Succession management has been bantered as a topic of interest in companies and IT departments for several years. Recently there has been an increase interest among IT shops as the need for skilled talent becomes more critical.
Succession management is defined as making provisions for the replacement of key people and requires a clear understanding of an organization’s values, mission and strategic plans. It is a proactive approach that ensures continuing leadership by cultivating talent from within the organization through planned development activities.
Companies who ignore the need for succession management planning risk potentially devastating losses to growth and financial profits when any of the following events occur:
â¢ Executives or managers depart from a company because of retirement, termination or death.
â¢ Key performers leave for another company.
â¢ Promotions within a company leave a vacancy without a trained successor to fill the open position.
Considering the importance of being prepared for unexpected staff changes, I would have guessed succession management was a common topic among company managers. I have been surprised to discover that a lack of succession planning is more rampant than I could have believed possible.
According to the National Association of Corporate Directors, 45 percent of companies with gross sales over $500 million still do not have a clear succession plan. Companies earning less than $500 million experienced even lower succession planning. Succession planning is nearly non-existent in startups and small companies.
Companies can experience tremendous financial losses when they are not prepared for the departure of a key employee. Delays in finding a replacement are common. Due to the skilled labor shortages in technology and related professions, the time that is required to achieve successful replacement results has increased from three weeks to three months.
During extended vacancies, projects are delayed, revenues unrealized, accounts lost, innovation stifled, patents gone, overtime costs rise and employee morale drops. If companies want to be effective at filing unplanned vacancies, they must commit to the development of a detailed and progressive succession management plan to ensure that they have the future skills required for corporate sustainability.
The realities of a continued talent crunch and an ever-widening gap between the number of jobless and the number of skilled technical talent are driving more and more companies to making succession management a priority in their companies. “There is no logical reason not to practice succession planning,” says Bill Bliss, an executive leadership development consultant to several public companies. If (corporate boards) don’t demand that a plan is in place, the stockholders should fire the board.”