Succession planning is an area every company will need to undertake, especially for small businesses where every member of staff is taking on a number of different roles and responsibilities.
However, succession planning is also something many businesses are struggling to manage, at least according to a recent study from Stanford University.
The research found that organisations with an effective succession plan in place are in a minority. In fact, only 46 per cent of companies that took part in the study have a programme in place to train individuals for high-ranking positions.
On other measures, the study recorded even lower results. When asked whether they have people to assume a leadership role like a CEO position, only 25 per cent reported that they met this condition.
To resolve this issue, the study’s authors suggested companies need to refine their succession plans so that there is a ready pool of candidates available for high-ranking positions. In particular, the study suggested seeking strategic assistance to navigate the succession planning process.
Scott Saslow, one of the authors of this research, emphasised how many businesses are unprepared for handling the succession process.
“[Many companies] fail to recognise the need for a strategy for this critical business process, they haven’t had great exposure to what other organisations are doing, and they haven’t thought through what their own organisation should be doing given its unique set of circumstances,” said Mr Saslow.
“This is more than lost upside opportunity; it puts many organisations at risk of having unstable executive leadership.”
For small businesses that want to be sure they are handing over their business effectively, having processes in place to manage this transition is going to become increasingly important in the future.