It’s never too early to start thinking about a succession plan. Whether retirement is years away or just around the corner, you want to protect the value of your business by ensuring that any leadership transition will be smooth. Begin exploring the process by considering the following issues:
Prepare your successor for success
You’ll never find the time to teach your heir apparent everything you want him or her to know. So instead focus on critical knowledge, ensuring that your successor:
- Understands your company’s direction, the factors critical to its success and its major challenges going forward,
- Has in-depth knowledge of your products or services, competitors and industry,
- Is comfortable with your business’s culture and supportive of its people, and
- Has internalized your organization’s core values.
To help ensure employees fully accept your successor, set your departure date and stick to it. It’s fine to serve as a consultant and advisor — just don’t play an active role in the company’s daily functions after you’ve “retired.”
Employee buy-in. A successful succession hinges on supportive — or at least, accepting — employees. So involve managers and key staff in the planning process.
Misinformation, rumors, threats about quitting or refusals to support the new boss are common during leadership transitions. To reduce or eliminate potential sources of conflict, identify stakeholders who may have strong concerns about your next company leader or the succession process. Then work out problems with them early on.
Board support. Consider forming a board of directors consisting of people you trust who’re familiar with your industry. This board can help you assess the strengths and weaknesses of potential successors. Your board can also help assimilate your successor. Board members’ varied perspectives usually provide a more objective and collaborative approach to analyzing succession problems and developing fresh solutions. They can further assist by mediating organizational disputes, giving feedback on your heir apparent’s progress and reassuring business stakeholders.
Work experience. Successors-in-waiting need leadership and decision-making experience before they assume the top position. For example, your successor should learn how to use your company’s financial data for tax purposes, financial reporting compliance and profitability analysis. In addition, allow your successor to:
- Spend time with HR staff to learn about your hiring methods and benefits issues,
- Get his or her hands dirty in the field with your sales staff or on the front lines of the production floor, and
- Meet and get to know major customers, suppliers, lenders and investors.
Communications strategy. Don’t wait too long to reveal when you’re leaving the company and whom you’ve selected as a replacement. Giving ample notice (at least one to two years) will allow plenty of time for employees to voice their concerns about your successor and the transition as a whole.
Break the news gently to gain their support for the new boss while giving them good reasons to stay with your company. If disagreements arise, discuss the issues openly and seek compromise by enabling your successor to exercise his or her newfound decision-making authority.
Remember that professional advice is critical to creating a solid succession plan. However, while your advisors can help you hammer out the details, the big succession plan decisions must be yours.