4 Reasons to Engage in Business Succession Planning NOW
You can trust a North Carolina business law attorney to advise you on strategies for achieving your goals. Check out some additional reasons to start the succession planning conversation right away.
Surprises may be welcome in your personal life, but North Carolina business owners rarely appreciate the unexpected when it comes to losing key employees and top talent. A high-level executive’s departure can create a domino-like effect that leaves voids in your company’s leadership and, unfortunately, it is a common scenario. Statistics on business succession planning from AIIR Consulting, a firm that focuses on enhancing organizations through solid leadership development, reveal that:
- A CEO’s departure can lead to a 30 percent variance in an entity’s profitability;
- The median employment term for executives at many Fortune 500 companies is just five years;
- Almost three-quarters of executives who were hired for a senior leadership role were unprepared for the challenges; and,
- Just 35 percent of businesses have implemented a documented success planning process, which is perhaps why 40 percent of them have ZERO internal candidates to replace a departing executive.
These statistics alone should be cause for concern if you have not considered a plan for your company’s future. You can trust a North Carolina business law attorney to advise you on strategies for achieving your goals, but check out some additional reasons to start the succession planning conversation right away.
- Onboarding from scratch is time-consuming and expensive.
You can expect expenses related to advertising for open positions, conducting interviews, and training, but there are many other hidden costs you may not expect. Glassdoor, an online recruiting site that focuses on increasing workplace transparency, reported that the costs of onboarding a new employee can run as high as $4,000; this amount will be much higher in highly specialized or knowledge-based industries.
Plus, the onboarding process can take as long as 90 to 100 days, extremely precious time when your company faces immediate needs due to a key employee’s departure.
- Succession planning forces you to think about the future.
Company stakeholders tend to focus on weekly meetings, quarterly earnings, and meeting annual projections, and these are certainly important topics. However, developing a business succession plan requires you to look at what you can do today to ensure future success. Through the process, you will address:
- Who among your current staff has the potential to fill a leadership role in 2, 5, or 10 years;
- How you can convince these candidates to stay until they reach their potential;
- Strategies for encouraging current employees to embrace their future position;
- What you can do to attract promising employees now; and,
- Tactics to implement when you do not have candidates in your internal talent pipeline.
- Succession planning enables higher levels of employee engagement.
Smarp, a developer of employee communications and advocacy platforms, reports that more than 63 percent of companies admit that employee retention is more challenging than hiring. When you have a succession plan in place, you send the message that your company is committed to its workforce. Your employees will appreciate the opportunity to be part of the organization’s future, even as they enjoy employment stability and internal promotion at the present.
- Succession planning gives you options.
When you have a well-developed talent pipeline to draw from, and employees who are motivated to succeed, you have crucial freedom of choice in running your company. You will not run into the problem of retaining an unmotivated or underperforming executive in place simply because you do not have someone to fill his or her role.
Reach Out to a North Carolina Business Law Attorney Today
For more information about business succession planning and how to maximize your organization’s long-term profitability, please call Mullen Holland & Cooper P.A. Our team advises companies throughout Western North Carolina and Upstate South Carolina in a wide range of business law matters, so we are qualified to discuss your concerns. You can set up a consultation with a lawyer by calling 704.864.6751 or visiting our website.
There is no offer to sell, no solicitation of an offer to buy, and no recommendation of any security or any other product or service in this article. Moreover, nothing contained in this PR should be construed as a recommendation to buy, sell, or hold any investment or security, or to engage in any investment strategy or transaction. It is your responsibility to determine whether any investment, investment strategy, security, or related transaction is appropriate for you based on your investment objectives, financial circumstances, and risk tolerance. Consult your business advisor, attorney, or tax advisor regarding your specific business, legal, or tax situation.