7 Tips to Jump Start Your Succession Planning Efforts

Business leaders face new challenges every day, and addressing those challenges takes time. Yet time is a scarce resource and, as a result, long-term issues such as succession planning are often kicked to the side of the road, only to become a priority in an emergency. Over the 46 years Kreischer Miller has been in business, we have learned that succession planning needs to be part of an organization’s DNA.

Following are some tips that may help you develop effective strategies for your long-term leadership needs:

  • Address the elephant in the room. Asking someone to help hire and/or develop their successor flies in the face of their evolutionary need for security. The only way to overcome this obstacle is to make clear that the successor’s development is not a threat to the incumbent’s security. To do that, be open about timelines, consider new long-term roles for the incumbent leader, and consider providing a safety net in the form of an employment agreement.
  • Make sure that compensation arrangements align with your succession planning goals. If a leader’s compensation is based entirely on factors unrelated to succession, then it is likely that those other factors will take priority.
  • Conduct a thorough evaluation of critical positions, time horizons, and potential internal candidates. When doing this, prioritize roles that need to be filled more quickly than others as well as those where the failure to have a successor could have a significant impact on the organization. For example, if the leader of your most profitable business is 5 to 10 years away from retirement, you will likely want to prioritize their succession over another leader who has 15 to 20 years of runway left.
  • Create detailed development plans for internal candidates and review progress at least annually. Employees may struggle with specific skills and other responsibilities can sometimes get in the way of development, so periodic progress evaluation and course correction are critically important.
  • Decide how to address positions without obvious internal candidates. If you wait until you need them, you may not be able to find them, so make sure you set specific goals for your recruitment functions.
  • Review progress annually. People leave, industries change, and sometimes you just strike out with a potential candidate. For each of these reasons, it is important to make sure that succession planning is a routine part of your annual planning exercises.
  • Most importantly, do not punish current leaders for being a part of the process. If you walk the incumbent to the door once their successor is ready, you will never get another leader to support future succession planning efforts. Be open and honest about what this means to the current leader.

Succession is hard and almost always involves some degree of tension, but the hardest things in business are usually the most impactful. By following these guidelines, you can make succession planning part of your company’s DNA, ensuring that you maximize the long-term value of your business.

 

Christopher F Meshginpoosh CPAChristopher F. Meshginpoosh is managing director of Kreischer Miller and a specialist for the Center for Private Company Excellence. Contact him at Email.   

 

 

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