The Hidden Cost of Not Succession Planning: How It Fuels Regional Housing Unaffordability

In many regional communities, businesses are often faced with the challenge of attracting talent from outside their areas. Whether it's due to skill shortages, specific industry needs, or a lack of local talent willing to relocate, companies sometimes need to look beyond their own communities to fill key positions. However, what many business owners don’t realise is that the absence of effective succession planning can exacerbate this issue, making it harder for local residents to access affordable housing.

Succesion Planning and the Hidden Costs

By failing to plan for leadership transitions or talent development within the region, businesses can inadvertently create a cycle of dependency on external recruitment, inflating local housing prices and pushing out long-term residents who are already struggling with the cost of living.

Let’s dive into how the lack of succession planning in regional communities contributes to the growing housing affordability crisis and why it’s time for businesses to start thinking long-term.

The Talent Gap and External Recruitment Pressure

In many regional communities, companies may struggle to fill higher-level positions due to a limited pool of local talent. If businesses aren’t actively planning for internal talent development or succession, they may find themselves in a position where they need to hire externally, often from larger metropolitan areas or even other regions.

This external recruitment practice can be problematic in multiple ways. First, it creates a demand for housing that wasn’t anticipated by the local market. When a business brings in employees from outside the region, these new hires need somewhere to live, which typically means they’ll be looking for accommodation in the local area.

As a result, businesses unintentionally contribute to driving up local housing prices as they pay for their new recruits’ housing costs, often providing generous accommodation allowances or securing rental properties to ensure that the external hires are comfortable and settled. This puts additional pressure on local housing markets, causing prices to rise further, making it even more difficult for local residents to afford homes in their own communities.

Accommodation Benefits Inflating Local Housing Prices

It’s not uncommon for companies to offer housing allowances, relocation packages, or company-provided accommodations to attract external talent to regional areas. While these incentives might seem like a solution to talent shortages, they often have unintended consequences for the local housing market.

When businesses pay for the accommodation of their employees, it distorts the supply and demand dynamics of the local housing market. Landlords, seeing that companies are willing to pay higher rents for their properties, may raise their asking prices. This creates a situation where housing becomes more expensive for everyone, not just the employees being relocated.

For example, a regional business that fails to implement succession planning may bring in an external manager with a housing allowance. This manager rents a property at a higher price, which encourages the landlord to increase rental rates for future tenants. Over time, this cycle continues, with businesses attracting more external hires and landlords continually raising rents.

Local residents, who often can’t afford to pay the inflated prices, are left with fewer affordable housing options. This drives up the overall cost of living in the area, making it harder for long-term residents to stay in their own communities.

Reduced Economic Mobility for Locals

One of the often-overlooked impacts of a lack of succession planning is the effect it has on local career advancement. In many regional communities, there are highly skilled, long-term residents who would be ideal candidates for leadership roles, if they had the proper training and development opportunities.

Without effective succession planning, businesses miss the opportunity to identify and nurture local talent. Instead, they bring in external hires for leadership roles, limiting opportunities for upward mobility among current employees. As a result, the local workforce is left with fewer opportunities to grow, which can lead to frustration and, ultimately, migration to larger cities for better job prospects.

The impact of this is twofold:

1. Local talent, which could have filled roles and contributed to a more stable and sustainable local workforce, is bypassed.

2. The need to bring in external talent from other areas further drives up the demand for housing, exacerbating the affordability crisis for those who have lived in the region for years.

   
   

Spiral of Economic Inequities and Housing Affordability

When businesses continuously bring in external talent without planning to promote local employees into key roles, they create an environment of economic inequity. Local residents, who may have been living in the community for generations, find themselves pushed out of the housing market because prices are inflated by the influx of external workers. At the same time, businesses might have to spend more on recruiting and housing talent from outside the area, rather than fostering the development of existing employees.

This cycle of external hiring, inflated housing prices, and reduced economic opportunities for locals worsens the cost of living for everyone. Long-term residents are unable to afford rent or purchase homes in their communities, while businesses continue to face high accommodation costs to attract employees who will only be in the area temporarily. Ultimately, the region loses both in terms of housing affordability and economic stability.

The Role of Migration and Balance with Local Development

Economic development in regional areas requires a careful balance between attracting new talent and fostering the growth of existing residents. Migration can be a key driver of renewal, new learnings, and economic growth. When businesses bring in fresh perspectives, skills, and knowledge, they contribute to the revitalisation of the local economy, injecting innovation and new ideas.

However, for this migration to have lasting positive effects, it must be balanced with the retention and development of local talent. Succession planning is vital in ensuring that locals have the opportunity to grow into leadership roles and become a key part of their community’s future. When businesses focus on developing local talent, they not only reduce the need for external hires but also create a more sustainable and equitable economic landscape.

The combination of external talent and internal development can lead to a thriving, diverse workforce. But it requires intentional effort, such as offering mentorship programs, training opportunities, and clear pathways for local residents to rise within the organisation. This balance supports both the needs of businesses and the well-being of the community, helping to keep housing prices more stable and affordable for everyone.

The Long-Term Economic Impact

The long-term consequences of this imbalance can be severe. As housing becomes less affordable and economic opportunities become more concentrated in urban areas, local communities lose not only their skilled workforce but also the sense of stability and continuity that comes with a homegrown talent pool.

With businesses failing to invest in local succession planning, entire industries can become unstable, with a reliance on external talent undermining community cohesion and economic resilience. This creates an environment where the community’s identity is shaped less by local residents and more by transient workers who come and go, driven by short-term employment opportunities rather than long-term career growth.

The Solution: Investing in Local Talent through Succession Planning

To avoid exacerbating the housing crisis and to foster a more stable, affordable community, businesses must prioritise succession planning. By identifying and nurturing local talent, businesses can reduce their reliance on external recruitment, thus alleviating some of the pressure on the housing market.

Investing in local talent development not only ensures that businesses have the leadership they need to thrive, but it also creates economic opportunities for residents who are invested in their community. This reduces the need for external hires, which in turn limits the demand for housing in the area, helping to keep prices more affordable for everyone.

Additionally, businesses can work with local governments, educational institutions, and other community partners to create programs that equip the local workforce with the skills needed to fill key roles. By focusing on homegrown talent, companies can help ensure that economic growth is sustainable and that housing remains accessible to those who have lived in the region for years.

Conclusion: A Call for Long-Term Thinking

The lack of succession planning in businesses may seem like a small issue in the grand scheme of regional development, but it has far-reaching effects. It drives up housing costs, reduces opportunities for local talent, and contributes to the growing cost of living in regional communities.

By implementing succession planning and focusing on developing local talent, businesses can help stabilise the housing market, support long-term economic growth, and ensure that regional communities remain vibrant, affordable, and sustainable for generations to come. It’s time for businesses to think beyond short-term fixes and invest in their communities' futures.