All too often business owners neglect succession planning. In fact, according to a recent Inc Magazine article and Deloitte survey on the topic, 90 percent of business leaders recognize the success of their company depends on effective leadership succession but only 13 percent are confident about the succession plans they have made. And those are business leaders who have actually MADE succession plans. I’d venture to guess, based upon my experience, that the majority business owners have no real succession plan in place.
It may be hard to think of your business without you. After all, it’s YOUR baby. But in order to build real value you need to start building a framework for the business to run without you. The Inc Magazine article has suggestion on how to build this framework:
- Outline ideal leadership characteristics – what type of leader does your company need? And here is something to remember, it isn’t necessarily the No. 2 person in the company due for the promotion that is the best leader for the future. Get specific on the qualities needed from your future leaders. I’ve had clients who owned family businesses and determined that the organization needed a more professional manager than the children coming through the ranks. Sometimes tough decisions are required.
- Define what actions your new CEO needs to take – is the company looking for growth, will it be merging, will staff need to be trimmed? The executive coach quoted in the article says, ”Focus your leadership development program on strengthening employees’ ability to deliver strong and credible results, to master new types of expertise, and to uphold behavioral standards that reflect the company culture and values.”
- Identify mentors to assist the new leaders. This is critically important. I’ve noticed with my clients and my own businesses that good mentors are critical if you hope to build a sustainable business. If you aren’t there to mentor you need to find someone, whether it’s inside or outside your organization, who can serve in that role.
- Outline the fast-track process. How will the new leader know he/she is taking over. Identify those leaders and begin equipping them with the training, incentives and added authority of that role. And keep your word provided the new leader performs. I’ve seen it get real ugly when a future leader is groomed for taking over but then the rug is pulled out from underneath them. In one case, I saw a future leader leave to start his own business and took nearly all the business away when he left. All because the owner was simply too greedy to turn over the reins as agreed upon (But the example also helps explain why not only incentives but also a strong non-compete are important to tie your future leader with the company).
- Build performance metrics. Figure out ways to measure a future leader’s problem-solving and decision making skills. The article suggests following the lead of companies such as IBM and GE can help you develop standardized methods of leadership development.
I encourage you to read the Inc article.