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Why prompt succession planning is so important for companies

On Behalf of | May 17, 2024 | Business Law |

Large, established organizations often include requirements for succession planning in certain employment contracts. Executives, company officers and managers may need to create an in-depth succession plan within a certain amount of time after accepting their position. Those starting businesses and helping run them typically need succession plans as well.

A succession plan includes recommendations for replacing a professional if they must suddenly step down from their position within an organization. Even if someone intends to remain with a company for years, creating a succession plan after learning to perform their job proficiently is important for the protection of the organization.

Why is early succession planning so important for key roles within a company?

Vacancies and transitions can do significant damage

Even when a professional has signed a contract requiring a long-term commitment to the organization for maximum compensation, there is never a guarantee that they fulfill that agreement. They might receive a far more lucrative offer with another company or may have some kind of personal emergency that renders them incapable of performing their job.

When a professional who plays an important role in daily operations has to leave their position, that vacancy can negatively impact company operations. Even when the company eventually identifies a successor, training them can be a lengthy process without input from the professional who previously filled that position. They may fail to properly fulfill their obligations, possibly because they are unaware of certain responsibilities or details about the company.

A succession plan can identify individuals who are in the best position to move into a role or can provide clarity about what training and skills someone needs to proficiently serve a particular role at a company. It can also include important details that could help someone perform their new role more effectively, such as instructions about daily weekly and monthly responsibilities.

Details not disclosed elsewhere in training materials could the important inclusions in a succession plan that lead to a smoother transition process with fewer challenges for the organization. Both those managing larger companies and those running small to mid-size businesses may need to prioritize the process of succession planning as a way of ensuring continued operations at the organization.

Integrating requirements for succession plans into corporate contracts and waiting for unpredictable events can help protect organizations from unpredictable occurrences that could otherwise lead to operational disruptions and financial setbacks.