Every day, there are stories in the media discussing the importance of succession planning, yet many of us business owners aren’t paying heed. According to a global study released by Korn Ferry International, “40% or less of organizations today have a capable CEO-in-waiting.” Also, according to a report released by the Canadian Federation of Independent Business (CFIB), four out of ten small to medium-sized business owners intend to retire and exit their businesses within five years. This number is expected to increase to seven in ten over the next ten years. In addition, the CFIB report states that only 35% of these business owners has any type of succession plan. What I find most troubling about this is, those who do have a succession plan, most often have an informal, unwritten plan that has not been shared with the intended successor!
So, do we really need a succession plan?
Yes. Take a look at what McDonald’s experienced in 2004. Their CEO, Jim Cantalupo died suddenly of a heart attack in early 2004. Because they had a solid succession plan in place, Charlie Bell was named CEO the next day, and their stock price rose — because this incredibly smooth transition, in the face of disaster, calmed the investment markets. (If they can handle this type of crisis with such aplomb, they certainly can handle other business issues well too…) However, Mr. Bell was diagnosed with terminal cancer in November and died shortly thereafter, so Vice Chair Jim Skinner took over as CEO. Again, this transition had minimal disruption to the corporation in the face of yet another tragedy.
OK, but does this apply to you and me since our companies are far from being global enterprises like McDonald’s?
It applies to us as well. This is not an exercise reserved for the large conglomerates. What would happen to your business if you were involved in a tragic accident after you left work today? You are injured so seriously – or worse – that you will never return to work. What will happen to your company? If your answer is: “My business would close” or “I don’t even what to think about that,” you need to think about succession planning. I’ve experienced personally and professionally, sudden tragic losses of family members, business colleagues, and friends because of illnesses and fatal accidents. No one likes to think about tragic situations, but they do occur and it’d be nice to allow your business to continue to provide for your employees, customers, and vendors alike.
However, succession planning need not just address the tragic situations.
It most often addresses the natural attrition of staff. We baby-boomers are edging ever-closer to retirement. We hold most of the senior spots in management and other key positions within our organizations. Who are we training as our replacements as we and others on our team retire, move into new positions, or leave our organizations? Succession planning also, is not an exercise to just focus on the top spots. It’s also an exercise to ensure that key positions throughout the organization have replacements in-the-pipeline learning the ropes and gaining relevant experience so they can take over when we and others leave.
If I’ve made you a believer on its necessity, here are a few Succession Planning pointers to make this project a bit easier and more successful:
- Ensure the CEO/Senior Management team is intimately involved and supportive
- Link the Succession Plan directly to the Strategic Plan
- Continuously monitor the Plan and the development of staff in-the-pipeline
- Combine work experience, training, mentoring, special assignments, and web-based activities for future organizational leaders
- Keep the plan as simple and straight-forward as possible
If you’ve taken the time to plan your company’s finances, marketing efforts, production practices, and sourcing tactics, why haven’t you planned for its future staff and leadership?
It’s time to start your next big project: Succession Planning.
Copyright MMV – Liz Weber, CMC, CSP – Weber Business Services, LLC – www.WBSLLC.com +1.717.597.8890
Liz and her team work with leaders to create focused plans for their organizations’ future. Then they work with the leaders to ensure their plans are implemented effectively.