Shareholders recognise importance of succession planning

Those looking to buy a company's shares will take a wide range of considerations into account before making a decision. After all, it can be a massive investment to make and certainly one that should not be taken lightly.

One of the factors a potential shareholder will be most interested in is the future direction of the company. It's no surprise, then, that a new report highlights leadership and succession planning as one of the key points of focus for shareholders.

The Corporate Governance Report for 2013 from AMP Capital reveals that shareholders are showing an increased interest in the link between succession planning, leadership outcomes and future business results. In fact, AMP Capital singled out the quality of leadership as “one of the many intangible factors” that should be considered before making an investment decision.

“A board needs to know where a company is heading and whether they have the right management in place to take them there,” explained Karin Halliday, corporate governance manager at AMP Capital.

“Shareholders play a valuable role in engaging with boards and shining a light on such issues.”

According to Ms Halliday, the fact that shareholders are directly asking executives about succession planning is drawing further attention to the importance of these “governance issues”.

Regardless of the structure of your business and whether or not it is looking for investors, succession planning should be a crucial ongoing consideration. It's not enough to bask in the glory of today's successes – to remain competitive in the future, you need to focus on finding and developing those with high potential leadership.

Consulting a change management specialist can help your organisation prepare for the road ahead to ensure it stays on track with the right leaders.