Who will do your job as a leader once you’re gone? And do you care? It’s clear that the evidence suggests that not many companies are taking succession planning seriously enough. Recent research by the Harvard Business Review suggests that around 50% of large US companies – those with an annual revenue of more than half a billion dollars – don’t even have proper succession plan for their CEO. That’s a pretty damning statistic, and one that suggests that even the biggest companies in one of the world’s leading economies see succession planning as a relatively low priority.

Here at Holborn Assets we know that succession planning is central to successfully serving the client over the long-run.

Succession planning matters

There are several clear advantages to having a stable, well-planned and clearly-defined succession plan for you and your top executives in place. The first is that by bringing up and developing people internally, you’re taking advantage of the fact that they already know your organisation – and you’re also saving time on hunting the external market for talent.

Home-grown talent is actually more likely to be successful in those top positions too – according to the same Harvard Business Review report, the figures suggest that in North America 55% of outside CEOs who departed in one year were forced to resign – compared with just 34% of those who had been promoted internally. It’s clear that the pressures of learning the ropes at a new company apply to us all, whatever our level.

Another big advantage to having an effective succession plan is that it can save you money – it reduces the risk of needing to pay external executives the large amounts required to match (or more likely beat) what they’re already on, to persuade them to take the risk of joining you. And this kind of cost doesn’t just have a one-off impact either – big pay outs to incoming execs can cause ongoing disruption to your existing pay structure for your other leaders too.

Plan for the future, lead better now

Of course, a well-defined succession plan also gives a clear line of development for your employees too – and this a key part of the way that we see it contributing to your own effectiveness as a leader, right now. Essentially, succession planning helps to create a culture within your business that shows your people that you, as a leader, reward and recognise high performance. Giving people this aspiration – this understanding that one day they too could lead the company – empowers them, and shows them that you personally are not afraid to think beyond your own needs. And ultimately it also shows them that as a leader you’re not afraid of competition – and that in fact, you actually encourage it in order to help everyone to try and be their best.

That kind of culture of positive competition and promoting leadership qualities is important, because real leaders are actually incredibly rare. Out of tens of thousands of employees, only a few thousand may be management material, while of those, only a small handful – in the tens at most – might be considered for the very top leadership positions. So, it’s important that as a leader you create an environment in which leadership abilities are encouraged, spotted early on, then developed over the years.

True leadership is a precious resource that takes many years of nurturing – and it takes true leaders to recognise its value.