Successful business owners and bosses know they need to plan and communicate openly about how to ensure continuity and leadership for the future. Handing over control to someone else is not easy - this is true in life and perhaps even more so in business. Whether it's ownership, management or another significant role, it's important that we not only learn to "let go" when necessary, but also ensure that someone with the right knowledge and skills is available, ready, willing and able to take the reins.
Adopting one of the proven approaches to succession planning in a company will not only ensure that the right person is well prepared to take on an important role and continue to perform it, but they must also be aligned with the vision and goals to be able to take the company forward.
WHAT IS SUCCESSION PLANNING?
When considering succession planning, family businesses often come to mind. While this is certainly a key issue for families, it is important for all businesses to consider and plan for the next generation of leadership.
Succession planning can be divided into two parts: ownership succession and management succession. While the appropriate person for each of these roles may indeed be the same, it is just as likely that they will not be - and your planning should reflect this.
In either case, your plan should map out who and what is needed to make your future plans happen. Whether you plan to leave the business or pass it on to the next generation, a succession plan will ensure you have the right processes and people in place at the right time.
Businesses that do this well have several key characteristics, including strong and effective communication and good management practices. They understand that succession planning based on assumptions is doomed to failure, and they make sure that the necessary conversations are had with the appropriate people - to achieve clarity and mutual understanding.
They also understand the intersection between a succession plan, other business plans and a personal estate, wealth and legacy plan - how and where they overlap and where they need to be aligned. Other business plans include the strategic plan, talent and human resource development plans, and the overall corporate and family governance framework.
KEY SUCCESSION PLANNING ISSUES TO CONSIDER
Regardless of the size or stage of the business, there are several key issues that are common to all SMEs when it comes to succession and continuity planning.
Preliminary departure planning
Knowing the exit strategy and planning to achieve it is essential. No business owner wants to reach the point where they are ready to leave or hand over the reins but find they don't have the right people in place to take on the role.
Knowledge transfer
Many owners and managers keep too much important knowledge in their heads. If something were to suddenly happen to them, that knowledge would leave with them, leaving the business in an untenable position. It is important that knowledge transfer occurs before it is too late - not only verbally to the intended successor(s), but also in written form, including documented processes and important formal documents.
Identification of future leaders
The right person to replace an owner, manager or other key function in a business may not always be the obvious or expected choice. Conversely, the person you identify as the ideal successor may not share your passion for the business or the company's values. Be objective in your assessment of potential successors and, once identified, make sure they have the knowledge, professional skills and the willingness to develop further to perform the role. Identifying suitable leaders in your company as early as possible, or starting to address the shortage early, is critical to succession planning.
Developing and retaining successors
Once business owners devote time and effort to developing the next generation of leaders, it can be tempting to offer them a stake in the business as a method of retaining them. This approach is not without merit, but it comes with a "warning" label. Carefully consider the future implications of such a move and whether you have done everything else to retain these key people. Are you looking after them as best you can? Is the culture of your workplace such that they want to stay in it for the long term? Are you communicating openly and regularly with them about your plans and their goals?
STEPS TO PROVEN SUCCESSION PLANNING
While it is true that no two businesses are the same, when it comes to implementing a best practice approach to succession planning, there are steps that all businesses should take.
Map the "terrain"
Involve the relevant stakeholders in your company and get an overview of the current situation.
- For example, what are the current roles and responsibilities of each key person?
- What are your and their future plans, both professional and personal?
- What are your and their ideas about the future of the company and their roles?
- How are they aligned with the strategic and operational plans of the business?
This is an ideal opportunity to establish open and clear communication about succession planning with the relevant people in your company.
Identify gaps and actions needed
The "gaps" we are talking about here are the differences between the current state and your goals and strategy. At this stage, you are trying to identify measures that will help align the two. Do you have the right people in your company, or will you need to recruit some? What development do they need to take them to the next level? Do you have job descriptions for the different roles in your business? Are the timeframes associated with your goals realistic or will they need to be adjusted?
Prepare a plan to achieve your goals
Based on all the information you have gathered so far, divide your goals into three categories: short-term, medium-term and long-term. Set out your path to achieving each of these goals, and in particular the policy and development or transition milestones along the way. This forms the basis of your succession plan. You will need to be flexible in implementing the plan to accommodate unforeseen circumstances (such as the departure of a potential future leader) but remain accountable to the overarching goals.
Businesses that take a best practice approach to succession planning can look to the future with greater confidence, knowing they have the right people and processes in place to ensure continuity, achieve their goals and continue their legacy.