Does it make sense to have a succession plan in place amid the ever-evolving landscape of today's business world, where turnover of team members and even owners has become the norm? Here, we explore the merits and drawbacks of succession planning in such a dynamic environment.
He said: Is the glass half empty or half full? The answer is that it is both. There are numerous valid reasons for having a succession plan in a firm, and many of these reasons vary depending on the size of the firm.
She said: Many small and midsized firms tend to delay developing a succession plan. Often, founders are either too occupied with building the business or, like many, simply procrastinating. Succession seems a long time away, and devoting significant time, effort and money to developing a succession plan may seem less urgent than something like addressing hiring or replacing talent. Developing a succession plan may be seen by some leaders as an inefficient use of resources.
He said: Most of us would like to think that continuity of a multipartner firm would rank at the top of the list. It could be argued that a succession plan ensures that leadership transitions smoothly, minimizing disruption to clients, staff and overall operations. This continuity helps maintain stability within the firm. Even in our relentlessly changing environment, a succession plan provides a clear roadmap for who will take over key roles, minimizing disruptions.
She said: I agree with that. But playing devil's advocate, I also have seen the downsides of succession planning, which are inflexibility and false security. In a rapidly changing firm, for example, a strict succession plan may quickly become outdated, requiring frequent revisions that could potentially undermine its effectiveness.
He said: You are right. Continuity can be a double-edged sword. Maybe there is a different way to plan for succession. Universal talent development, for instance. Succession planning encourages the development and retention of high-potential employees. It identifies future leaders and provides them with the necessary training and experience, enhancing overall organizational capacity.
By developing talent without directly naming future leaders, the firm can identify and develop any number of individuals who are interested and capable for upcoming leadership positions. This provides an immediate benefit to the firm since it is now developing its talent and boosting staff morale and engagement.
She said: That is certainly a valid point, and I am seeing this done more often. Firms must identify the technical and leadership skills required for the future and start developing leadership skills for teams of professionals who are excited about embracing whatever skills the future requires. The leadership skills and strategies that helped firms succeed in the past do not necessarily reflect what will position them for success in the future.
Talent development not only nurtures the necessary skills but also ensures the transfer of institutional knowledge and expertise to next-generation leaders. It also opens the door to considering nontraditional talent for certain roles. This process is crucial for retaining valuable skills and insights within the firm. Additionally, fostering a culture of continuous learning and development helps attract and retain top talent, enhances employee engagement, and drives innovation.
He said: Planning for succession also has a side benefit to the firm. If done correctly, it allows the firm to adapt to changing market conditions, client needs, and industry trends by ensuring that leadership remains agile and responsive. The most detrimental mistake leadership can make is becoming complacent and assuming they know everything. Such an attitude stifles growth, innovation and adaptability, preventing the organization from responding effectively to changing market conditions and new challenges.
She said: Strong leaders know that agility is critical for success these days. Effective leaders should cultivate a mindset of continuous learning and openness to new ideas, encouraging feedback and collaboration across all levels of the organization. This kind of holistic approach fosters a culture of innovation, resilience and agility. Additionally, by remaining humble and curious, leaders can better anticipate and address potential issues, ensuring the organization's sustained growth and competitiveness.
They said: Implementing a succession plan offers significant advantages even in today's changing business environment. Succession plans offer continuity and stability, help manage the risks associated with sudden departures, and align with long-term strategic goals. They also promote talent development, enhance client confidence, and preserve the firm's value during transitions.
However, the practicality of a succession plan can be challenged by the resource-intensive nature of its development and maintenance, potential inflexibility, and the unpredictability of constant turnover. Moreover, reliance on a succession plan might lead to complacency, cultural resistance, and a short-term focus that overlooks immediate challenges and opportunities. It can also discourage those up-and-coming leaders who may feel overlooked in the process.
To address these challenges, we recommend firms consider adopting a more flexible, modular succession plan. These types of plans combine the stability and strategic alignment of traditional succession planning with the agility required in a dynamic environment. By balancing long-term planning with adaptability, firms can better manage risks, develop talent, and ensure seamless transitions, while remaining responsive to their unique circumstances and evolving needs. Developing and implementing a succession plan requires significant time, effort and financial resources, but in the end, it is worth the effort.
