Hiring a new executive for your company can mean changes to the company culture and exciting new opportunities for the business as a whole. The contract that a company executes with an executive will typically include an outline of all the expectations regarding performance, as well as terms for severance when the executive leaves the company in the future.
It is common for executives to negotiate to protect themselves with a good severance package, but businesses often don’t protect themselves by putting enough requirements on executives to get those packages. Requiring adequate succession planning for an executive exiting the company to receive their severance package or bonus protects your business from disruptions and financial loss.
When an executive leaves, chaos can follow
The higher up in a company a professional is, the more influence they have on daily operations. They also likely have more access to information that the rest of the staff may not be privy to. If an executive exits a company without outlining all of their obligations to the company and making transparent the information they have gathered, it may be difficult for someone to seamlessly move into their position.
Bills could go unpaid and client contracts could go unfulfilled, leaving your company financially and legally vulnerable. A succession plan protects the company from the disruption that can occur when high-ranking employees leave.
A succession plan should include daily workflow and critical information
Creating a thorough succession plan doesn’t just take a few minutes. A worker must carefully review each and every obligation they have and tasks they perform to ensure someone else can meet those obligations and perform the same work.
A good succession plan explains exactly what functions an executive serves within a company. It also details other information that staff may not readily know, such as:
- the location of various accounts
- how to handle the filing system within the company
- issues with staff not reported in human resources files
- similar critical information
Requiring a succession plan ensures that when an executive leaves, one or more people can fulfill the tasks that they once performed and ensure (if not a seamless at least) relatively smooth transition to new leadership.
