31 Jan What keeps you up at night? How about succession?
The issues that keep us awake at night are the ones over which we feel the least control: health, employment, retirement, money, relationships.
How about changes in leadership? Does that trigger the anxiety button? Someone unexpectedly gets fired, hired, promoted, leaves or dies. For those who have aspirations in their career or rely on a leader for their employment, sudden changes can really hit your gyroscope and distract the company from the core mission of delivering services and products.
Gratefully, you can and should plan ahead and there’s no time like the present to do so. Determining who succeeds us in the leadership of our organization provides peace of mind not just for ourselves but for those we lead including employees and their families. It also creates career paths for younger employees whether it is a supervisory or executive role. Though it doesn’t obligate you to put a candidate in the role, it sets expectations against which you can judge performance.
People who are being groomed through succession development tend to play at a higher level. Current leaders need to set attainable goals that measure outcomes rather than charm or activity. Goal-oriented managers keep educating themselves, testing new approaches, networking in new markets and schooling themselves in the numbers.
If a future leader has the drive and determination for a higher position but lacks the interpersonal skills, on-the-job training, mentoring and any number of “executive charm schools” can improve personal communications to round out potential successors.
In family businesses, this can be a particularly tough conversation as it gets wrapped up in parents making judgments about their children’s abilities and about lifelong favoritism or grudges. Many companies go outside the family for senior leadership as a strategy to allow children to retain business equity without getting into leadership issues.
Whether it’s at the top or the middle of the organization, having a plan in place for who steps into a role should the unexpected occur, just makes sense. The plan may be to replace people with outside hires and that’s OK; it just ought to be part of your business strategy.
Plotting the financial exit strategy also is tantamount to cashing in for retirement in many small businesses. However, few businesses have retained earnings great enough to offer an owner a lump sum so selecting the next generation of leadership means placing a bet on people who will successfully complete your buy-out. That’s a reason to call us, as well. We can school you about buy-sell agreements that are financed by insurance.
Candidates who are too ambitious, obsequious or overt in their desire to lead may be candidates for tempering. But in a well-rounded and stable business, those who hope to lead should be ambitious but their ambition should be for the organization’s success. If the enterprise succeeds, so will they. If you can understand what motivates your successor candidates and take stock of their lifestyle, it can help indicate if they share your values. If you have recently bought or refinanced a home, you can use the same rigor in vetting the pool of successors.
So who else cares about succession? Bankers, suppliers and customers; all of them operate with self-preservation in mind which means they really need to have faith in your decisions. Extending credit and favorable terms can mean the difference between profit and loss. And for customers, a relationship with leadership is probably how they became customers and the source of your operating sales. Leadership is multi-faceted and includes relating just as well with the buyers as with the numbers and employees.
So, get to it and let yourself sleep more soundly.