The Importance Of Succession Planning
Succession planning is often believed to be an essential aspect of any business, regardless of how big or small it is. However, it is often overlooked and disregarded until a senior member or any other relevant and highly talented employees announce that they plan to leave or retire, or in the worst-case scenario, they pass away – often pulling the business into a crisis mode. Usually, the problem with succession planning is that many companies are not really aware of their options and “are too busy accumulating wealth and preserving wealth to take the time to plan for transferring their wealth” (Fishkind & Kautz, 2001, p. 2).
It is crucial that companies understand the importance of implementing a well-thought out succession plan well in
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We will borrow a definition by Rothwell (2010) to better understand what succession planning is. Succession planning is best understood as “any effort designed to ensure the continued effective performance of an organization by providing for the development, replacement, and strategic application of key people over time” (p. 6). However, we shall not forget that succession planning is not simply about finding a replacement for a job. It is rather a process that helps identifying high-potential and talented employees, evaluating and honing their skills and competences while nurturing them for advancement into high-level and key positions that are most critical to ensure the company’s strategic success and continuous growth. It is important that we understand succession planning as more than just replacement planning as organizations are starting to build “high-performance and high-engagement work environments in which decision making is decentralized and leadership is diffused throughout an empowered workforce” making it essential to develop everyone in the company, not just top managers (Rothwell, 2010, p. 9).
Although succession planning has been widely discussed and evaluated in recent years, Henri Fayol, a French mining engineer who developed a general theory of business administration, was among the first writers to acknowledge the importance of succession planning. In his book, Industrial and General Administration, Fayol (1930) argued that management has the great responsibility to guarantee the stability of tenure of personnel. And if this organizational aspect is neglected, he believed, high-level and key positions in the organization would be filled by incompetent and unsuitable
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