Many companies in Nigeria are not prepared for a succession emergency, and many more are unaware of the consequences of having no Succession Plan. A founder who suddenly dies without a succession plan generates a shock that the business may never recover from. It is alarming that many organizations depend on a last-minute hiring process to fill in vacant leadership positions. This is an unconscious hindrance to business survival.
Here are some risks associated with not having a succession plan
1. Financial risk
Sudden vacancy in your company’s leadership is enough to cause financial damage, it is a greater threat when you don’t have the best man for the role. An example is an incident with the CEO of Hewlett Packard, when he stepped down in 2010, shares took an 8.3% plunge just after the news was announced.
The replacement must have been groomed and should already be known by most stakeholders. Potential investors/lenders may have a hard time supporting your organization with long-term financing if your business planning does not speak of future certainty
2. Loss of knowledge and experience
Loss of knowledge will greatly impact your company badly. In many cases, companies lose information vital for the growth of the organization with the departure of key leadership personnel. This is particularly bad especially in cases of sudden resignation, retirement, or death.
Knowledge transfer should be done as soon as possible.
3. Increase Rate of Staff Turnover
A vacuum is often left with the departure of a leader. Without a clear succession plan, there could be a power struggle with employees, leading to a hostile work environment and a lack of structure. This can cause unproductivity and unwelcomed turnover of staff.
4. Inability to Meet Client’s Needs
Increased workload and lack of adequate experience can affect the quality of customer service. When customer satisfaction is not met, many of them will turn to your competitors.
5. Hiring Or Promoting Mistakes To Fill An Urgent Gap
There is usually an urgent need to quickly fill a leadership position, and many times, the wrong candidate is chosen. This is a very expensive mistake for any company to make – whether they are hired from outside the company or promoted from within.
Meanwhile, succession planning helps your company identify candidates that might have been overlooked. Candidates who are a great investment with an in-depth understanding of your business are key to a successful transition.
Hiring talent from within can strengthen your staff committed to the company and protects the company from losing any skills, or business knowledge that would be lost if they left. It is equally cheaper. All these benefits can be missed if you don’t have a succession plan and have to hire to fill an urgent gap.
Westsons Consulting can support your organization in creating a succession plan. The aim is to put you in a state of readiness for the baton exchange. We have a methodology that can effectively protect your long-term business plan even as it goes from one generation to the next.
We have you covered!
