Succession planning has fallen off the radar for many companies in the current competitive landscape where there is a steady demand driven by a demographic shift and healthy economy. Firms are concentrating their efforts on growing their businesses. Many business owners do not start their succession planning until the owners are ready to retire. By this time, it is too late to design and implement a plan to accomplish all of their goals in their retirement timeframe. Furthermore, depending on how you plan on transferring your company, there are a number of preliminary steps that you should take to ensure that your succession plan is executed as you would like it to be. This is especially true if you plan to transfer your company internally to existing or future employees. Below are four key considerations owners should be addressing when considering an internal succession plan.
- Determine whether you need to look externally to strengthen your management team
Begin the succession process early. It will provide you with enough time to identify and groom the right candidate. Begin by identifying whether you have employees who have the skills or the potential to acquire the skills necessary to take over the company. Assess not only their technical skills, but also their leadership potential. This will help you decide whether you need to search for someone from the outside to strengthen your management team.
Training is one of the most important ways that you can ensure a successful transition. Many owners do not know where to start, so they avoid it. Other owners have serious reservations about letting an employee in on the inner workings of the business too soon, sometimes out of fear of losing control and other times out of fear of losing their key employees and company secrets to a competitor. Both of these are legitimate fears; but by giving in to them and not training your employees to take over, you risk the future of your legacy and your retirement.
- Training and Development
Once the individual or group of individuals is chosen, you need to begin to develop them into your future leaders. Begin by cross-training them in all aspects of the business. This helps them learn the inner workings of the company and become more well-rounded leaders and problem solvers. Beyond just the workings of the business, you need to train them in the soft skills and leadership skills that will make them successful. Invest in a program that will provide those skills to your future leaders. Once a transfer begins to get closer, some companies may even find benefit in bringing in an executive coach to continue to develop leadership skills for transferees.
One of the most important steps that you as an owner can take is to share as much knowledge as possible about the company to your successors. As the old adage goes, knowledge is power; and leaving a company without a good knowledge basis can spell its demise. Transferring knowledge can be one of the most difficult parts of the succession process, but it is also one of the most vital.
A mentorship program can produce great dividends. The program should offer young, future leaders access to the business owner – or other senior members of your leadership team – in order to ask questions and receive advice from a trusted source in the upper echelons of management.
Succession can certainly be a difficult bridge to cross, but the professionals at our firm can help you begin the journey. Call us today.