Passing the Torch: 5 Steps to a Business Succession Plan

Goodbyes are never really easy, especially when you're leaving a role that you’ve dedicated years to. Many executives may mistakenly think that they have enough time to handle transitions before their retirement, which is why it’s no surprise that discovered that 44% of businesses don’t have succession plans in place. Creating a succession plan is the key to creating friction-free work environments where employees are driven to succeed and executives are always prepared.

So if you want to propel your company and yourself into a brighter future, here are the five steps that you need to take.

Engage the board and senior staff members in the plan

As you can imagine, developing a solid succession plan can be overwhelming. However, you don’t have to do this all on your own! Since the succession process affects the entire organization, you have to involve the board and senior staff members in planning the future of the organization under new management. Involving senior staff means they can also help you look for an appropriately skilled and experienced successor, which can save time and headaches.

Align succession with the company business strategy

Now that you’ve gathered the team, you need to identify how the succession plan aligns with the business strategy for your company’s present and future. While board members understand the importance of choosing the right leader, Strategy+Business states that candidates often fail to live up to the expectations because the committee does not understand the company’s needs. So instead of thinking about who the next leader should be, ask the team what the company needs. By outlining the challenges and best practices of your company, it becomes much easier to narrow down potential candidates.

Identify and assess potential candidates

This step is crucial, since you want your successor to be able to continue the legacy that you built. After you’ve identified the key strategies for your company’s future, strategy consultant Peter Cohan recommends that you identify candidates that can future-proof your company based on their track records. Then, assess their potential by testing their operational skills and their flexibility. Ask them to develop new products aligned to your business goals, or put them in charge of a company project. Through these steps, you can identify who among the crop of candidates can step up to the plate.

Implement a knowledge transfer plan

You need to ensure that your successor will fit into the role, which is why coaching matters. LHH’s article on executive coaching encourages this training strategy as a way to develop key leadership skills and enhance employee strengths. Therefore, executive coaching must be a normal part of the company process— starting with your knowledge transfer process. Provide candidates with hands-on training on the processes and the responsibilities that you handle as a leader, so that you can both start the next chapter of your lives with confidence.

Develop a strategy for your transition to retirement

Once you’ve prepared your replacement, it’s time to focus on the other party: you. That’s why our article entitled ‘4 Ways to Ensure a Comfortable Retirement’ recommends planning what you want for the next stage in your life. Assess how much you currently have saved for retirement— and if it isn't sufficient, find ways to boost your income through other means. By planning ahead, you can live the life that you truly deserve during your retirement.

Succession planning can take a lot of work, but it's worth it once you see the organization in good hands. Ensuring a neat and successful transition means both you and your previous company will face your retirement worry-free.


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