Whether you’re selling out, in, or just want to hold steady in an increasingly competitive market, everything hinges on solid succession (employee development) planning.
CFO: What happens if we invest in developing our people and then they leave us?
CEO: What happens if we don’t, and they stay?
Popular quote. One I wish were shared by more managers and business owners. But then I wouldn’t be here talking about what happens when there isn’t a solid, employee-driven succession plan at work.
What I see and hear quite often is business owners in pain. They’re tired, they’re frustrated and overwhelmed from the rigors of running their business. And with good cause. More often than not these owners have succession planning out of their exit strategy, hoping instead to sell up, out or internally to their existing management team.
What Happens When the Team Isn’t Strong Enough?
Enormous pressure is put on unaware managers before, during and after there is a management buy-out deal on the table. Once the deal is complete even greater pressures are felt and few are adequately prepared to sustain the stress put on their family, friends and working colleagues.
According to the acquisition specialists at MBO Group, one of the biggest obstacles in becoming an owner is knowing when to step aside and let someone else make the decisions. Just because a manager buys into a company doesn’t mean to say they should have equal say in all decision making.
I recruited one fellow out of a management takeover gone sour because, as he put it, “Life is too short to argue about what toilet paper we’re buying, and when things actually digressed to that level, I knew it was time to get out and get on with my life.”
Done Right, Succession Planning is Your Exit Strategy
A few years ago succession plans were trending heavily with banks and valuation firms foretelling the doomsday impact the plethora of retiring boomers would have on small business. In fact Canadian Federation for Independent Business stated that fully 1/3 of independent business owners, mostly baby boomers, planned to exit their businesses within the next five years.
Today exit plans are taking a new turn, with changes in the economy pushing them out by another ten or more years. Add to that, less than half of the boomers who want to exit their businesses, have any sort of succession plan in place, which hugely diminishes their business valuation. It’s not hard to see where this road is headed.
There is no magic bullet in fixing this problem. Finding and investing in right people late in your business is seldom easy, nor will it be painless. Regardless, succession plans don’t need to be costly or unwieldy organizational projects.
Here’s Our 8 Step Succession Planning Guide
- Start with a valuation of your current business. A succession plan without first knowing where you are – so you can track essential developments – is, well, meaningless.
- Get out your org chart and mark each of the key positions that have real impact ie they significantly contribute to generating profitable customers. From production to finance to sales and marketing, who do you, and your customers, rely on the most to keep things in good working order?
- Under each position, without thinking about who is in the role now, list the top three qualities of most desirable skills for each of these roles.
- On a separate piece of paper, write down the name of each of your high potential employees across the top. Under each name list that person’s unique values and qualities which make them valuable, regardless of the role they are in. Pick one that most stands out about that particular person. Think in terms of where they most add value to your company.
- Now go back to your org chart and see what other roles these high-potential employees would be suited to. Then list the development they need, match them up with mentors or set up outside training.
- Meet with each of these key people, introduce them to the process and analyze their response. Discuss your 5-year plan, what you are considering to offer in terms of their career path, and what you are looking for in return.
- Rigorously evaluate each of your key players to see if any display selfish, protective or siloed behaviours. Coach them up to embrace your vision, or make plans to replace them with people who have the ambition and loyalty to work through what it takes to develop themselves and build your company. At this point you may need to look outside your company, and perhaps even your industry.
- Meet regularly with your teams to listen to and share feedback, revise and reset objectives. Remember to benchmark and then reward each member’s progress and accomplishments.
Beware Putting All of Your Eggs in Anyone’s Basket
Don’t squeeze too many expectations, nor rely too heavily, on just one or two people in your succession plan. Keep two people in mind for developing into any one role, but take it just one person, one role at a time.
Give each person tasks that allow them to experience one or two key elements of the new role at a time. This will prepare them for real game experience and let you see how keenly they step up to the challenge, or not.
Succession planning is a process that everyone in the organization needs to get on board with, ideally sooner than later. There may not be a magic bullet. Yet a workable plan, one that breaks your succession plan into bite-size and manageable pieces, makes every small win add up to one great victory.
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Barbara Ashton is a leading social recruiter with well over 10,000 LinkedIn followers. She has been finding extraordinary talent for BC’s Employers of Choice since 1980.
Ashton & Associates Recruiting Inc. Placing Powerful People. Offices in Kamloops and Kelowna. Barbara Ashton is the President and Founder of Ashton & Associates Recruiting.
Ashton & Associates Recruiting … Helping you hire right. Every time.
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