Need for Succession planning in Small Business (Essay Sample)

Institutional affiliation
Student Name
Date
Succession planning
Purpose of the Study
For any business to ensure that it secures its’ future operations, succession planning has to be a vital part of the business. Butler and Roche-Tarry describe succession planning as a dynamic process which assists a business or an organization to align its goals and the human capital needs (Butler and Roche, 2002). For a small business to grow and ensure future posterity succession planning has no substitute. This literature review seeks to understand the importance of succession planning and how it can be efficiently implemented on small business to help secure a prosperous future.
Method of Research Used
The core method of research used in this study is the analysis of existing documents in print and online articles which have done studies on succession planning. This study will be limited in that it will not use other methods of data collection like the use of interviews, questionnaires and direct observation.
Review of Literature
Introduction
Proper succession planning for a small business is a critical part of the day to day running of the business. When done correctly succession planning will ensure that the business grows and it will endure for generations. Succession planning mainly involves the choosing and development of potential successors in a business or an organization (Linda Amoretti, 2011). Succession planning helps prepare for any future critical vacancies of management positions. The main objective of succession planning involves focusing on the individuals with the necessary talent for the roles to be filled. The chosen individuals must have understanding and groundwork needed to maintain the company’s strategic plan.
Business managers have a great responsibility when it comes to ensuring a successful transition of vacant posts in a small business. Succession planning comes in as a vital tool in a manager’s toolbox when he/she needs to ensure vacant positions are filled correctly. For small businesses managers have a better chance of making sure successful succession planning takes place. This is because the size of the organization is relatively small and all positions which will likely be left vacant soon can be identified easily (Denny McGee, 2012).
With increasing competition from other small business and large cooperates succession planning cannot be taken lightly. Succession planning is an important tool for small businesses to ensure that they survive for generations and have competent people in the right positions to steer the organization in the right direction.
Need for Succession planning in Small Business
The need for succession planning is imperative as it deals with very critical aspects of a business; its importance is both subjective and objective. Succession planning is crucial since if executed correctly it ensures the future is secured.
Many small businesses and family business will often fail due to lack of or improper succession planning. For many small businesses when the owner becomes incapacitated or dies the business will most often collapse due to lack of a proficient successor. Problems can also arise for a small business when partners no longer are willing to get along and decide to dissolve the enterprise (Watson, 2010).
Thus proper succession planning is critical especially for a family business in particular. In case when the owner of a family business dies, the family will be forced to either identify a family or member(s) who are or is qualified for a leadership position(s) (Beldi, 2012). If that option does not seem viable, they will have to consider other options beyond the family like hiring someone qualified. Hence it is very crucial for family and small businesses to make succession plans basing decisions on business needs and revising the succession plan to ensure a successful hand-off.
Total Quality Management
The subject of whether TQM can be a tool of ensuring succession planning is executed successfully is an emerging business topic. Since total quality management emphases long-term success through customer satisfaction, therefore succession planning has to take into account of the individuals who possess customer satisfaction skills (Lopez, 2013). The employees who possess satisfactory customer satisfaction skills need to be placed in departments that deal directly with customers like customer support, and in small business, these are the individuals who need to be serving the customers.
In a case of a small family owned store, the family members who are known to interact with people well can be placed at the storefront to serve customers. Other members need to be trained personally trained so that in future they can replace their relatives. This ensures that in future the right people will be in the right positions.
Different Goals
Many businesses are started with the aim of making profit, this goal most often conflicts with the other purposes of any business like having a good succession plan. Since most small businesses have a small workforce (10 to 20 people), they are mostly facing other organizational challenges. This other problems make thinking about who will fill a position say executive director if the current one resigns or what would happen if a critical member of a department like finance suddenly left will not be high on the priority list(Howe,2014).
There are many important reasons why organizations even small businesses have to be thinking critically about succession planning. The most critical reason is that all businesses rely on staff to implement and carry out the missions of an organization, to provide services and meet the team’s set goals. Small business needs critically to think what would happen if those services or the ability to fulfill the business mission when a staff member leaves suddenly. Thus it is important for small business to balance other set goals and succession planning.
Impact on Colleges and Universities
George (2014) encourages all small business owners and managers to take succession planning courses and certification to have planning information .This information will help in successful running of their businesses for future success. Goetz (2014) notes that small business owners need to take success planning courses. He states that if a business has a right product, the product will sell, but if the owners do not know what is taught in a basic succession planning course, they will go out of business if the key members retire or are incapacitated. Goetz (2014) states that the key areas that managers need to have some knowledge in are: keeping track of assets and liabilities and updating them, determining what to do with earnings, and focusing managerial attention to problem areas. The problem areas include which employee is better placed in a particular position and who is likely to replace that employee if the position is left vacant unexpectedly.
Principe and Aglet (2014) suggest that academia has only recently begun to acknowledge family and small business firms as a large determinant of the economy. The differences in decision-making and reporting between small businesses and larger companies may have an impact on the research and instruction.
The planning strategies especially succession planning strategies will equip future managers with crucial tools. The succession planning may be characterized by understanding to what extent internal decision-making and control systems differ and how they deal with capital budgeting, strategic and operational decision-making, operational budgeting and accountability, performance measurement, and evaluation. Curriculum development in research may determine if small businesses use different employee selection practices and if they can develop effective controls or do they make suboptimal choices (Prencipe, 2014).
Curriculum Development
Mitra (2008) examined the perceptions of business students on the need for requiring a course in succession planning management for all business majors. Hossain et al. (2008) agree with the practice of requiring all business students to take a succession planning managerial course because succession planning administrative with its process of identifying, training, and putting in a position the right employees is used by managers to plan, evaluate, and control. It has a far-reaching relevance, for all business students in making them better managers. The objective of teaching succession planning managerial courses is to help students learn how managers can use both subjective and objective strategies to make sound decisions which will affect the future of the organization they run. Therefore, it is important that these students be taught the necessary succession planning skills and strategies (Howe, 2008).
Hossain et al. (2008) observed that students with better academic skills and students that had business-related work experience thought succession planning should be a required course and would have real-world application. From this observation, they determined that even non-accounting business majors, such informatio...