Succession Planning: How to avoid being a Commercial Ozymandias?
Since 2011, baby boomers have been going through retirement and with this, concerns related to succession planning is an eminent issue of growing interest in the world of economics. Creating and nurturing business ideas, turning these ideas to reality, building brand reputation and goodwill, while going head to head with competition – has meant many business owners have had to overlook the unpleasant question of, what happens tomorrow when my star-performer is gone?
Handing over the centrifugal responsibilities of leadership, is one of the most critical decisions for any company. An inaccurate handover for a large business, may be fortunate on occasion, to be accompanied by a second chance. However, for small and medium companies, the likely reality is a death knell.
To explain why so many SME’s have no succession planning, we have enlisted the following reasons:
- Finding an able successor: This by far, is the most significant contributing factor leading to company and brand extinction. SMEs on a quest to create a succession plan, neither have an able interim successor or partner identified nor have they taken adequate steps to grow internal talent or seek-out future super stars from the external market. As a result, many in their moment of crisis, perform till they are either bankrupt or sold off to an external strategic or fiscal buyer.
- Interpreting Value: Is the second most significant contributing factor. Whilst a firm’s assets and liabilities are eminent in written records and free from interpretation, the value of all that has been created over the years and the purpose for which it has been brought to market, is unfortunately, not as transparent. These differences make the process of finding a suitable successor increasingly challenging and where not done right, create rips in the culture and brand fabric, resulting in misalignment, internal conflict and overall poor performance.
- Generation Transition: The present phase of transition from baby boomers to millennials is a rising cause of concern – because only a small percentage of baby boomers see the necessity in sharing their knowledge and learning with others. Those that cross this initial bridge, then have the added challenge of having to manoeuvre around individual beliefs, values and differences in attitudes to make the succession planning process effective.
- Deadline Crunch: A productive succession planning strategy requires a minimum investment of 5 years to reach fruition. Many businesses start this process too late, or don’t have a strategy at all – relying on crisis to react, thereby limiting their options for success.
- Denial towards Detachment: Research shows that accepting detachment from a part of one’s own identity can sometimes be more difficult than accepting detachment from children. Resultantly, many owners adopt the ostrich strategy of hiding their heads in the sand till they reach voluntary or involuntary retirement with no documented succession plan in place.
What is apparent from the above, is that planning one’s own succession, must be deliberate and purposeful – as it requires both psychological (inner) and strategic (outer) presence, discipline and action. The daunting reality however, for most business owners/ leaders, is that they spend a lifetime building and growing their empires only to watch them fade away from the sidelines – because their succession strategy was premature, ill developed or rather not born at all.
So lets explore some small yet significant actions that have helped create successful succession plans that have shaped our modern-day brands.
So, what can you do to make a difference?
- Start Early, Start Now: GE leader Jack Welch started succession planning 7 years before he resigned as CEO of General Electric in 2001. Despite the organization moving on to benefit from a century of Welch-caliber CEO’s even this seems last minute when compared to Bob Galvin, the former CEO of Motorola, who began planning for the next generation a quarter century before finally leaving.
- Work and Learn together with possible stakeholders early on: Mark Lee the predecessor of Daniella Vitella, the new CEO of Barneys New York, had been working with and training Vitella for over 11 years in Gucci, before joining Barneys.
- Focus on direction, not designation, to keep the spirit of your business alive: Steve Jobs, before resigning as CEO of Apple, established Apple University as his succession plan. Established in 2008, Apple University uses Job’s experiences to “teach Apple employees how to think like Steve Jobs and make decisions that he would make.”
- Don’t wait for a crisis – make the handover gradual: IBM appointed its current SVP, Virginia Rometty, to take over from Samuel J. Palmisano when Palmisano and the company were performing at their peak. This reportedly was one of the smoothest transitions in the IT history.
- Elevate your HR department to a position of power: your HR department should include skilled, qualified executives capable of identifying and supporting promising leadership potential. Where the focus is not just ”replacement planning” but “succession planning”.
More about the Author
Dominic Nair, CEO of Talent Multipliers is a people and culture strategist who partners with CEOs and business leaders of SMEs to grow and transform their organisation’s human capital and deliver tangible business results.
After 25 years of experience and holding executive leadership positions across multiple industries in both private and public sector, Dominic knows what truly drives engagement and organisational performance. It is how well an organisation can harness individual potential and drive massive action needed to create desired outcomes.
Over his career, Dominic has developed and led successful people solutions and strategies across 50 organisations in international markets covering small, medium and large businesses. In addition to his extensive experience across HR, compensation and benefits, executive reward, leadership development and M&A, Dominic is also a trained business and executive leadership coach.
For information on how Talent Multipliers can support your business, visit us at www.tmultipliers.com.au