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The businesses that succeed at achieving these goals generally follow these succession planning best practices.
1. Align Succession with Business Strategy
If your succession strategy seems like a departure from your long-held goals and beliefs, it will be difficult to get everyone on board with the process. Right from the start of your planning, ensure your succession and your overall business strategy are in harmonious alignment.
2. Approach Development Like a Pipeline
Businesses that are most effective in their successions create a “pipeline” approach to development. This approach can be effective to ensure you’ll have several qualified people in the wings at any given time. If one of them leaves to pursue other opportunities, you’re not left in crisis mode.
3. Hold Regular Talent Reviews
Your board, CEO, and executive team should review talent on a regular basis with one another. This casts a wide net throughout the business, and it also allows you to recognise problem areas before the problems get out of hand.
4. Make a Serious Commitment to Development
In many businesses, working on development seems like a luxury because there is so much to do and so few resources to spare. Businesses that enjoy effective successions, however, put both time and resources toward development on an ongoing basis.
5. Manage the Emotional Dynamics of Succession
Succession would be much easier if emotions never came into play, but unfortunately, they do. Recognise the emotional dynamic, and deal with it as it comes. Ignore it at your peril.
6. Assess Potential
Just as with investments, past performance is no guarantee of future results. That’s why it’s important to assess potential in candidates and employees on an ongoing basis.
7. Hold the Executive Team Accountable
The executive team is responsible for measuring key indicators and activities, and they often tie performance to compensation. Hold them accountable for these activities and be transparent throughout the process.
8. Integrate Succession Planning with Recruitment
Take a holistic approach to your business by considering succession even as you’re recruiting new workers. How will this person fit into the organisation? Are you in need of shorter or longer term employees?
9. Create Targeted Processes to Focus on Goals
As you work through your succession planning, create goals that have timelines and quantifiable metrics. This will help you to delegate and track targeted processes as you work toward the succession.
10. Create a Talent Database
All the information you collect through the board, the CEO, and the executive team needs to be securely stored and easily accessible to decision makers. Consider creating a talent database that incorporates the following information:
- Career Performance
- Education
- Career Interests
- Demographics
- Assessments
- Experience
11. Create Individualised Development Programs
This isn’t just a service to the people who work for you. When you make the effort to help each employee reach his or her career goals, you’re actually helping to raise up the next generation of talent for your business.
12. Communicate the Importance of Succession Planning
Without a clear understanding of the important place of succession planning in a business, some employees may start to feel that the business and their jobs are in peril. Therefore, be clear in your communications, and explain that succession planning is a way of decreasing risk and ensuring the health of the business for the long haul.
13. Model Effective Coaching
Some people are naturally good at coaching others and some people aren’t. Help everyone to improve their coaching skills by modelling effective coaching yourself. If you don’t feel confident in this area, reach out to us for assistance.
14. Review Goals Regularly
Since business succession is a lengthy process, review your goals at regular intervals. Include a review of business succession goals at your administrative meetings to keep tasks and goals fresh on everyone’s mind and to institute accountability.
15. Keep Your Plan Dynamic
Your business has probably changed since you first started it, and it’s likely to continue to change before you’re ready to exit. Keep the dynamic nature of business in mind as you work through your succession planning. Be flexible and always strive for the best results under the circumstances.
16. Identify Gaps Between Goals and Actuals
Your succession plan will define goals, but in most cases, you have some work to do in order to achieve them. By defining the gaps, it’s much easier to schedule the work that needs to be done and to make plans for the future.
17. Consider All of Your Options
You’ve probably had some kind of exit strategy in mind for some time and it’s easy to think about this one plan to the exclusion of others. It’s important, however, to consider all of your options when creating a succession strategy. Talk with an adviser to make sure you’re not overlooking a strategy that could perfectly suit your circumstances.
18. Assess Current and Future Needs
Use your growth plans to assess your current and future needs. You may need to start developing talent for positions that don’t currently exist in your business.
19. Start Planning Early
Waiting until it’s too late to plan a smooth transition is one of the biggest mistakes businesses make in succession planning. Start planning now, even if it will be many years before you’re ready to exit the business.
20. Use a Third-Party Facilitator
Having the advice and guidance of a third-party facilitator is invaluable when you’re creating a business succession plan. On your own, you may be oblivious to the tax, financial and legal considerations of your planning, or you may simply overlook options that an outside expert could introduce you to.
To learn more about business succession planning, or to speak to an expert about your own business succession, get in touch with us at Altus Financial.
