Unfortunately, some companies fail to make a board succession plan, which makes their organization messy when a board member leaves. Other companies, in turn, are more confident about their future when they have a thought-out strategy.
So, what is a board succession plan? What are its benefits? What challenges might await you, and how can a virtual boardroom help you overcome them easily? All the answers are ready for you in our post!
What is a board succession plan?
A board succession plan is a long-term action plan for recruiting future trustees. In essence, this is preparing the board of directors for the future, considering the knowledge and experience of current members and designing the qualities of those who may come (if the current ones leave the position). Therefore, this strategy is crucial in managing potential risks and ensuring normal board functioning.
Before we go any further, check some statistics on board succession planning:
- Among Fortune 500 companies, only 54% develop CEO successors, and 40% don’t have a candidate to replace the CEO.
- Many family business owners fail to pass down their businesses successfully to their successors. Such businesses have a survival rate of only 30 percent to the second generation, 12 percent to the third, and a mere 3 percent to the fourth generation and beyond.
- Only 30% of organizations feel the efficiency of their succession planning process.
Now, check out the benefits of this strategy and see its value for your board.
What are board succession planning benefits?
Succession planning ensures workforce continuity and maintains performance standards essential for business operations. Thus, the process benefits companies in the following ways:
1. Protection from unexpected changes
Succession planning ensures that your organization can smoothly transition to the next person in line, reducing the risk of losing expertise and relationships due to sudden employee departures.
2. Identifying vulnerabilities and skills gaps
The policy helps organizations assess current and future talent needs, identify vulnerabilities, and invest in training, development, and recruitment to build a robust talent pipeline and train for future challenges.
3. Promotion of development and learning
Employees have the opportunity to learn and grow by being involved in setting their own career goals through the succession planning process. Thus, succession planning motivates them to acquire new skills and experience to prepare for future positions.
4. Improved retention and engagement
With this action plan, you improve employee retention and engagement by demonstrating value and providing a clear career path. It aligns goals and creates purpose, clarity, and collaboration among employees and teams.
5. Preserved brand reputation
Finally, the strategy helps fill important positions with competent candidates who share the company’s vision and values. And this, in turn, increases your image in the eyes of partners, investors, competitors, and other interested parties.
You may want to know: Check more about board succession planning and explore its benefits, stages, and best practices.
Common board succession planning challenges
Like any other business operation, the succession planning process entails specific challenges. In addition to listing them, we present a way to solve them using a board portal.
What is a board portal?
Board portals are secure online workspaces that allow board directors and other parties to access meeting materials, communicate in real-time, and carry out their governance responsibilities. Since the software includes secure storage, collaboration features, task management tools, and video conferencing solutions, users no longer need to employ multiple programs to work. Generally, business leaders use a board portal for financial services, strategic planning, performance monitoring, board meetings, and complex deal-making.
Now that you know what this software is, look at how it can help you with the following challenges:
✖️ Data collection for succession planning
Unfortunately, many teams approach data collection in an unplanned and ad hoc manner. As a result, companies lose relevant and essential information for decision-making. In addition, organizations tend to store documentation on separate platforms, making it difficult to collect and compile.
✅ Solution
Virtual boardrooms ensure that all the relevant information is in one place, preventing it from being scattered across different platforms. This way, critical data is readily accessible when needed. In addition, the solution comes with document management features that allow for the structured organization of data. Consequently, it becomes easier to find and collect the necessary information.
Finally, the platform offers version control features, which help maintain the accuracy and integrity of data. This feature is especially crucial for succession planning, where historical data on potential candidates and their performance over time is essential.
✖️ Board training
Maintaining transparency for executives and board members throughout the succession planning process and keeping them informed can be difficult. However, the process can only run smoothly if everyone is updated and on the same wavelength.
✅ Solution
The paperless meeting solution allows participants to access the succession plan immediately, track progress, and provide input if necessary. It is worth noting that such easy access and transparency are safe for the company since senior management can manage data access based on other board members’ roles.
✖️ Lack of updates
Even after the succession plan is completed, the work on it is still ongoing. Specifically, companies need to return occasionally to revise it. Moreover, changes in market conditions, personnel shifts, or changes in the industry force teams to make significant changes to policies.
✅ Solution
With online board meeting software, teams can collaborate in real-time to make the necessary changes to the plan online from anywhere. Moreover, changes can be proposed, discussed and documented. Also, some platforms integrate with data analytics tools that provide value for periodically reviewing the succession plan’s effectiveness and making data-driven decisions.
Start creating a plan now with board portals. Research providers, study the functionality of each solution, select the most suitable board software pricing, and get started!
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