What Is Holding You Back from Succession Planning?
So, what is succession planning? It isn’t exit planning. Exit planning is the preparation for the exit of a business owner from his business. It is a comprehensive analysis identifying what impacts a business owner and his goals and identifies the specific steps necessary to meet those goals. The goals include not only the business but family and community. Exit planning generally spans several years prior to a business owner’s planned exit.
In contrast, succession planning focuses on the human capital within a company. It is a systematic approach to ensuring continuity of leadership, knowledge, and expertise within an organization by developing employees and recruiting new talent to meet the future needs of the organization. It is having the right people, in the right seats, at the right time, doing the right things. A true succession plan includes not only all leadership positions but key knowledge roles such as those with technical, product and creative expertise critical to an organization’s ongoing success. Unlike exit planning, succession planning is an ongoing process that takes place year over year.
A strategic succession plan, well implemented, is a powerful tool. It helps in assessing your talent pool to make sure employees are being developed to support the future needs of your business. For most companies, filling open leadership positions with internal candidates is an advantage because these employees have institutional knowledge of the company and appreciation of company culture which doesn’t come with an external candidate.
Roadblocks to Succession Planning
Today, 58% of all small businesses don’t have a succession plan. So, why do so many small businesses not have a plan? I have found three main reasons why companies don’t have succession plans.
The first is the business owner doesn’t have a plan for what he or she will do after exiting. What on earth will he do after years of building the business? The business has defined him. Without the business, who is he?
How do you know if you’re ready to be replaceable? My experience has shown business owners are ready to become replaceable when they have a plan.
The second reason small business owners don’t have a succession plan is they don’t have the systems and processes to drive a succession plan such as a development planning process, a performance management system, a core competency model, and a clear understanding of what leadership potential means in the organization.
The third roadblock to succession planning is focus. Many small businesses are easily distracted with the daily urgencies of business and aren’t disciplined to create and execute a succession plan on an ongoing basis. I have found those who create business plans using systems like Verne Harnish’s Scaling Up or Gino Wickman’s EOS® are more prepared to take on succession planning. Both business planning and succession planning are ongoing processes requiring discipline and an executive sponsor. And in my opinion and experience, a business plan is not complete without a succession plan.
If you are one of the 58% of business owners without a plan, who have planning and execution discipline, now is the time to be proactive and create your succession plan. Make a commitment to the process, put a succession planning team together to develop and implement your plan, and communicate your plans to the company.
Beth Armknecht Miller is CEO of Executive Velocity, a top talent and leadership development advisory firm. Beth is a trusted executive consultant, Vistage Chair Emeritus, and committed volunteer. She is certified in Myers Briggs, Hogan, and Business DNA. And, she is a Certified Managerial Coach by Kennesaw University. Beth’s insight and expertise have made her a sought-after speaker on hiring, leadership development, and succession planning. Her book, “Are You Talent Obsessed?“ was published in 2014 and is available on Amazon. She is a frequent contributor to Entrepreneur Online, About.com, and TalentCulture to name a few. She is a graduate of Babson College and Harvard Business School’s OPM program. To learn more about Beth www.Executive-Velocity.com .
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