Succession planning – for any business of any size – takes time and careful thought. As an owner, you need to find ways to manage risk, explore possibilities and develop an exit strategy for yourself.
Your exit may be gradual, over a period of months or years as you step back from your day-to-day role. Or it could be more sudden, sometimes through circumstances beyond your control. Regardless of the time frame, you want to be assured your legacy will continue, and your family’s financial security is protected.
If your exit strategy is not selling the business, you want to protect your investment by making sure the future leaders of your business can sustain the success and profitability into the future. Therefore, in addition to working out the financial aspects and getting advice from trusted experts, much of your planning will focus on people and their skills and abilities.
Your goal is to be able to step out of the day-to-day role of leading your business and enjoy your hard-earned ‘retirement’, with confidence that your business will thrive (I say ‘retirement’, as you will continue to have a hand in the business somehow, right!?).
To do this, you need to look at your current top performers but also identify employees who have the potential to grow in various roles so that you can develop talent capable of leading your company to future success.
The more time you have to prepare, the better, because your organisation will only be stronger if you identify and take advantage of the skills your employees have now while also looking for skills you may be missing when hiring new talent.
Just as selling a business has a proven process for success (valuation, marketing etc.), identifying and developing future leaders of your business can follow a set of reliable succession planning steps.
The first of these steps is to identify the skills and knowledge needed to run the business. This is a bit like doing a job description for yourself, and this is not easy to do. Get some help… an expert or a tool that will make it easier and more accurate to document your job.
Second is to have a reliable way to evaluate the skills and capabilities of your current staff. Just observing them ‘on the job’ is not sufficient. Use a more structured approach to remove any bias or inaccuracies, and perhaps uncover hidden talents of your people. Importantly, this assessment is not just about the industry or technical knowledge. It is about leadership and relationship management.
Our Accru office in Adelaide has developed and uses a Leadership Radar tool to assess the leadership impact of people in a business, and provide coaching to strengthen leadership skills for better business performance.
Depending on company size, you may want to consider using succession planning software to help improve your team, grow your business and create your exit strategy. Many companies now use planning software to help track, analyse and evaluate the performance of their employees.
From the first two steps, it is likely you have identified a couple of prospective staff who can step up to run your business.
The third step is to design and implement a plan to close the gap between the requirements of being ‘the boss’ and the current capabilities of the candidates for higher leadership. It can transpire that there is no single person that can fulfil all the requirements (yes, you are unique!), and leadership duties may need to be shared to tap into the best each person has to offer.
This plan to close the gap is likely to involve development plans for key staff, including mentoring, exposure to new tasks and perhaps even formal training. In some cases, there is a gap that cannot be filled by current staff, and this identifies a need to recruit into the business for the future.
The key to success with these three steps is to recognise that you are not the first owner to go through this process. There are tools and support available to negotiate this transition.
Need to build a strong succession plan for your business? Contact us to discuss options.