. This strategy should outline the steps and timelines for identifying, developing, and transitioning potential successors into key positions.
Create Development Plans
Design individualized development plans for identified successors. These plans should include training, mentoring, job rotations, and stretch assignments. The goal of these exercises is to enhance their skills and prepare them for future leadership roles.
Communicate the Plan
It is crucial to communicate the succession plan to all stakeholders, including current leaders, potential successors, employees, and relevant external parties. Transparency and open communication help mitigate rumors, build trust, and align everyone’s expectations.
Continuously Assess and Update
Succession planning is an ongoing process that requires regular evaluation and adjustment. Continuously assess the performance and progress of potential successors. Keep your eyes open for any gaps in their development and make necessary updates to the succession plan.
Monitor and Track Progress
Implement a system for monitoring and tracking the progress of succession planning activities. This can include regular check-ins, performance reviews, and feedback sessions to ensure the development of successors is on track.
Evaluate External Talent
While internal talent development is essential, it is also important to consider external candidates for key positions. Evaluate the external talent pool through networking, industry events, and recruitment processes. Use the channels to identify potential candidates who can bring fresh perspectives and expertise to your organization.
Document the Plan
Document all aspects of your succession plan, including the identified successors, their development plans, and timelines. Be sure to include any adjustments made along the way.
Test and Refine the Plan
Regularly test the effectiveness of your succession plan by simulating transitions and assessing the readiness of potential successors. Use the insights gained from these tests to refine and improve the plan over time.
How ERP Can Help
By replacing basic accounting software or traditional ERP with more complete, modern tools, such as Acumatica, you can set your business up for success during the succession planning process. One of the key benefits of ERP is it delivers key insights into processes and employee roles and workflows. The right ERP platform can also give you a high-level view of business data and performance.
ERP systems like Acumatica deliver two features which are key in the succession planning process. These are a single source of the truth and wikis. Together these tools give you a place to document processes and ensure everyone stays on the same page.
For added clarity, you should consider storing customer, vendor, partner, and prospect information in a centralized and connected customer relationship management (CRM) application. You can also configure dashboards, alerts, reports, and inquiries to manage metrics. The project accounting included in a comprehensive ERP solution can be beneficial to managing succession planning tasks, as well.
Succession doesn’t have to be an intimidating process. It’s essential, too, given the high cost of poor succession planning for your business. Consider starting the ERP selection process today if you are creating a succession plan to future-proof your business. Using an all-in-one solution like ERP can provide the necessary data and advantage to navigate a complex succession effectively.
