“A clear vision, backed by definite plans, gives you a tremendous feeling of confidence and personal power.” – Brian Tracy
From Brian Tracy to Tony Robbins to Napoleon Hill, nearly every great personal-development coach will tell you that the most successful individuals rise in life due to their outstanding propensity for planning.
Although the future is always unknown, planning at least gives us the opportunity to anticipate what is to come so that we are always ready to make the most of each moment, thus maximizing our efficiency. By thinking ahead, we are also able to get ahead, which gives us a strong competitive advantage in the market.
With this in mind, it’s clear that every ambitious organization should make planning a priority. While most businesses emphasize planning in the short term, few take the time to truly consider and implement long term goals.
One of the most important ways to prepare for the future is through succession planning, a process that ensures your next generation of leaders are capable and that their transition into power is seamless.
Although it can be difficult to think about the future when there are so many pressing needs in the present, there are many compelling reasons to start succession planning early.
The Importance of Succession Planning
Inevitably, every CEO will leave their company eventually. But even with this knowledge, a recent study revealed that only 54% of boards are training a specific successor, and nearly 39% have no viable internal candidate to promote when the situation arises.
This lack of preparedness can come at a big cost. In fact, large companies that undergo forced succession lose an average of $122 billion in market value. Furthermore, the longer it takes a company to find a new CEO during a succession crisis, the worse that the company performs compared to its peers.
When it comes to succession for family businesses, the outlooks are even worse. Over 80% of family businesses have no succession plan in place, which leads around 70% of family-run businesses to fail or be sold before the second generation takes over
It’s easy to see that through proper succession planning, an organization can easily get ahead in the marketplace. For that reason, it’s imperative for all companies to make succession planning a priority if they hope to stand out.
How to Plan for Leadership Succession
If managed properly, succession planning can be broken into small, easy tasks that will save you time and stress in the future. This process should typically start at least one year prior to the day that your incumbent executive plans to leave.
Although every company is different, there are some general guidelines for succession that your organization can follow.
Find the Right Advisors
Succession planning can be a complex and intricate process that requires taking an objective look at a company. For that reason, it’s important that organizations employ outside consultants as they prepare to take on their next generation of leaders.
This need for advisors is especially prevalent in family-run businesses, who often have a harder time analyzing their needs objectively due to internal politics driven by close family ties.
These advisors can come in the form of a board of directors or an executive search firm who can provide clear advice that is tailored to your unique needs.
Establish a Vision
After securing trusted advisors, they will be able to help you review your business’ performance in the past and present. Throughout this process, your advisors can also help you to take stock of your team, looking at each employee’s strengths and weaknesses.
Based on this analysis, you will understand the ideal qualities and core competencies that are required to drive your organization towards greater success. Together with your advisors, you will be able to put together a realistic vision of your ideal leader.
Communicate Your Plan
Once you know what you’re looking for, it’s best to inform your staff that you’ve initiated the search for a successor. This will serve two key purposes: first, it keeps your employees in the loop so that their questions or concerns about the process can be addressed. Second, it gives members of the staff the chance to step up to train for the position themselves.
Promoting from within is typically better than hiring externally. This is because internal hires are more able to seamlessly preserve the corporate culture. They will also be more familiar with how the incumbent ran the business, and thus be more capable of emulating their leadership style, making the transition less jarring.
Hiring externally has its perks as well, such as providing the opportunity to invite new ideas, perspectives, and approaches into the organizational culture. Throughout the entire process of searching for new employees, an executive search firm can be of great assistance.
Onboarding the Next Generation of Leadership
After you’ve informed your staff and initiated your search for candidates who complement your existing core capacities while also meeting your needs, you’re ready to start an in-depth interview process to ensure that you make the right choice
After selecting a candidate, a lengthy onboarding process should be carried out in order to ensure a seamless leadership transition. During this process, the candidate should spend a few months shadowing and assisting the incumbent executive so that they learn the ropes in a hands-on, experiential way. If this grace period is given, the candidate will be able to hit the ground running at full speed as soon as the incumbent officially leaves.
Success for Generations to Come
Even though succession planning can seem like a big responsibility amidst an already packed corporate schedule, partnering with us can ensure that business runs as usual when the inevitable leadership change occurs. We wish you a seamless succession process!
This blog was originally drafted by Executives Unlimited.
Executives Unlimited serves a global roster of clients ranging from entrepreneurial middle market companies to billion-dollar multinational corporations, both publicly and privately held, as well as nonprofits.
With offices in California, Utah, New Jersey and Connecticut, Executives Unlimited provides clients with a nationwide perspective of well-qualified candidates for upper management positions including Presidents, Vice Presidents, Chief Executive Officers, Chief Financial Officers, Chief Operational Officers, Directors, General Managers, and Interim Executives.