For many entrepreneurs, their business is like their baby and they cannot imagine giving it over to another person. That is, until they reach retirement age, fall ill, or experience another extenuating circumstance. Like a will, a succession plan is something nobody likes to think about until it’s too late. Here are some approaches to the succession planning process that will help remove any confusion or anxiety about the process.
It’s important to start discussions about C-Suite succession earlier than you think you should. Even if your CEO plans to stick around for another 10 years, there’s always the chance of a prolonged illness or some other event that could leave your organization without a leader. Have an emergency plan so that you’re prepared if the CEO is suddenly unable to lead.
Consult Stakeholders to Define Skill Sets
Especially for companies looking to retire their first CEO, the next top executive may need very different skills than the original; you’re not looking for a clone. The grit required to start a company is different than the strategy needed to sustain it in the long term. The board, other C-Suite executives and high-level managers could all have valuable ideas that the CEO might not consider.
Document the Plan
PricewaterhouseCoopers conducted a study of mid-market businesses, and of the 154 they surveyed, half had a succession plan but only 1 in 6 could say it was a robust and documented plan. When you start planning, record everything! Your plan will be an evolving document, but whatever iteration exists when it’s time for succession will provide a blueprint to implementing the exiting leader and stakeholders’ plan. Afterward, you can compare the plan to the actual events so as to improve future succession plans.
Engage in Continuous Professional Development
No matter how much you plan, there’s always a chance that some unforeseen circumstance will throw a wrench in that plan. In addition to contributing to a positive culture, professional development also provides a pool of potential new leaders from within your company who are statistically more likely to succeed than leaders brought in from outside the business. Should an emergency arise before your succession plan is fully realized, you’ll have people who can step up and hold the business together.
Get Everyone on the Same Page
Communication among stakeholders is vitally important to making the succession process go smoothly. Before the CEO leaves, he or she should be prepared to let go of the reigns, other leaders should be on board with the successor, and employees (especially direct reports) should be informed of how the handing over of responsibility will happen.
Building a succession plan is an integral part of your long-term strategy for the company, but it does not have to be stressful. For more tips on how entrepreneurs can maximize their impact, check out our whitepaper.
Sources: PricewaterhouseCoopers, Workforce.com
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