By Analytix Editorial Team
Succession planning is especially essential for owners of small privately owned or family owned businesses. The aim of the succession plan is to ensure that the values and vision held by the business continue. To ensure the business legacy carries on, careful consideration must be given to the succession process. However, owners or partners often neglect to give this process the serious attention it deserves.
This happens for several reasons, including owners finding it difficult to relinquish control of a successful business that was built through passion, dedication, and hard work. Other reasons can include family dynamics that may be fraught with tension, when otherwise invisible surface at times of succession discussions. Even if family relationships are amicable or the question is not applicable to business operations, succession decisions can impact key people within the business itself that can make the entire process cumbersome. This may include tenured or key employees feeling either entitled or neglected in the decisions.
Below are four tips to help ensure development of a successful succession plan.
Plan well in advance; involve professional help if necessary
One of the most common visions for succession is that of a founding member of the business growing old and transferring leadership to an identified, younger employee or family member. Unforeseen developments such as accidents or deaths can easily disrupt such plans, as can situations such as founding members receiving compelling employment offers. Succession planning in such cases becomes reactive, hasty and ill-planned and could erode the company’s revenue stream, including customers and market share.
Instead, businesses could benefit immensely from identifying and securing professional assistance. Succession planning can then be conducted in a thorough manner, without disrupting the future of the business or its legacy.
Determine the qualities of the successor; address ownership
Succession planning should also include business ownership in its domain. This translates to identifying issues that surpass just business management concerns. For this reason, determining a successor becomes a key factor in the plan. Founding members may look for someone most similar to themselves; but this need not always ensure a successful succession plan. Instead, owners should look at the contemporary business environment and look for qualities in the successor that will carry the business forward in current times.
Design a selection plan/process
Unless the business is passed from family generation to generation, a rigorous selection process is required to ensure selection of the right candidate for the position. Consider designing a test that can assess strengths and weaknesses of the potential leader, and administer it to key employees of the business. The exam should not test just leadership qualities; it must also capably assess the candidates’ adaptability and creativity and whether they can maintain and develop the legacy of the accompanying business.
Also, succession plans do not require in-house successors. If needed, keep your selection circle open. Hire professionals who can assist in identifying and hiring the right candidate from outside the business.
Make a decision and inform employees about it
Succession planning may begin with much enthusiasm but may lose momentum if the business owner chooses to defer completing it until a later time. If needed, revise and review selection criteria as well as the final decision; however, establish a realistic selection date, as well. After conducting the search, commit to making a decision to avoid negatively impacting morale across the business. Without the perceived consistency of a leader, employees may feel rudderless, impacting overall productivity and the company’s bottom line.
By considering the above tips, you have taken the first steps in creating a successful succession plan.