Jeff Immelt, the CEO of General Electric, once said that he has only two items in his job description: One is to retire with the value of the company exceeding that when he took over and the other is to find a successor.
Succession planning acknowledges that your team members will not be with a business indefinitely. It provides a plan and process for addressing the changes that will occur when they leave.
You often hear of public companies ‘grooming a successor’ for the CEO position or other lead roles, where the purpose is to create leadership continuity so that it remains business as usual when the current leader retires.
The same need exists in privately held businesses although you must go further to consider not just retiring from your job but your exit strategy options as an owner.
Succession planning is not just for business owners who are expecting to exit an industry in the near future. It is never too early to start planning. Those business owners that do start early will find they have the greatest amount of control over the timing, nature and profitability of their exit.
A succession plan helps your organization in the following ways:
- Maximize your exit options: Plan and put the wheels in motion for selling the business on your terms.
- High performer retention: Reward and retain talented team members by including them in your succession plans. Demonstrate your loyalty by promoting from within.
- Recruiting effectiveness: By clearly understanding your workforce needs in advance, succession planning creates the opportunity for you to pro-actively initiate recruitment and to do a thorough job.
As you would expect, many of our clients have been through the process of putting in place a succession plan or selling their business, so if this is something you feel you should be considering, feel free to get in touch.