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Why is business succession planning important?

Succession planning is a crucial strategy for business continuity.

Business succession planning is crucial for companies that need to maintain continuity in the aftermath of high-profile departures at senior levels.

Unfortunately, a 2014 study published by the Stanford Graduate School of Business (GSB) in the US revealed 46 per cent of organisations are not currently grooming a replacement candidate should their current CEO leave.

This trend appears to also be a problem much closer to home. Last month, a Cranfield School of Management study found only 19 per cent of business respondents in the UK, Australia and New Zealand were prepared for senior leaders stepping down.

"The research shows the critical issue of succession planning and the development of a pipeline of talent for key roles is still taking a back seat," said Dr Emma Parry, a reader in human resource management at Cranfield.

"Key employees such as leaders and those with specialist skills can leave at any time, with potentially devastating results if a succession plan is not in place."

Organisations that wish to build more robust business succession planning processes should contact commercial lawyers in Brisbane to discuss the necessary steps. An expert legal team can help identify the right people to take on important positions and smooth the transfer of businesses to new owners.

The benefits of long-term planning can have a significant impact on a company's bottom line. In fact, recent Gartner data indicated 95 per cent of enterprises that plan between five and 15 years ahead outperform less strategic competitors.

Nevertheless, Professor David Larcker of the Stanford GBS said many companies polled by the academic institution feel they are not doing enough to prepare for inevitable shifts in the C-suite.

"These findings are surprising, really, given the importance that strong leadership has on the long-term performance of organisations," he added.

Is your company taking the right business succession planning steps? Get in touch with our dedicated team of experts by clicking here.