Succession Planning in a Business
DID YOU START YOUR BUSINESS WITH THE END IN MIND?
When should a business owner start their succession planning? The answer is that the best time to start the planning process is the day the company opens its doors for business. Just like marketing, operations and sales, succession planning is an integral part of the strategic execution process in a business: it connects directly to the long-term goals and objectives of the company, it is often overlooked, but it is a powerful risk mitigation process.
Before discussing what succession planning is, we need to clarify what it is not. Succession planning is not replacement planning which is characterized by a focus on an immediate need to fill a vacancy: selecting the best candidate at the time by assessing available qualified candidates. Replacement planning addresses a short-term need, period.
Succession planning is about the long term, putting the right people in the right seats at the right time, to ensure the future success of the business, regardless of whether the owner(s) are actively engaged in running the business or not. A natural consequence of the succession planning process is that provides for the capture, transfer and maintenance of key institutional knowledge and processes that could otherwise be lost, and it addresses how to deal with unexpected vacancies that may occur.
THE UNEXPECTED SUCCESSION EVENTS
When engaging in strategic planning I would suggest that most business owners may consider the expected events such as the retirement or normal departure of a key employee, but they almost never factor in the unexpected; a death, a disability, divorce, illness of a key employee or even owner burn-out. Succession planning helps to address these unexpected issues when factored into the strategic planning process within a company. We all likely know of examples where a business has been seriously impacted as a result of an unexpected event occurring. Succession planning is a way to prepare for and mitigate the effects of these occurrences.
TALENT REQUIREMENTS
Succession planning is focused on the longer and future-term needs of the company, identifying critical positions and roles that will need to be filled or created. It is approached from an understanding that
critical positions and roles not only have base education requirements, but also skills knowledge and
experience developed and nurtured from within to ensure competencies are developed specific to the company. This also means the company will need mechanisms to identify, select and cultivate appropriate talent to fill those roles. To be effective succession planning must align with the company’s vision and mission, tie into the company’s strategic plan, and use a framework that assures that all factors have been considered, reviewed, and assessed, allowing for adjustment as the plan unfolds.
ALIGNING SUCCESSION WITH OPERATIONAL STRATEGY
Several steps are involved in ensuring that an effective Succession Plan is created, implemented, and managed in the company. The planning process should complement the company’s existing strategic planning process, building on the vision, mission, and values.
Steps:
1. Review the Strategic Plan
2. Identify Critical Positions & Roles
3. Identify Competencies
4. Identify Key Talent, Interests and Gaps
5. Create the Success Roadmap
6. Monitor Evaluate and Adjust
Step 1 – Review the Company Strategic Plan: Nobody gets anywhere they want without a roadmap, and in order to identify your current and future talent needs and to prepare a succession plan, you need to know where you are going: whether it is preparing a company for a future sale, an internal family transition, expansion, acquisition or consolidation, as each goal will determine the critical positions and roles that will be needed to execute on them.
Step 2 – Identify Critical Positions and Roles: The company needs to create a listing of every job within every function (sales, operations, accounting, HR and so on). Once the list is complete you then need to ask difficult questions about each job to determine which ones are critical to the success of the company including questions like (but not limited to):
· If this job were to be left vacant, how would it affect achieving the company goals going forward?
· Does the job require unique skills for a person to be competent?
· How long does it take to become competent in this job?
· Will this job be required in the future?
· What job might we need in 2 years, 5 years?
Once you have answers to your questions, critical positions will begin to become apparent: they will be the ones that you cannot operate without, will impact business success, and which require specialized knowledge, skills, and education specific to your business that takes time (usually years) to acquire. Identify these roles on the company’s organization chart as critical.
Step 3 – Identify Competencies, Education, Experience and Skills: for each critical role you will need to identify and catalogue the hard/technical skills (sales expertise, trades training, education requirements, certifications, writing skills) along with soft competencies (behavioral/emotional intelligence, leadership, attitudes, teachability, habits) that would contribute to success in each critical role. Identify all the necessary specific training needed for each role, along with the relevant experience necessary for competence. Once you have these attributes, create an ideal candidate profile for each role.
Step 4 – Identify Key Talent, Interests and Gaps: Looking first within the organization, identify candidates that are a good immediate fit, as well as candidates who could be a good fit given enough time and training. If no potential candidates exist internally, or the need is urgent, you will likely need to conduct an external search to fill the role. Discuss role opportunities with potential internal candidates to determine whether they have an interest in the role. Keep an eye out for potential retention risks while conducting your internal search.
For identified candidates (internal or external) prepare a GAP analysis and map the candidate’s current qualifications against your ideal role requirements. Narrow the field for the best “fit” using the KASHT Formula (Knowledge, Attitude, Skills, Habits and Teachability). For the final few candidates consider performing some form of behavioral/leadership trait assessment to determine whether they have requisite emotional/behavioral aptitude and temperament for the critical role. Ensuring that you have the best candidate goes beyond education, skill, and experience; they must be a fit culturally as well as emotionally/behaviorally with other team members.
Step 5- Create A Success Roadmap for Talent Development: Using the GAP Analysis create a roadmap for each candidate to develop the requisite training and build on skills and experience to become competent and successful in the role within the required timeframe, including:
· Assigning appropriate mentors/trainers,
· Provide position appropriate projects to complete under supervision, and
· Provide the necessary soft skills training and education to allow for success in the role (leadership, change management, effective communications and so on).
· Ensure all activities, milestones and success metrics align with the company values, and build the role success scorecard to support this alignment.
Make sure that any plan provides for cross training in each role, and that a back-up plan is put in place should a candidate not meet expectation, or should they depart the company.
Step 6 – Monitor, Evaluate and Adjust: As you mentor candidates through the development roadmap, ensure that you provide appropriate time and space for critical, and timely assessments to ensure they
meet both your and the company’s expectations.
Create appropriate metrics to gauge a candidate’s development against the mile-stones identified for success in their role. Ensure that you periodically check candidate progress to ensure there is continued alignment with the company strategic plan and company values.
Should any adjustments be made to the Strategic Plan, these must be reflected in a candidate’s development roadmap as well.
Business owners know nothing ever works out according to the original plan but if they want to make sure that their business is prepared for the future, they should recognize the need for a plan to address succession, sooner rather than later.
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