Less than 50 percent of privately held businesses have any kind of succession in place, according to surveys. While long-term succession planning is important for every business owner, many put off the process for quite a long time, often until just before the CEO is getting ready to retire.
But what about an emergency plan in the event your CEO gets hit by the proverbial bus? An emergency succession plan is something every business should have in place at all times, just in case.
Here are four key considerations for your emergency succession plan:
- The plan should be written and also orally communicated to all executives and the board of directors, if you have one, so there is no uncertainty about what should happen in the case of an unfortunate, unexpected event. If the CEO is the owner, the CEO’s spouse should also be apprised of the plan.
- It is critically important that there is clarity about who will lead the company. There can be no infighting or authoritative uncertainty in a time of crisis. Ideally, one individual should be vested with the final decision-making authority. If you have a board of directors, the emergency CEO should report to and solicit advice and council from the board.
- There should be a clearly thought out process of communication with employees and customers should an event occur. Consider who should deliver these communications, and what the messages should be, particularly for customers. The more assurance employees and customers can be given that business will continue uninterrupted, the better.
- From a longer term perspective, consider how a permanent transition will occur. If you have a board, presumably the board and the CEO/owner’s spouse are given authority to establish a time table for determining the permanent CEO or other transition of the company. If there is no board, the owner’s spouse should know on whom they should rely to help make decisions regarding the business.
The burden of the sudden loss or disability of a company’s leader can be devastating for all stakeholders, including spouses, employees, and customers. The more clarity and forethought you give to an emergency succession plan, the easier it will be for stakeholders grappling to deal with the loss.
Contact us at 215.441.4600 or Email if you have questions or would like to discuss how this topic may impact your business.
Does your business have an emergency succession plan in place? Share in the comments.