When working in the business industry, there are a lot of terms that you need to get familiar with. One such term is incumbent. You must have come across this term in business magazines or news if you are a regular reader. But what exactly does the term incumbent mean? Every company or government has some designated positions in different offices. An incumbent is a person who holds any such particular position in the respective company or government and is responsible for the office is termed as an incumbent. Although this term may seem quite simple and easier to understand, it still goes a lot deeper as far as the business and political world is concerned. To know the significance of the term incumbent, we need to go through the basics of this term and understand its importance in the business and political world.
What is an Incumbent?
Incumbent is the term that refers to an individual who holds a set of responsibilities in a specific office within a company or a government organisation. This person has an obligation to the position or the office they hold. All incumbents in an organisation or a branch of a company, be it the directors and officers, have a certificate of incumbent which is used as their identification.
An incumbent can also refer to the obligation or responsibility itself. This means that incumbent is the sense of duty surrounding the accomplishment of a particular task or objective which is concerned with the particular position that the individual holds. The term incumbent can have different meanings when used in different settings or different fields.
In business, incumbent can also refer to a leader who is more specifically a front runner or leader of a company or a company itself that holds a large portion of the industry’s market share. This term also refers to business relationships, whereas in politics this term particularly refers to the person in power or the person who currently holds office. The leaders of a company are listed on the incumbency certificate which includes all current directors, officers, and may also include main shareholders of the company.
When talking about politics, the incumbent has a higher chance of winning the re-election as compared to a new challenger. This can be due to various reasons, one of which is that they already have an experience of the existing position and the responsibilities that come with it as they have already been in the office facing the same responsibilities.
Understanding the term Incumbent
The term incumbent can have several meanings depending on what context it is used. Although the term most commonly refers to the person who holds a position in the office of a company or a government organisation and is held responsible for that position, it may also refer to the responsibility itself. In other contexts, this term also refers to a strong and powerful company which has a larger share in the market.
When the word is used for a person in power, it also includes the duties of that person that come with his or her position. This person can be a business leader like a chief executive officer or CEO, or any other important person in a company can be an incumbent of a company. While this is true in the business field, in the political field this person will be the senator who holds the office in the present.
When used to describe the duties of the person, the term incumbent describes the obligations of the person towards the position they hold in the branch of a company or the government office. The concerned person is expected to satisfy these obligations in order to fulfill their designated role.
What is incumbent in Business?
As we have already discussed above, all the companies or organisations list the leaders of the company on a certificate which is called the incumbency certificate. This certificate is necessary to know all the important persons in valuable positions in the company. These may include directors of the company, shareholders, officers and many more. The incumbent certificate can be considered as an official company act just like the annual report which is presented at the end of every financial year. This certificate needs to be accurate and is something that third parties including the shareholders can rely on when investing in the company.
When used to describe business relationships, this term refers to the relationship between the supplier and the buyer in which the supplier is someone who provides useful materials to the buyer that can be a business, company or organisation. In this business relationship, the supplier that is currently in use is the incumbent because of the position they hold. When a new supplier wants to take over the current supplier’s duties, the new supplier is considered to be the challenger to the old supplier’s incumbency.
What is incumbent in Politics?
When the term is used in reference to the position in politics, the incumbent is the position who currently holds the office. Although it can be used to define the person who holds the position at all times, it is more commonly used at the time of election, when the term can more efficiently differentiate between two candidates when the current position holder is running for another term in the office. In such a case, the new person who is running against the incumbent who already holds the position in the office is referred to as the challenger.
In political elections, holding the position of the incumbent is seen to be advantageous, but it still depends on the current sentiment of the associated constituents. If the constituents feel that the current circumstances are favourable then the incumbent may have a higher chance of winning the position again. Whereas, if the constituents disagree to the current circumstances including the incumbent’s policies or actions, then the chances of the challenger’s winning increases.
None of the incumbents are not required to attempt to maintain the position they are currently holding although they are expected to hold their current position until their term gets over and they step down from office. In case a new position is created and is not occupied prior to the first election, it is clear that there is no incumbent for that position.