Summary:

Succession planning refers to the development of a comprehensive and coordinated plan designed to insure an orderly replacement of key members of an organization when they are lost to the organization for any reason. Succession planning also provides for training and mentoring prior to the change. Management first needs to identify the key employees within the organization and provide a plan for their eventual replacement.

This task should not be delayed until the employee nears retirement because many key people leave the company well before retirement age. There are a number of reasons an employee may leave a company. For instance, they could be lured away by another company, become ill and unable to work, move away, and the list goes on. It is not only wise to perform succession planning, it is an obligation management has to shareholders as well.

Article Quote:

“Many organizations have Succession Insurance policies that are designed to provide the necessary funds for the recruitment and training of new personnel in the event of a sudden loss of a key member of the organization. This is one indication of how serious this issue can be to a large business. It is a part of the risk management element of the overall business financial plan.”

Link: http://strategicplanning.doodig.com/2010/02/17/have-you-considered-succession-planning-2/

History has shown that succession planning is critical to the continued success of the business. Many companies falter and even fail with the loss of key personnel. Businesses have the option of taking out an insurance policy to cover training costs and lost profits directly related to key employee loss. However, this could be avoided with management’s careful consideration and development of a plan.

Succession planning should not be limited to large corporations. It should also be performed in smaller businesses because the smaller the business is, the more important each member is to the business’s success. Succession planning  reduces this risk and is considered as important as any other form of insurance in the overall risk management picture.

For more on strategic planning, see http://www.performancesolutionstech.com/category/strategicplanning/