Selecting Your Heir Apparent – Take Succession Planning Seriously
Contributed by Matt Sauer, Chief People Officer.
Whether you have a set time period for your exit or nothing on the horizon, it is always a good idea to be working on your succession planning and selecting your heir apparent. While it can never be too early to start working on this, you don’t ever want to be in the situation where it is too late.
Succession planning for your heir apparent includes taking a future look at the company to determine the talent that will be needed to run the company 5 and 10 years from now. It goes beyond the selection of who will run the company upon the current CEO’s exit, but also who is the leadership team to support that CEO and how is the organization set up for success.
Think Ahead 36 Months
Succession Planning is a process for keeping experienced employees in the organization, so the business will continue to grow and prosper, with or without the current CEO. It is generally a 12 to 36 month process of preparation and should be an ongoing process after that. Succession planning can be a valuable tool to smaller organizations that have limited resources, and must rely on cross training the existing talent to perform well in many different positions, especially when so much of the knowledge base and leadership is centered on the owner/CEO.
Cross Training Isn’t Just for Athletes
While positions can be unique to the organization, as a part of succession planning, we should be looking at ways to cross train employees to ensure a seamless movement of talent within the organization so we are prepared for the unexpected at all levels.
A reduction in the learning curve for almost all positions can be achieved if much of the knowledge that is gained by experience could be passed from one generation of workers to another. With succession planning, job sharing can occur concurrently between the worker and the potential successor, giving the successor the unique opportunity to gain useful skills and knowledge without a long, on-the-job learning curve. In addition, succession planning will substantially decrease the need for formal training programs, and the resources they consume to recreate the learning opportunities. Succession Planning will also increase employee engagement and thereby improve employee morale which will increase employee retention. Engagement and retention are cornerstones to an organizations success.
Succession Planning over the longer term will provide the CEO/Owner the opportunity to view employees in functions that they were not hired for, thereby demonstrating their future value to your company. You will be able to identify the best and the brightest within your organization and move them to positions that can help you increase productivity, thereby increasing revenue.
Guidelines for Succession Planning
We have had a few clients recently who have had to make sudden decisions and changes in their infrastructure due to the departure or passing of someone at the executive or ownership level. This is not a decision or process anyone wants to be rushed through nor make it from the limited options available at that time. To get the ball rolling, we have put together some basic guidelines to help you get started on selecting your heir apparent:
- The selection of the heir is the responsibility of the business owner
- This process should be part of your strategic business plan
- It is never too soon to start planning for your replacement ; no way to know what tomorrow holds
- Create a process that looks at what matters to you and to the future success of the company
- Financial acumen
- Customer relations
- Employee Relations
- Promoting the company and products
- Knowledge of the industry
- Consider your successor from family members; one of the management team; or outside the company
- This change should be for the benefit of all employees, family members, customers, suppliers as well as for you
- While a new leader always involves a change in management, it can also involve a change of ownership
- The selected person will not run the company exactly like you did; expect and embrace that
- The heir should be able to build upon what you have accomplished, and take the company up to new levels
- Consider the needs of the business not just for today, but with more focus on the future
- Seek advice from your trusted advisors to assist in your decision; Attorney, CPA or long time business confidante
- Remember, the final decision should be yours
- Write a plan on how and when this is going to take place
- Use milestones for the transition, not specific dates
When appropriate, communicate the decision. Explain your choice; eliminate the whispers in the hallways and warehouses
Next step, documentation. If it isn’t in writing, it doesn’t exist. One of the more common documentation methods is a simple notebook or Word file. Put the person(s) picture on the page following by:
- What are their current skill sets?
- What skill sets will they need to move into the next job (or your job)?
- What are the gaps/what do they need to develop?
In most cases, no one will be ready to step into your role tomorrow. Use this simple method and review weekly to ensure you are both doing what is needed to have them ready when the time comes.