All businesses need to have a succession plan in place, irrespective of whether you are aiming to sell your business in the near future or not. Identifying and training individuals to take key positions within the firm can take a considerable amount of time, and it is vital to approach the process in the correct manner. With that being said, read on to discover how to get started with putting a succession plan together.
First and foremost, you need to make sure that all stakeholders are fully engaged. There are a lot of stakeholders when it comes to succession planning, and it is vital to ensure they are brought into the process in a timely manner. A lot of business owners simply present their succession plan to the board once per annum during a board meeting. However, it is better to engage your board from the off so that they can assist with the development of experience and forward-looking skills for the CEO. This makes sure that there are alignment and buy-in in the eyes of those who are going to choose the next leader.
Once you have done this, the next step is to assess the candidates you have internally. In most cases, it is better to choose someone from within your business, as opposed to looking for new talent. Of course, you may have no choice in some instances. Nevertheless, firstly make sure you put together a list of all criteria required, and then have an extensive look at those working at your business. It is also advisable to assess the layer of management, as this will expose you to C+2 candidates, and in some cases C+3 candidates. This process may make you realise how deep or shallow your talent bench is, which provokes the according response.
After you have your criteria in place, you should perform a stress test and a stimulation. The internal candidates you have picked out need to be measured against a more planned succession, i.e. a medium or long-term plan, as well as a short-term emergency time frame. This ensures you are prepared for all eventualities. For example, for financial firms, you need to read up on changes in the industry in order to choose the right person for the right time. You can read the whitepaper here for one illustration of what we mean. For example, someone may be a good candidate in the long-run, once they have received the necessary training in certain areas. But, they may not be ready to go into the role of leader immediately.
You then need to plan for what is going to occur once you have named your successor. This is part of the process that is often overlooked. However, there are mistakes to be made and learning to be done by the successor. You need to take advantage of the time between the successor announcement and them taking on the job. Use this time wisely to give the successor the best chance of taking over your role effectively.
All in all, if you follow the steps that have been mentioned above, you should have the best process in place to put together an effective succession plan. This is something that should not be rushed and needs to be approached in the correct manner.