Any human resources expert will tell you that succession planning is one of the most important things that executive leaders can do. While it doesn’t directly impact today’s bottom line, it has a significant positive impact on the organization when done well, and a potentially detrimental effect when ignored.
Despite the critical nature of succession planning, a recent report by Robert Half Management Resources based on a survey of 1,100 CFOs, uncovered that only a slim majority had identified and were grooming a successor.
With nearly half of the respondents putting off succession planning, it’s important to understand why succession planning for CFOs is beneficial to the organization, and specifically why it’s valuable to the CFO herself or himself.
Why Succession Planning is Good for the Business
There are good reasons that succession plans, across management, are recommended. These are just a few.
Employee Development – A key component of morale and retention fostering employee development. When teams know the path forward, they can focus on what skills they need to develop to reach their goals. It also helps identify potential leaders that may be missing some experiences, so that opportunities can be created for them to gain valuable, hands-on learning.
Protecting the Company – Having a line of succession ensures that employees are cross training and proactively gaining information from team members that may leave or ones that are on the path to retirement. This prevents “tribal knowledge” and single points of failure.
Cost Savings – Recruiting is expensive, as is the downtime and lack of decision making that happens when a leader leaves but there is no one in a position to step up and take their place. With a plan in place, those already tagged as next in line can quickly move into an open position, with the knowledge and training to be effective quickly.
Why Succession Planning is Important to the CFO
Having a line of succession is important for the organization, but the position of CFO has some specific elements that make identifying and training your next-in-line particularly important.
Many CFOs have a transition they are hoping to make themselves – to the “corner office”, that of the CEO. It’s clear that CFOs wanting to move into that position would want a strong financial leader working with them. The best way to ensure that is to find the right person within the team and set them on the path to success – both yours and theirs.
However, CFOs looking to transition to CEO have challenges in front of them. Few financial officers go straight from leading finance to leading the organization. CFOs who are looking to broaden their experience and become a more attractive option as CEO must either move laterally, out of finance or consider a jump to a different organization to gain a wider base of knowledge. In either case, simply moving on would leave a void. Succession planning ensures that your team is well cared for, whether your jump is up, over, or out.
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