We believe that planning for the future and hiring expert financial advisors are two things that go hand in hand. If executives, business owners, and managers want professional help, they can contact us at The Kelley Financial Group, who are here to assist with succession planning needs.
What Succession Planning Is for Companies
In organizations, succession planning is a process that allows employers to recruit new employees who must fulfill a specific role within the company.
Succession planning is essential because it increases the chances of competent employees being available to work for the company. Since these new faces start their jobs to fulfill specific roles, they're learning to replace senior executives when they are not available anymore.
Preparing an employee to take over leadership involves different processes, but overall, it requires managers to transfer them to a specific department or on-the-job shadowing.
Once they do this, the new employee has the opportunity to learn and see how others carry out the job that they will do in the future.
At the same time, succession planning guarantees that there is no leadership vacuum once a senior retires or exits the organization. In the case of family businesses, it ensures that they can continue to run even if an essential member dies, decides to leave, or is unavailable to carry out the tasks they had to perform before.
The first step of this process is to observe the skills of the exiting leader. After that, managers must try to find someone with the same potential, regardless of whether that happens inside the organization or recruiting new people.
When someone is perfect for the job and they already work in the organization, employees undergo training, so they're able to see the roles the leader performs.
Successors often work closely with the person and learn to carry out the tasks they will have to perform in the future. The purpose is to ensure that they will eventually take over this role with ease.
When it comes to large companies, succession planning is essential because it anticipates leadership changes to be better prepared for the future.
On some occasions, companies even develop emergency succession plans, which help in case there is a sudden change of leadership. This way of organizing changes allows the organization to run smoothly even when they're going through a transition.
Practices and Processes
Succession planning has gained popularity over the past few years, especially because people understand the importance of relying on strategic processes, practices, and professional help.
Big companies such as IBM and Nike have succession planning programs, and they're ongoing because they're meant to groom future executives.
Pixar, for example, also fosters its designers' and filmmakers' imagination by allowing them to create their own short films in hopes that some of their ideas and vision will replace the current significant cinematographers.
In addition to grooming the leaders of the future, senior executives of big organizations often have meetings where they discuss employees who are ready to take more significant roles.
Considering the previously mentioned aspects, this is especially essential when managers anticipate vacancies because they know that soon enough, they will need someone else to perform those tasks.
On occasions, the top manager or senior executive makes a list of potential employees that could take over the leadership roles. They also consider the person's readiness for the job and their potential, which could meaningfully change the company's future.
However, there is no secret formula for choosing the next successor. There are different ways to recognize employees' qualities, but each organization is unique.
Therefore, senior executives and managers should develop their own way of planning for the future.
The Importance of Succession Planning for Organization
Succession planning is essential for all organizations, regardless of whether they're small businesses or big industries. If the owner wants to see the company grow even when they're gone, they have to plan.
When owners and senior executives develop a succession planning method, they can rest assured knowing that even if they can't make significant decisions, someone else will, and they will carry out choices the way the owner would have liked it.
Years ago, organizations hand-picked successors into confidential processes. However, nowadays, things are very different because senior executives openly identify potential talents and groom them to be the company's future leaders.
Planning for the future is essential because it allows companies to guarantee that high-performance leaders are always the ones making the decisions.
At the same time, succession planning helps reduce cross-training, which is a process to make an employee keep the company on track while others find a suitable replacement for the job. It's sometimes not as effective because in the former, a fully trained worker takes over the role.
Why Succession Planning Is Essential with Financial Advisors
Financial advisors have many tasks to perform, but one of the essential ones is to guide clients so they can make the appropriate financial decisions. When it comes to succession planning, advisors can help seniors analyze the potential options for their company.
Even though the financial advisor's job is not to pick the next successor in a company, they can offer a unique insight because they analyze different options and their monetary impact and give conclusions about them. Overall, they might be able to point out things that the senior executives might not have noticed before.
Financial advisors work closely with managers and executives because they must analyze the potential risks and benefits of a leadership change in terms of the monetary aspect of the company. Therefore, working with the advisors from The Kelley Financial Group can be beneficial since we’re ready to help clients build the future they want.
Hiring our professionals at The Kelley Financial group means the managers and seniors can rely on experienced and passionate financial advisors who are ready to analyze their cases and provide accurate suggestions depending on their options.
This material was prepared for The Kelley Financial Group’s use.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision.
The Kelley Financial Group and LPL Financial do not offer tax or legal advice or services. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.