February 12, 2020 • Beth Williams
Does Your Business Have a Succession Plan? 4 Strategies to Ready Your Business for Tomorrow
A few years ago, a friend of mine decided he was going to retire. He had founded a successful company, built a great reputation in the business, and now was looking forward to passing the company on to his daughter. A successful businesswoman, his daughter was well qualified for the role, and he had been preparing her to take over as CEO for more than a year. The replacement plan was in place and everything was going smoothly, until the COO resigned unexpectedly due to health problems. Shortly after that, another long-time sales manager departed the organization to move with her family across the country. As a result, and within just a few weeks, the company had lost two important sources of institutional knowledge.
As employees struggled to fill the void left behind, the business began to stumble. Sales goals were missed, and no one was able to interpret the notes the COO had left regarding the business’s newest initiative. Eventually, my friend put his retirement plans on-hold. There was simply too much that needed to be addressed before he could step away for good.
The moral of this story is that existing talent can disappear faster than imaginable. Retirement, health concerns, personal issues, and employment offers can all cause the sort of brain drain that slows operations. While replacement planning is key and is often undertaken for big leadership changes, succession planning for any loss of talent is often overlooked. By preparing ahead of time and putting a succession plan in place, you can guarantee that knowledge is shared long before any departure or transition occurs.
Let’s look at 4 succession planning strategies that will ensure your business is ready for the future.
Build Your Plan Now
Companies tend to view succession and talent loss as a far-off event. This means it’s easy to procrastinate and delay the succession planning process in favor of more urgent business concerns. That mindset, however, can lead to major problems. What happens when a key leader leaves unexpectedly and you have no succession plan in place? Or what if a lifelong employee decides to retire in a few months. How will you ensure their years’ worth of knowledge gets transferred to the right people before their departure?
In order to be prepared for both the unexpected and planned talent departures, it’s crucial that organizations have a succession plan in place. While a succession plan is unique to each company, there are a few general steps you can follow to put together a successful succession plan.
- Identify the most important roles in the organization. These are the positions that would need to be filled quickly if an employee were to leave.
- Review the responsibilities, competencies, and requirements of each role and make sure these are well documented.
- Assess current employees using a standard set of criteria to determine who has the potential for leadership roles.
- Provide opportunities for employees to gain work experience and develop the skills they’ll need to take over when the time comes.
Successful succession planning is never reactionary. Start building a plan now to guarantee your business is ready for whatever comes its way.
Identify Future Leaders
You’ve put together a succession plan. Great! Now, it’s time to start putting that plan into practice. To begin, it is important to identify current employees with the potential to be future leaders in your organization. As of 2018, the amount of time the average American employee stays with their employer was down to 4.2 years. While finding future leaders early can help mitigate some of the natural effects of attrition, it also ensures your organization has talent ready to step up when needed.
When looking for possible leaders, it’s important to note that technical aptitude alone is not the kingmaker. Each role will have its own criteria and requirements for success, but there are a few key traits that every leader should possess. Consider the answers to these questions when deciding which employees should be included in the line of succession.
- How well does the employee align with the future vision of the company?
- Do they inspire others? Do they understand what motivates the team?
- What is their communication style? Are they good at listening to others?
- What is their approach to solving problems? How open are they to new ideas?
- Are they a good cultural fit? Are they likely to remain part of the company?
Remember, the goal of this exercise is to identify future leaders. Your chosen successors likely won’t score perfectly on all these questions now. The key is finding employees with the potential to grow into a position. The next step is fostering that growth as you train and test them so that, when the time comes, they’re ready and prepared to step into a new role.
Test for Readiness
Plans are great in theory, but as the saying goes, even the best-laid plans can go awry. That’s why, in order to ensure your succession plan is successful, you’ll need to put it to the test. Draw up a scenario where a key member of your team departs unexpectedly, then follow your succession plan to see how it works. Are the responsibilities and requirements of the role well-documented? Have other employees been prepared to take on the projects or tasks left behind? How deep is your bench of talent? Is a future leader waiting in the wings? This exercise allows you to find the gaps in your succession plan and fix them now, before they become bigger issues down the road.
While testing your succession plan is critical, it’s also important to evaluate your future leaders. You’ve identified their potential, but are their skills improving? Complete a detailed employee review and note the skills that need refinement. Make sure your future leaders are tasked with positions and projects that maintain their talents while also fostering new ones. Companies that follow this model and test for readiness in their succession plan and employees will experience much more success in the long run.
The day has finally arrived… One of your key leadership roles is vacant and it’s time to pull out your succession plan and put it in motion. The team has pulled together during the transition and the future leader you identified months ago is prepared and ready to step into the role. What could go wrong now?
The reality is, even with a great succession plan that’s been tried and tested, there’s still plenty of room for error in the implementation. For example, one of the quickest ways to undercut your succession plan is to show a lack of confidence in the new team or successor. A failure to communicate trust, idle consideration of external candidates, or restricting a successor’s efficacy can all wither the figurative fruit on the vine.
No matter how prepared you are, change is always challenging. But with a succession plan, top talent, and the right systems in place, you’ll be able to sail through the transition with flying colors.
Ready to set up or evaluate a succession plan for your business? Smart Resources offers Human Resource, management, and IT consulting services to assist you with a plan. Reach out to us to learn more.