What is succession planning? Succession planning is a process that involves careful replacement planning and strategy to pass on important leadership roles and responsibilities. Businesses often perform this succession planning function for their key management personnel. It is used to identify and develop new potential leaders who can fill those “big shoes” when the leadership role becomes available. Many have the notion that succession planning is only for large companies that have CEO, CFO, COO, and CTO titles. This can be applied to various businesses of all sizes, including small family businesses, including farming and agriculture, where this is used to transition ownership and responsibilities to the next generation.
Here are some tips to make succession planning a success:
1) Start early by identifying key roles that are needed for succession planning. One of the largest challenges is not planning early enough for the transition to build a proper strategy. This can be a missed opportunity for a smooth transition and lead to lost business knowledge from someone that has been with the entity for many years. Businesses should be succession planning for 5-10 years ahead of an employee’s retirement of a particular role.
2) Define those competencies and skills required to take on these key roles.
3) Keep assessing people (new hires and current employees) against those required competencies to identify the individuals that could potentially perform well in these roles.
4) Develop these employees to be ready for their advancement by providing them the training, experiences, and skills to perform well.
5) Do not let the key leader’s knowledge, skills, and expertise vanish when they leave. Let the successor learn, develop, and train alongside their leader for six months to a year to better familiarize and support business operations.
6) The key leader may have a hard time letting go if they have been in their role for a very long time. They may feel like they are the only ones capable of the tasks. If this is the case, consider reaching out to an external consultant to objectively approach this situation for proper delegating and training.
7) Have honest conversations about what the key leader really wants to do after he/she retires. Is the person wanting to retire and then stay busy by traveling all over the world and/or spending all their time with their family? Or would they like to take life at a slower pace but would still be interested in working part-time or as needed? Knowing this information can help make succession planning a success, especially for the successor. Also, realize that family businesses might see a challenge by trying to keep the business within the family. What if the owner wants to retire at age 55, but the children are still in high school or college? This may make it very challenging, as the children may not have the experience yet to fill such an important role. Do the children even have the same ambitions about the family business? Maybe the next generation is interested, but the timing isn’t right. If so, look at hiring a person to fill in the role for an agreed-upon timeframe.
8) Lastly, your succession plan for your key leaders does not have to be concrete. Keep it adaptable and flexible as things might change that become unexpected.