Business Succession Planning

The Purpose of Succession Planning

As the Senior Leadership teams in the business industry approach retirement, creating and developing the company’s succession plan is critical.  Along with creating a succession plan, it is important for key executives to plan for retirement. When retirement planning is ignored and not clearly communicated, even the most thorough succession plans will fall apart.  The ultimate goal is to have a smooth and successful transition.

Business leaders must consider their own retirement planning first and then integrate it into the business’ succession plan. The leaders must know their future so proper steps can be taken forward with short-term and long-term succession planning for the company.  The company needs to consider who they need to retain, and how to reward them to ensure they will remain at the business for the years to come, to fill leadership roles as individuals retire. 

The purpose of long-term succession planning is to create an ideal plan for the future that takes into account all the things that are important to the business, such as culture, philosophy, and goals.  Short-term succession planning refers to being prepared for when the unexpected happens.  The business must have a solution for when immediate actions need to be dealt with, this is often called the “lifeboat drill.”  It is never too early to develop your employees with depth, skills and training so individuals are prepared.

A succession plan that is developed should be formalized and written down.  When a plan is in writing and is presented to the Board during the year, the business is more likely to stay on track with that plan. When a plan is not formally communicated, it becomes a mental note in the middle of the night that does not get the attention it needs. Once written down the plan can be in place for years going forward and can help determine how to develop specific individuals, and what parts may be missing.

Once the business has determined who will be in the pipeline for leadership roles, it important to determine a retention strategy.  Most companies have found that promoting from within outperform those that recruit from the outside.  Businesses these days have Baby Boomers, Gen Xers, and Millennials all in the same company, and they all have different ideas of what is important from a compensation and retention standpoint. What worked for one group, may not work for the next generation, be sure to take the time and listen to the employee’s desires. 

The areas of retirement and succession planning is often overlooked. Too many companies are forced to sell because of the lack of preparation.  When preparing for the company’s future focus on the end result.  Take action to develop a plan sooner rather than later and communicate that plan with other leaders and the board.