I get it. Succession planning is not our favorite topic. Maybe we don’t want to think about it. Maybe it just feels like it is so far in the future it isn’t pressing. According to a study conducted by the Wilmington Trust, 58% of business owners have not created a specific succession plan for their business. Possibly more concerning, 47% of business owners over the age of 65 have still not created a specific succession plan.
The reality is, despite our apparent reluctance to confront this aspect of our organizations, times of transition are some of the most vulnerable times for an organization. Failure to proactively plan for succession not only puts your business at risk, but also has second and third-order effects on your employees who depend on your business and on the community who depends on your product or service. One of the most critical factors to ensure your organization continues to thrive in your absence is your ability to transfer leadership.
There are a lot of factors to consider with leadership transitions: legal issues, stock buyouts, business valuations, and proactive financial planning. Today we will focus on 5 areas with the succession plan itself that you need to consider to keep your organization running smoothly throughout the transition.
Identifying what your organization needs from its leader in this next phase of its existence is crucial. Focus on defining what kind of leader is needed before selecting your successor. What challenges will the company face in the next 10-20 years? How is the market changing? Will you need a greater sales focus or product development focus? Defining what kind of leader will be best suited for the next phase of your organization will help in dispassionately selecting candidates to succeed you in the best long-term interest of your organization.
Timing is an important part of any succession plan. The earlier you can begin the succession planning thought-process, the better chance you have at a successful transition. Once you have selected a successor, let them know early of your plans for them so they can begin to think differently about their role at the company and their own development. Consider initiating the plan 3-5 years in advance of the date of transition. This gives the successor time to grow into their new role.
Military officers rarely spend more than 2-3 years in any unit early in their career. The primary reason for this level of movement is to give them broad exposure to experiences in different roles and environments to better equip them for leadership as their responsibility grows.
A similar tactic should be taken in a successor’s development once they have been identified. Move them around to different areas of your company. Let them spend a few months learning your manufacturing process on the manufacturing floor. Send them out on sales calls with your sales staff. Take them along on meetings with your most important clients. This level of exposure to every area of your business will give them much richer perspective as they make decisions for the future of the company and will build their rapport with employees at all levels of your organization.
4. Professional Development
Invest in the professional development of your successor as an individual. Help them seek out a mentor from outside of your organization. This could be a friend or acquaintance or even an executive coach experienced in working with emerging leaders. Ensuring your successor is developing her own leadership capacity is just as important as making sure she has a comprehensive understanding of the specifics of your organization.
The final step may be the hardest. When the day comes that it is time to hand over the reins
of the company, be intentional about giving your successor the space to lead. This includes making mistakes. Their confidence in their own leadership will likely never be
more fragile than the first few months after the transition. You have left them some big shoes to fill and they know that everyone in the company is comparing their leadership style to yours.
This is not to say that you abandon them. You are likely their most valuable ally as they find their voice. However, letting them determine the boundaries of the relationship will allow them to access the full benefit of your experience while still building their own confidence to make decisions in the best interest of the organization.
Leadership transitions are always emotional and vulnerable. But by being proactive, identifying your leadership needs, creating time to prepare, setting your successor up for success through cross-training and professional development and then giving them the chance to lead, you can leave a lasting legacy to your organization and watch it move confidently into the future.