"A leader’s lasting value is measured by succession" - John C Maxwell
Every company must prepare for the future and this preparation lies in the succession planning process. Effective business succession planning has two components; having an understanding of how to motivate and retain key staff within the business and building the internal capabilities to ensure that it isn't reliant on any specific individual.
Succession Planning
When a key employee leaves or retires, a well-prepared business will have somebody trained and ready to be the replacement. One of the rarely talked about crucial skills of a good leader is the ability to identify the key roles in the business and make sure there is at least one replacement member of staff ready or nearly ready to take over each key role. Even in small businesses where there are fewer staff with bigger areas of responsibility, it is important for business owners and managers to identify key skill areas that other members of staff can be trained in, to make sure if somebody leaves, there isn’t a significant skill gap left behind.
An excellent analogy is a premier league soccer team, where there are likely to be 17 or 18 regular first-team players. The manager must make sure that every position can be covered if there are injuries to one of the regular 11 team members. This means that there must always be players who have skills in positions that are not necessarily their normal ones and that there are no skill gaps on the field.
Related: Why a Succession Plan is Essential for your Business and your Family
The other role of succession planning is to motivate and retain key staff within the business, by ensuring they know they are building the skills to give them new opportunities and roles within the organisation and that they know the business is thinking about their future. The best staff are the ones that are most important to keep and by ensuring they know where they can go and that they are being given the skills to get there, they will be clear about where their opportunities lie and what direction the business is going and how they have a long-term opportunity to fit into that.
A succession plan should include a working document and evolves with the people and the business as they grow and develop, and the business evolves and grows. It is highly likely that the requirements of the business and the skill sets of employees will need to change as the business grows and evolves. Markets and customers change, and all businesses must respond to those changes and make sure they have the products and the people with the skills to satisfy changes in market dynamics and market demand.
6 Key Steps to Effective Succession Planning
When building a succession planning strategy for your business, there are six key steps that, if you follow, will make your succession plan useful, realistic, and a relevant working document that will benefit your business.
Succession Planning Process
1. Identify company goals and position
Identify what your company does, what its proposition is, what the future looks like, what its key goals are and what is its raison d'être. If you can identify all those things, then you are in a much stronger position to identify who the new leaders should be, what skills they need to have and what they need to learn.
2. Assess the business' whole workforce
It is important to assess the whole of the business’ workforce to identify key employees, key job roles and key skill and resource gaps. When looking at the workforce, it is not just the senior managers, but the whole business that needs examining to ensure that every member of staff is included in the review and to look for the key roles and the key members of staff at every level and every area of the business.
3. Decide on a Succession Plan
Every business is different and that means it is likely that every succession plan will be different. Deciding the right succession plan for your business is choosing the one that fits your business best and will continue to fit your business as it hits your targets for growth and expansion. To do this, every business owner or business manager needs to decide whether they want the succession plan to be for everybody and every role in the organisation or just for the senior team and other important positions. Once this is decided and the succession plan developed, it is crucial to work out how to make the plan work, for example; "Will identifying and developing successors be part of all manager’s job descriptions and will their delivery be part of their performance review?".
The succession plan must also consider any area of potential future problems. For example, a large proportion of the workforce in a particular area of the business may be close to retirement age or the business may be growing in an area that requires a specific skill and there are very few people in the organisation with that skill. These types of short-, medium- and long-term challenges must form part of the succession plan and must be dealt with by affirmative action as early as possible. Finally, the succession plan must focus on the end game for the business and what the outcome for the business will be. The succession plan must keep and grow the knowledge and skills within the business, that are essential for driving the business towards its goals.
4. Identify current employees who would be suitable successors
Once the succession plan has identified the key positions and job roles, the business owner or the management team needs to identify two or three current employees who would make a suitable successor for each of those roles. This must be an objective and dispassionate review of the skills, knowledge, emotional intelligence, and attitude of all staff, with no sentiment or personal views coming into the decision-making. If you don’t find the necessary high-achieving, adaptable, problem solvers with high social and self-awareness as well as reliability, loyalty, and creative inspiration within the business, you should start looking for them externally or look at the more junior staff within the business, who have the right attributes to be stars of the future and ensure they are fast-tracked.
5. Engage in discussions with your employees
Deciding whether employees are the key role holders in the future is up to them as well as you. So, talking to all the employees and understanding what they want in their jobs and careers, as well as their longer-term ambition as well as the development they believe they need, is critical to building a robust succession plan. A transparent relationship with staff about their performance, expectations and the reality of opportunity and the number of resources the business will put into developing them into the key roles you will want them to fulfil, is crucial if the succession plan is going to be delivered.
With a good plan, and a transparent and honest relationship with the staff at every level, staff retention will be high, and the company culture will be stronger as employees will have a clear view of where they are within the business and what opportunities are available to them. Obviously, not every member of staff will be part of the succession plan, but many still have a very important role to play in the success of the business, and creating a succession plan will give a clear view of how staff expectations and long-term motivation and commitment will need to be managed.
6. Ensure all employees feel valued
You need to realise that if three people are in the frame for every critical role, two of them won’t get it. The definition of progress, success and achievement might need to be redefined by the business and in the minds of employees. The employees that you want to retain who do a good job every day for the business but are not the stars of the future must feel valued by the business. If these employees can’t be promoted, they still need to feel great about working hard every day and improving. These employees must be developed with the same level of commitment as the stars in the succession plan and they must be made to feel equally important as the senior staff and be recognised and developed to keep improving in their job role and that they are recognised and valued by the business. This is a big challenge for many organisations but the succession plan should focus the business owner or management team on all the staff and not just the senior team of the future.
Succession Planning Consultants
Azure Group understand that succession planning is crucial in facilitating financial security and preparedness, business structure, leadership and employee motivation. Our corporate advisory team are able to consider every facet of the succession planning process through our holistic service offering, get in touch with our succession planning consultants to learn more!
Have you noticed our #FridayExpertTips... here's one that relates to #Succesion Planning
"As a business owner, there will come a time when you start thinking about moving on and exiting from your business. Regardless of your reasons and the strategy you choose, you will undoubtedly improve your outcome if you seek professional advice along the way. Succession planning and timing your exit is essential in gaining the best outcome for your circumstance."