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Owning or being an important part of business is about the little things. At first, the big decisions will take up most of your time: what is our business going to be? How will we lead our employees going forward? However, what separates good leaders from bad is how they deal with the decisions employees may not know they make, like their succession planning program. It may not define your vision as a business, but it will define how your business is run. Unfortunately, because these decisions often go unnoticed, it’s hard to know if you’re making them correctly. Luckily, we’ve put together some go-to signals that should act as red flags indicating your plan isn’t what it needs to be.
The Plan Does Not Exist
You may not think your company needs a solid plan, you’re small and the people who make up your company are so fundamental to how it works that they’ll be around forever, right? Or you’re big, and with the way every job has a title, with “senior” or “chief” in the name, you’ll know who to pass every role onto, right? Unfortunately, it doesn’t work that way, and if you don’t have a plan, you’re behind. About 1/3 of all businesses don’t have succession planning program putting them firmly in the minority.
Are you part of the 1/3 of businesses making a mistake in future planning?
Not having a plan in place can hurt your business. Real Estate firms, for example, are notoriously short-lived, and a lot of this has to do with their lack of planning. Constance B. Moore, former president of BRE Properties, Inc., highlights how important this process is for business longevity.
“An embedded succession thought process… makes the organization consider leadership changes and capabilities well ahead, and helps career development for employees… An executive may not naturally think about their own succession—will I really get hit by a bus? And the planning and conversations with your executive team can be very hard sometimes, but are extremely helpful for everyone involved.”
Constance Moore, former president of BRE Properties, reveals best practice for career development.
It’s Not Set in Stone (Or Software)
When your business is small, it’s easy to have an informal succession path planned out for everyone in the business, because it’s easy to remember who reports to whom. As your business grows, however, it’s going to become more and more difficult to relay such a plan to everyone at the organization, especially as you add new departments, and direct paths of management become more ambiguous.
Tip: The best time to implement a succession plan is at the beginning, when it's small and manageable.
If you don’t implement a clear, outlined plan from the start of your business, chances are when it comes time to use the plan it won’t be able to help you. This is why 81% of companies outline their succession planning program using software. Having software mediate your plan works not only to prevent those plans from becoming too convoluted to follow, but also helps make sure there’s a centralized, objective place to view said program. This helps employees know the plan isn’t just made up, and helps keep everyone on track.
It’s a Little Too Simple
In Hamlet, Shakespeare famously said, “Brevity is the soul of wit.” Having a simple line of succession is great, but if it’s too simple, you may have to start thinking about what you may have missed. Specifically, you may not want to name a successor too early. If you’re a family business, for example, you may not want to assume your next of kin will lead the business. Most people with a high net worth (87% of them) don’t expect their children to continue their business, and thus don’t consider them as part of their succession planning program.
Relying on your next of kin to lead the business might not be your best move. Here's why:
It should be obvious not to hand over your business to your children if they’re not qualified, but the state highlights something many businesses take for granted: these plans are meant to stick around, and shouldn’t be held to the times they were made. As such, companies should name successors directly, and should instead aim to have more generalized rules about what positions are most likely to inherit a role, or how the successor will be determined. Naming someone in the plan itself, instead of determining it at the time of succession, assumes that person will be around when the plan is invoked. It also gives that person a bit more leeway than you might think (after all, if someone is named a successor, then clearly the company doesn’t plan on letting them go anytime soon).
But make no mistake: no matter how you organize your plan, how intricate or specific it is, or how it’s documented, you need a succession planning program. Not having one is indicative of a business that isn’t planning for the future, and it will lead to trouble down the road. Better to cut those issues off at the pass and let everyone know you have a plan.
