By
Claire Morley-Jones
January 27, 2025
Succession planning is a strategic process for SMEs to ensure business continuity and growth. By identifying key roles, developing internal talent, and creating clear progression paths, businesses can mitigate risks, retain top performers, and build a robust leadership pipeline. This proactive approach demonstrates organisational stability and supports long-term success by preparing for future leadership transitions.
As senior leader in a busy SME, you’re undoubtedly focused on driving financial performance and ensuring the company’s long-term stability – that’s clearly part of your job description! However, one critical area that I’m fairly certain you’ve overlooked amidst day-to-day pressures, is succession planning (that should have been trumpeted in your head by the way). This strategic HR initiative is essential for fostering sustainable growth, mitigating risks, and preparing your business for the future. In this article, we’ll explore why succession planning matters, how it can enable your company’s growth, and all the practical steps you’ll need to implement an effective plan.
Succession planning is not just about replacing key individuals when they leave; it’s about ensuring business continuity, retaining all their knowledge of how your business runs, and building a robust talent pipeline to support your company’s growth ambitions. For SMEs, where leadership and specialised roles are often concentrated among a few individuals, the stakes are even higher than in a big corporate. And yet, big corporations will undertake this planning activity regularly (that’s why they need 100’s of people in HR!) whilst SME’s often concentrate solely on the commercial day to day realities of life. Unfortunately, ignoring succession plan is like driving a car without a spare tyre, or base jumping without insurance – you’ll be royally stuck when something unexpected happens and punctures your business’s momentum.
So, let’s take a look at why you should actually spend time thinking about this:
1. Business Continuity: Unexpected departures—whether due to illness, retirement, or a multitude of other reasons—can always disrupt operations (and often with poor timing!). A well-thought-out succession plan ensures seamless transitions, particularly in critical roles and a lot less stress all round.
2. Talent Retention: As you already know, employees are more likely to stay with a company that invests in their development and provides clear career progression paths. This shows your commitment and faith in them which, if the culture is also good, results in greater loyalty.
3. Investor Confidence: A solid succession plan demonstrates stability and foresight, which has the added benefit of making your business more attractive to investors and lenders.
4. Cost Efficiency: Whilst recruitment agencies can do a fantastic job, their usual cost model means that each placed candidate costs a small fortune! Internal promotions, however, reduce recruitment and onboarding costs while maintaining cultural alignment and organisational DNA knowledge!
5. Risk Mitigation: Proactively identifying successors now, whilst you have the space and time to properly think it through, minimises the impact of sudden leadership gaps and future knee jerk reactions.
Despite its importance, many SMEs struggle with succession planning due to a variety of factors. Unlike larger companies, SMEs often lack the budget for extensive leadership development programmes whilst owners or senior leaders may be reluctant to relinquish control or discuss succession openly out of a misguided fear that their usefulness is ending.
Of course, its also the case that many SMEs work very informally and this can also make it challenging to implement structured plans. Admittedly, in some smaller teams there may also be a lack of any suitable internal candidates for those key roles.
I would absolutely argue though, that recognising these challenges is the first step toward overcoming them and being aware of your options and limitations.
Well, succession planning is not merely a defensive, “we need a solution quick” strategy; it’s a proactive approach that can unlock new opportunities for growth. For example, by spotting your rising stars early on and giving them a proper leg up with training and mentorship, you're actually cultivating a pool of future leaders. These bright sparks will bring fresh ideas to the table. Although, succession planning isn't just about people either. It's about your company's grand plan too! If you're eyeing up new markets or fancy adopting some interesting new tech, you'll want leaders who can actually understand what's what. So succession planning then also becomes about making sure you've got the right tools in your toolbox before you start building.
Let's face it, nobody wants to feel like they're stuck in a dead-end job, do they? When your team can see a clear path to the top (or at least a few rungs up), they'll be more chuffed with their roles. It's like dangling a carrot, but in a good way - you'll see productivity shoot up and fewer people heading for the exit.
Essentially, I’m encouraging you to think of succession planning as your business's safety net. When you've always got capable hands ready to step into critical roles (or at least know what you’ll do), you're not left in the lurch when someone decides to swan off to Bali. It keeps things ticking over nicely, and your customers or clients won't even notice there's been a change behind the scenes. -
Well, along with this article we’ve created a toolkit to help you get started because creating a robust succession plan requires a structured approach. However, some quick hints and tips:
Start with identifying why succession planning is important for your business. For example, is it to prepare for leadership retirements, mitigate risks from sudden departures or support future growth?
Align your succession plan with your overall business strategy to ensure it addresses both current needs and future goals.
Think about which positions are critical to your company’s success. These could include senior leadership roles as well as specialised positions with unique skill sets.
Consider what your future needs might be based on market trends or strategic shifts.
Evaluate current employees for their skills, competencies, and leadership potential. You also want to identify high-potential candidates.
If internal talent is lacking, consider external recruitment as part of your plan.
Provide coaching, mentoring, project work or training, tailored to the skills required for future roles, to those individuals you’ve identified.
Definitely encourage mentorship from current leaders to pass on company knowledge.
Offer stretch assignments or cross-functional projects to broaden employees’ experience.
Outline clear timelines for transitions in key roles.
Define responsibilities during the handover process to ensure continuity.
Communicate openly with stakeholders about the plan to build trust and transparency.
Succession planning is not a one-time exercise; it should evolve with your business needs.
Regularly review progress against goals and adjust the plan based on changes in the market or internal dynamics.
If you fancy taking your succession planning up a notch, creating a mentorship programme is a brilliant way to pass on knowledge and skills from your seasoned pros to your up-and-comers. Plus, it'll make everyone feel like they're part of something special and build relationships both up, and also across, the company.
Another interesting tactic is to ensure you’re cross-training your teams. It's a fab way to build a more versatile workforce and ensure that skills are not lost on someone’s exit. I liken this to having a Swiss Army knife of talent at your fingertips (but then I am weird)!
It can also be incredibly useful and productive to involve your team in the succession planning process themselves. Generally asking them about their career aspirations and where they see themselves in the company might uncover hidden talents and ambitions you never knew existed. OR, indicate that you can only rely on someone for a set skill or certain time period. Knowledge is power after all.
Lastly, don't forget to celebrate your successes along the way. When someone moves up the ladder or masters a new skill, shout it from the rooftops! A little recognition goes a long way in keeping everyone motivated and engaged.
Obviously, we deal with highly sensitive and confidential cases, alongside the day to day, so we can’t often shout about our clients. Below though, we’ve managed to summarise where we’ve previously been able to give some help so you get an idea of the benefits!
A family-run manufacturing firm faced challenges transitioning leadership from the founder (who was still in control aged 87) to the next generation. By engaging with us, they developed a structured plan that included mentoring sessions between the founder and potential successors. The result was a smooth transition over the course of 2 years that preserved the company’s legacy while introducing fresh ideas.
A fast-growing tech start-up recognised early on that its rapid expansion required strong leadership at all levels. They implemented a talent development programme focused on upskilling employees in areas like project management and strategic thinking. This proactive approach ensured they had leaders ready to step into new roles as the company scaled and they secured new investment.
I’ll say it one final time. Succession planning is not just an HR exercise; it’s a strategic imperative that directly impacts your company’s ability to grow sustainably and adapt to change. By being proactive and taking the steps above—identifying key roles, developing talent pipelines, and aligning plans with business objectives—you can safeguard your SME’s future, save yourself from potential worry and foster an engaged workforce ready to drive innovation.
By embedding succession planning into your company’s DNA today, you set the stage for long-term success tomorrow. Good Luck!
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