In this age of the entrepreneur and “self-made businessperson,” it can be easy to forget that all professional careers eventually come to an end. More than once I have seen a successful, visionary leader without a succession plan: a family successor or business plan for post-retirement have to shut down their business, or have it shut down, because they did not have a plan or process to sustain the business after they move on. This situation is a shame- to see all of that value created over years of commitment and hard work evaporate due to the lack of a plan.
Exit and Transition planning is an important part of their responsibility. They owe it to their family, their employees and themselves. Many owners are “battle weary” in this continuing, tough economy, but it’s tough to retire or “semi-retire” absent confidence in the next wave of company leadership.
In these cases, adding to the problem of not having a successor is the situation where the leader/owner cannot retire because he/she needs to rebuild the value of the company to make up for wealth lost in the recession. Having a succession plan does not necessarily solve this issue, but can allow the leader/owner to hand off some of the everyday issues and focus more on rebuilding the future value of the business.
Forward-looking owners and companies have found that establishing an ongoing talent and succession planning process is an effective way to avoid the problems mentioned above. As well, committing to this area yields a number of other key benefits:
- Makes associated promotions, merit increases or other organizational decisions more “fair” and objective, which can help the company avoid related employee complaints or legal actions when the criteria and assessments are documented and fact-based.
- Helps the company assess its employee development efforts; if the company regularly needs to go outside to fill key roles, its employee development efforts may be poor.
- A good process will help the company continually upgrade its organization, including actively developing high-potential employees and “weeding out” under-performers.
- Succession planning is excellent for executive leadership team-building: it’s a great way to validate company values, align around the desired culture and hold each other accountable.
- In a larger business environment, enables participants to look at the business holistically, not just through the eyes of a particular function or Strategic Business Unit. Sometimes the process will surface key new personnel or high-potential performers who otherwise might be unknown to some senior leaders in the business.A well-run process can be an effective way for senior executives to get to know their organization better.
There are a number of ways to establish an organizational talent planning process, from a “back-of-the-envelope” approach to a comprehensive, standardized methodology that is embedded into the fabric of a business’ operations.
Wherever a particular company falls within this range, it is far better to have a process and resultant plan than not to. Done well, succession and talent planning is a systematic approach to:
- Building a leadership pipeline/talent pool to ensure leadership continuity;
- Identifying and developing the best candidates for current or future positions;
- Developing and sustaining and strong organization and accompanying business culture.
The most effective processes tend to have a few things in common:
- Senior leaders in the business are intimately involved and committed to the process;
- Employees are assessed across two dimensions: results and promotability;
- Leadership is compelled to agree on standards for assessing talent;
- The company’s values and leadership competencies are integrated into assessments, re-validating them while making them more tangible;
- They surface explicit development plans for employees, with relevant supervisors accountable for follow-through;
- They surface gaps, weaknesses, or concerning patterns in the organization, enabling senior leadership to gauge organizational readiness to support company strategy.
For many in business, anything related to assessing people’s performance and making associated merit, bonus and employment decisions is as challenging and difficult as anything they do. Some of the pain here relates to a lack of process or a process that is either not fit for use and/or is reactive.
Having a solid process in talent and succession planning, linked to business strategy, company values, competencies and desired culture, cannot only make related decisions less painful but engages senior leadership as a team and with the greater organization. It can become some of the richest, most valuable work that leaders do.
Take the Exit Planning Readiness Test, Listen to Jim Gitney, founder of Group50, speak regarding exit planning About the author: Steve Sharp is a senior consultant with Group50® Consulting and heads Group50’s Strategic Execution practice.
Steve and the Group50 Exit Planning Consultants are all former executives with well-known manufacturing and distribution companies who understand what it takes to put together and manage the implementation of a successful strategic plan and exit plans.
Group50 has designed a series of strategic assessments, workshops and strategic execution tools that drive successful business performance. Call us at (909) 949-9083 or send a note to firstname.lastname@example.org
- 8 Key Components of a Successful Strategic Planning and Strategic Execution Process
- Why Should You Care About Blockchain and IoT?
- Manage Your Business Like You Are Going to Sell It
- The Internet of Things – IoT : Making sense of Its Components
- Digital Supply Chain Technology …… Are you leveraging it to the fullest?
- Case Study in Sales, Inventory, Operations Planning (SIOP) Process Improvement
- Digital Technology as a Strategic Asset
- 12 Purchasing Best Practices
- Group50® Recaps 2018, Announces Addition of Lara Abrams to the Group50 Team
- The Need for Technology Succession Planning