What Is Succession Planning and Why Should You Care, Anyway?
Succession planning is a tool that ensures long-term effectiveness among an organization's leaders. Those who currently hold leadership roles must take the time to identify high-potential individuals who can take over their position at some point in the future. The process is not just about identifying a potential successor; however, it is also about ensuring a leader can achieve his or her own goals, all the while preparing that successor for success.
Without A Succession Plan, Leaders Can Not Move Forward
Succession planning should begin early. As soon as a leader accepts a new position, part of his or her long-term strategy for that position should include identifying and coaching potential successors. Without someone in line to step into the role, it can hold leaders back from taking on new responsibilities, moving up in the organization, or retiring.
Lack of succession planning can also affect the sale of a business. Without a viable replacement in line, potential buyers will want the business owner to stay on to develop a transition plan. A lack of successor can also affect the value of the business and have a negative impact on the sale price. Buyers want companies that can run without the owner, and entrepreneurs want to sell so that they can move on. The only way to achieve these mutually beneficial goals is to devote time and attention to succession planning as early as possible.
Succession Planning and Risk Management Go Hand in Hand
Nowhere is the old adage "If you fail to plan, you plan to fail," more applicable than succession planning. Leaders and business owners may outline their ideal timeline for their exit, but as we all know, life rarely works out the way we plan. Unforeseen events happen all the time including accidents, medical and health emergencies, and family situations. These things are impossible to plan. When these types of events occur, it can be devastating to the organization when there is no succession plan in place.
As a leadership coach, I work with entrepreneurs and executives of all ages. Several years ago, I worked with a business owner who, unfortunately, suffered a fatal heart attack. At the time of his passing, he did not have a successor in line to take his place, and within eighteen months, the business was closed.
It's not just business owners who have to worry about unforeseen changes in circumstances. Every CEO should be sure that his or her key executives have succession plans in place, as it can be extremely disruptive for an organization to lose one of those executives due to health problems or an accident.
While I've seen my share of succession planning disasters, I've also seen my fair share of succession planning successes. The key to good planning is to know that succession is a process, not an event. Those leaders who create smooth transitions know their target date for their exit, whether it's taking a new position, retiring, or selling the business. They identify high-potential successors several years before that date rolls around. They use that time to mentor, coach and train their successor, and throughout that coaching period, they systematically pull back, strategically transferring responsibilities to the successor. By the time the leader's exit date rolls around, the successor has taken over much of the job, and they can step into the role without disrupting operations.
Succession planning is something that all business leaders know they need to tackle, but many ignore until it's too late. To ensure the long term sustainability of your organization, make the time to start developing your own plan to cultivate the next generation of leaders on your team.