In today’s fast-paced world, employees at any company are always coming and going, creating a perpetual ebb and flow. With this, the organizational structure is in a constant state of flux. Roles get shuffled around, departments are restructured, and reporting lines adjust.
Succession planning is the process of identifying important positions within the organization and creating a talent pipeline by preparing employees to fill vacancies as team members move on. However, effective succession planning is about more than just filling open roles. It’s also about planning for the long-term continuity of a business, including an exit plan when the current owner leaves and creating steps for achieving the business’s lasting goals.
Here are a few best practices for creating an effective succession plan strategy:
Don’t focus too much on personality evaluation when considering organizational structure.
Generally speaking, we advise avoiding the tendency to exclusively select a successor who has a similar personality or behavioral attributes as the predecessor. While personality traits can offer valuable insights into individual strengths and work styles, relying solely on personality traits runs the risk of overlooking other crucial long-term success factors such as skills, experience, and growth potential.
Look for a candidate who would be a long-term investment and exhibits characteristics of adaptability, core value alignment, and who seeks to climb ranks within your organization.
Do look for growth in positions within your organization.
Instead of laser-focusing on your current employees and roles that would fit them, think more about positions you’d like in your organizational structure at large and finding the right talent to fulfill those placeholders. Focusing on qualified positions rather than specific people allows you flexibility in the face of inevitable turnover.
However, we don’t want to negate your current team. When thinking of succession planning with your workforce today, start by identifying your company’s critical positions and its high-potential candidates. Prepare a gap analysis of the skills possessed by those individuals compared to the skills considered necessary.
After this analysis, you can create a development plan for high-potential individuals. Developing leaders within your organization not only makes it stronger but also provides growth opportunities.
Don’t overlook external candidates.
When looking at your organizational structure, it’s easy to focus on promoting your current team alone. However, as mentioned above, creating positions to fill vs. filling exact shoes makes for a better transition when an employee leaves the organization.
While running a family business or other tight-knit culture may allow you to transfer your company to a well-groomed inheritor, that’s not always the case. Sometimes, it’s wiser not to limit your candidate pool to your current employees. As you create space in your organization for new talent, you invite expertise and experience your team does not currently possess. This can mean big things for your future business growth.
Do follow the standard steps for succession planning.
The fundamental elements of succession planning include prioritizing the development of future leaders, identifying high-potential candidates, assessing your current situation, and mentoring your team to create an environment in which everyone can thrive.
Read our article, 6 Basics Steps for Succession Planning, to learn how to achieve these best practices and more.
Don’t forget to loop in key stakeholders.
Creating an effective succession strategy entails more than just internal planning; it requires the active involvement of key stakeholders.
Engaging stakeholders from various levels and departments fosters buy-in and support, enhancing your succession plan’s overall ease of transition and implementation. Moreover, involving stakeholders early on enables the identification of potential gaps or challenges in the succession plan, allowing for proactive solutions and adjustments.
Develop a list of major stakeholders who may be impacted by the transition — such as senior leadership, board members, and department heads — and decide how and when they will be notified.
Don’t wait until you’re ready to exit your company before planning.
Succession planning shouldn't be something you start when you are ready to exit the company; instead, it should be an on-going process ingrained in the organization's culture.
Waiting until the last minute to consider succession can lead to rushed decisions and inadequate preparation — risking disruptions in leadership continuity and organizational stability. By proactively engaging in succession planning early on, businesses can identify and nurture potential successors, grooming them for leadership roles over time. This approach allows for the seamless transition of key positions when the need arises, mitigating risks associated with unexpected departures or retirements.
Do rely on expert advice.
Don’t complicate the process; you’ll be less likely to actually plan if you do. Instead, utilize quality succession planning advisors — such as an attorney, accountant, insurance agent, and wealth advisor — to help ensure you properly plan for your needs and objectives. Your company’s future is not something you should carry on your shoulders alone.
Transition & Exit Planning Services with Kreischer Miller
Succession planning strategies like these help to ensure you are prepared for inevitable changes as your organization grows and employees come and go.
A lot goes into long-term transition preparation, including successor development, board structuring, exit strategies, and more best practices.
Plan for your and your company’s lasting success with Kreischer Miller. Our advisors can assist with all the above Transition & Exit Planning services and beyond.