You are trying to build a company that will last the test of time. That means preparing for every potential scenario and fostering an organization that isn’t dependent on any single person to thrive. To achieve that lofty goal, you need to have succession plans in place, creating a structure that will keep your firm moving forward.
Despite its importance to long-term planning, many organizations skip this key process. One study found that just over a third of organizations (35%) have devised a formal succession plan. That leaves most firms vulnerable to potential turmoil if an unexpected event roils their org structure.
Don’t let that happen to you. Take the steps necessary to secure your future. With that in mind, here are some critical aspects to consider as you prepare a succession plan for your company:
Why You Should Create a Succession Plan
Succession planning can involve unpleasant discussions. Death, sudden illness, scandals, unexpected departures — many of the triggers for these procedures involve traumatic events, the kinds of incidents that people would rather not think about.
However, this process should be a normal part of your long-term planning. Here are some of the reasons why a succession plan represents a critical endeavor:
- Secures Continuity: Make sure unexpected events don’t lead to infighting or turmoil. A succession plan raises the chances that a smooth transition can occur in any circumstance.
- Provides Comfort for Key Stakeholders: Reassure those around you. From employees to investors to vendors, the existence of a solid succession plan underscores your organization’s stability.
- Gives You a Chance to Review Your Leadership Options: Succession planning provides an excuse to look around and assess the talent you have available. You can evaluate your leadership bench and consider possible holes in your team.
- Avoids Emergency Decision-Making: Panic decisions don’t tend to be good ones. Side-step this necessity by making difficult decisions in a calm, considered manner, well before they become a pressing issue.
- Helps with Executive Retention: Your best performers will be ambitious. To keep them in the fold, you need to let them know they are valued and have a future in your top leadership ranks.
How to Create a Succession Plan
Now that you understand the importance of succession planning, you can start thinking about the process itself. Having a well-structured procedure will help you make the right decisions for your company. Here are some steps to consider:
Building a succession plan means you need to understand the details of your organization and the options you have available. That means gathering intel.
Many small businesses have a sloppy org chart. What does yours look like? Succession planning gets easier when you have clearly drawn responsibilities and a well-constructed organizational structure. As part of your information-gathering effort, assess your process of oversight and determine if changes need to be made.
In many ways, the impact your best executives have on your business is hard to sum up in a tidy job description. However, if someone else needs to step into those roles, that’s exactly what needs to happen. Determine the structure of each responsibility and who would be best suited to take over in an emergency.
Consider Your Candidates
Review the people you have on your team. Identify the ones that will thrive at higher rungs on the corporate ladder. If you find yourself lacking in some areas, start a process to recruit your next generation of leaders.
Communicate with Those Involved
Keep the lines of communication open. Some succession decisions can be sensitive, so full disclosure isn’t always necessary (or wise). However, once you’ve sketched out a potential succession plan, make sure it’s accessible to key personnel.
Create a Schedule for Review
Your succession plan shouldn’t remain static. Your team might change over time, and conditions could evolve. As such, schedule regular reviews. Making the process routine will take some of the emotional stings out of the event and ensure you have the best plan in place at all times.
Looking to Set Your Organization Up for Success in the Long-Term?
A succession plan helps you prepare for any circumstance. That goal is also served by building a flexible funding plan. A strong financing partner, like Frontline Funding, can give your business the security it needs to thrive into the next generation.
Contact Frontline today to learn more.