Looking at any Asian economy, one can easily see the reason Asia is a dominant force in the global marketplace: the rising growth of Asian economies and their advancement in technology and value creation. From being predominantly manufacturing economies, Asian countries have diversified their economies greatly and moved to consolidate the value creation chain.
The growth of Asia businesses and economies
Asian countries and cities like India, Japan, China, Hong Kong and Mumbai have successfully revamped themselves to become powerhouses in various fields and industries. Some of them include IT, robotics, tourism, manufacturing, finance, education, health and many others.
This has seen a surge in the number of businesses in Asia and a growth of the Asian middle class and family-owned businesses. It has been responsible for increased business valuation of many businesses, necessitating the adoption of world-class strategies and practices to manage them.
The growth of Asian economies and businesses and global competition have resulted in business owners and managers searching for practices that increase their competitive edge on the global market. Succession planning is one of the practices used by large corporations and organizations to ensure smooth transition and future growth. Part of that includes looking at ways to leverage succession strategies, making businesses both large and small put in place succession plans.
The importance of succession planning
There are many reasons business owners and managers are turning to succession planning model as are family-owned businesses. Family feuds and wrangles have been known to ruin family-owned businesses. The greatest cause of failure for family-owned businesses is family issues, with chances of wrangles rising with higher business valuation. Some examples of family-owned businesses in Asia that didn’t fair too well as a result of lacking a succession planning model include Cycle & Carriage Co., Haw Par Group and Sinar Mas.
Succession planning reduces potential business risks that could result from poorly implemented plans in relation to filling vacancies in an organization. This ensures the continuity, growth and profitability of a business is not threatened by succession. In fact, when properly carried out, filling vacancies in a business actually strengthens it.
Well thought-out succession strategies reduce employee turnover rates and results in high talent retention. Businesses thus do not have to invest in employee training nor lose investments made in employee training and growth. When well leveraged, succession strategies save businesses a lot in terms of talent acquisition costs.
Succession can be a thorny issue and result in considerable ill will between employees, board members, business owners and other stakeholders. This results in poor performance and morale, disillusionment, resentment and other negative emotions that ultimately impact the business negatively. Succession plans greatly reduce the negative emotional impact of succession on a business. This is especially true when succession plans are inclusive and take into consideration the views of all pertinent stakeholders, especially the employees.
By having a succession plan, a business is better able to react more nimbly to changes. Business risks are reduced and the continuity of a business assured. Succession in high-level and important positions affects the future growth and profitability of a business. It is therefore good business to work on succession strategies, and Asian businesses are not being left behind.