Succession Planning in a Firm

Entrepreneurs and great firms like Third Eye Capital Ninepoint always plan for the future. One Ibo saying is “Nothing lasts forever”. Look at all the success stories of successful businesses around the globe today. The secret to their success lies in good leadership and governance. What happens to these businesses after these great leaders have left? They will eventually leave these businesses. A very hardworking, agile Director today will one day become weaker and retire. They also believe that death is an inevitable and necessary end, which will come when it has to. The same question is asked: “What happens to these companies if these highly-motivated, productive, and successful Officers, Directors, Supervisors, and Managers die?” We now come to the topic of succession planning. In a previous blog, I stated that anyone who fails to plan is planning for failure.

Although there are many definitions of succession planning, they all boil down the same: making sure that you have all the pieces in place to ensure that the right person is in the position. If you want to look at Succession planning from a more professional perspective, it is the process of making preparations in advance to handover power, authority and responsibilities in a professional way without disrupting operations, values and goals of an organization.

It is always good to have succession plans prepared and documented in advance. This will make it easier to find someone to succeed you if necessary. To avoid pushing people into a position, succession plans should not be made public to all staff.

Unfortunately, most businesses today don’t have written succession plans. This is a problem when an exiting officer needs to be replaced.

Succession planning in one-man companies is often more complicated. Because of the informal nature of family businesses, succession planning should be of primary importance. If the sole owner of a successful business decides to retire, what happens to the business? Are his children able to manage the business? If so, which one will be in charge of which position? What if one of them is the youngest and most experienced of all the children? But, is he interested in selling the business? All these questions can be answered by a thorough succession plan. Even if the sole proprietor dies, his family can still be notified about the plan by the company lawyer. Because of the emotional and family attachment, a succession plan is especially important for a one-man company. A formal succession plan is a must for many one-man-owned businesses that fail to exist. It is clear that succession plans are a key to smooth transition programs.

If the sole proprietorship is formed, the plan will determine who assumes which Management role, who inherits which share, and so forth. If the owner is a good leader, he may hand over management to his last child and all his children will share equally in the business’s shares.

Public firms use succession planning to help them identify and develop talented employees. This plan will ensure that you are able to fill key positions within your organization using the talents that you already have.

We can also say that succession planning involves choosing tomorrow’s leaders. Future managers must be able to meet the challenges posed by technology advancements and global strategies.

This holds true for both small and large firms. It’s more than just succession to top positions. It’s about finding the right person for each job. Some of the key jobs of tomorrow may not exist today. A company that plans to double its size or expand their business line in the next five to ten years will need to have more qualified managers who can take over during this period of growth.
Succession plan involves leadership development. A good career plan with a succession plan is the best way to retain and attract good employees.

Firms must see succession planning as an important strategy for organizational growth. This is a job that the Human Resources department does in collaboration with the CEO, Directors and Management team depending on the size and type of the company.

A formal succession plan can build confidence and decrease turnover.

As stated earlier, Succession planning involves top executives working with the HR department. Sometimes, consultants are also involved to help in the decision. This plan should be reviewed regularly as an employee may no longer be eligible in the future. It is possible for eligible staff to leave the company in the event that they are drafted to assume certain positions in the future.

We can easily say that succession planning is about identifying and monitoring talent within the organization and matching them to future needs.

When succession planning is done, it is determined who is fit to be in the system based on their inherent talents, competencies (both clear and hidden), their leadership qualities, their ability to learn new technologies and innovations, their ability to develop themselves (educationally and training wise), their potentials, and their ability to adapt to change.

Planning for succession should not be based on gender, tribe, age, or the number of years in an organization.