Create a succession plan for your business

It happens all the time at organizations: Your boss leaves for a new job. Or a fellow employee takes on a new role. How do you plan for the unexpected?

Because employees leave unexpectedly, you should consider some level of succession planning for most people within an organization. Even though no one is irreplaceable, the transition and ramp-up costs, including opportunity costs, can be staggering and stressful. 

Typically, most people think of succession planning related to the retirement of key executives. While that is important, organizations that extend their succession planning beyond the C-suite will be better positioned for success.

Often underestimated is the extent of individual employees’ institutional and positional knowledge. Having employees create their own operational manual, which they update annually with best practices and procedures, will allow companies to be better prepared for the unexpected. Some employees will resist these efforts, but if the manual is done in conjunction with annual performance reviews, it can be a very effective tool.

To only consider the use of succession planning internally is doing a disservice to the organization. Succession planning for external stakeholders is a tool that can be used by for-profit and not-for-profits as part of an organization’s annual strategic planning. For-profit organizations need to focus on customer succession. Not-for-profit organizations should give attention to their audiences and their donor bases. Effective succession planning can help to present new opportunities and avoid common pitfalls.

Loyal customers are the backbone of the organization’s revenue stream. Who will replace those customers when they age into a different product or leave the market? It is possible the organization stays with the same target market, but the individuals in that target market will not be attracted by or toward the same products and messages that attracted their predecessors. 

Consider restaurants, for example. A restaurant may target a demographic comprised of specific income levels, geographic locations and lifestyle variables. The restaurant may be very popular. Adults go, like it and occasionally bring their children. As the kids grow up, they enter the targeted demographic. However, do they want to go where their parents always went? Probably not. To appeal to this new customer within the target market, organizations need to reinvent themselves to feel “new” to the customer. Does this mean they will lose the business of their past customers? It is very possible. Trying to attract new customers without alienating existing customers is a difficult tightrope to walk.

This concept is even more difficult when applied to not-for-profit organizations. Many local arts organizations, for example, have well-established clientele. Encouraging new, younger audiences to attend typically means changing the offering as well as the accompanying atmospherics and services. This not only alienates established audiences but, many times, will anger or offend them. These established audiences have become comfortable and content with the status quo. Anything viewed as “messing with” the arts is not well received. This is particularly problematic because established audiences are also donors who help to keep the organization afloat.

Whether it’s through individual employees or customers, the way we do business is constantly changing. And as with most management tools, restricting usage to the most obvious applications will not give an organization a competitive edge. Limiting the use of succession planning to executives is short-sighted. Recognize the importance of all employees (no matter where they are in the company) and customers to help ensure a successful future.

Kim Donahue is a senior lecturer in marketing at the Indiana University Kelley School of Business on IUPUI’s campus.

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