Management succession planning is more important today than ever before. Global competition is fierce and succession planning mistakes a successful business could absorb only a few years ago can absorb the business completely – hardly leaving a wet spot.
Not only is competition an issue of great contention – the business landscape in general has changed in so many ways, making effective succession planning far more difficult than it was just 10 years ago. Not more difficult from a technical perspective or for that matter even a taxation related point of view. But more challenging none the less.
For family owned companies, who account for over three quarters of all businesses, effective succession planning is often very tough indeed, because personal feelings come into play.
Hiring a consultant is a good way to get a neutral viewpoint, to get a start on the process and even to get someone who can tell the next generation of future owners how you really feel about their chances of success running the business you’ve built.
A good consultant will help owners identify potential talent or verify that the talent is actually there – something often very hard for the owners (fathers, mothers, aunts, and uncles of the next generation) to do when their feelings get out front of their objectivity.
Even though it may be your style to sort of make it up as you go along, when it comes to management succession planning you need to be sure that the information you are relying on is up to date. Books about management succession planning from 5 or 10 years ago will be out of date.
Just consider how the tax code has changed, how much your company’s value has changed, and how much interest rates have changed over that period. Whatever you thought would work before needs going over with a very sharp pencil – if you want to be sure it will still have the results you are after.
If you decide to hire a consulting firm, choose a young team or at least one with a couple of young members. Experience may be important, because of the real-life insights that come from having seen management succession plans through from conception to creation to implementation. But being “in touch” with today’s specific challenges is just as, if not more important.
Many organizations are feeling the effects of an aging workforce. It is as true today as it has ever been that in almost every case the business owner has key employees within ten years of their age – people they have grown up together with in the business. This is often referred to as the “bridge” group – the key players in the organization whose experience mirrors that of the founder and whose age creates a bridge between the founder and the successor generations.
A staggering number of these employees are ready to retire or will be within the next 10 years. Those employees will take with them something very valuable; wisdom. Effective succession planning requires the head of the organization to be able to identify someone that can easily step into their role. That can be challenging. A neutral eye can help with that, too, even when the business is not family owned.
Increased competition within your industry has made it harder to find and keep talented employees. That’s particularly true in technical fields. Headhunters abound. No team member should be irreplaceable. There should always be someone willing and able to step into that position, in the event that an employee suddenly finds a better offer at another company.
Management succession planning almost requires a crystal ball. You may know what your current needs are, but how will that change in the future. There may be some team members that are no longer necessary or may become unnecessary over the next 10 years. Identifying those positions and thinking about ways to redistribute that employee’s duties may be all that you need to do.
Many online tools and software packages are available to help you “see” what’s going to happen, or at least, what is expected to happen, over the next two decades. Effective succession planning can ensure that your business will continue to be successful in the future.
Procrastination is one thing that you cannot afford. Let your management succession planning start today.
Successful management succession is the key to achieving what the founder – whether it is you, your father or mother, or your grand parents, even your great grand parents had in mind when the launched the business in the first place.
When the business is successfully passed down to the next generation and the next and the next – all the faith, hope, and sacrifice that made it possible has been worthwhile.
That success, just like the successful founding and managing of the business is the result of making more good decisions than bad ones over the years.
Both business owners and their team of succession planning professionals understand that making good decisions today will keep the business on track for the future. Success comes from making better decisions. It’s that simple, not easy to do on your own however. In fact the most successful leaders and family business consultants among us, in every walk of life, systematically reach out to their hand-pick board of advocates and supporters for insights and advice.
You can have the same tools for creating your own management succession process and board of advocates who will collaborate with you at no cost whatsoever.
Simply watch the very short video.