Preparing for Succession
Liability insurance shields you and your workers in case of accidents or disgruntled clients. You routinely back up your electronic business records. Threat or emergency--you got it covered. Or do you? What would happen to your design firm if one or more of your key leaders were to retire, resign, or worse, die. Unexpected disasters happen. Companies grow and change. Your firm may need more leaders tomorrow than it does today. That's why proactive succession planing makes such good sense.
Succession planning is one of the most important investments you can make in the future of your firm. In small businesses especially, the loss or unexpected departure of a leader can be devastating. Someone has to be designated to run the day-to-day business and to think strategically about the future when the need for new leadership occurs, and they should be trained to do it well.
Building leaders and management structures takes time and thought. You don't want to be naming successors at the last minute when leadership changes happen. Think in terms of developing future leaders, not filling a vacant spot.
If your firm does not have a succession plan, there are many resources you can turn to for assistance. In the meantime, here are few steps to get you started:
- Develop a replacement plan for the owner and other principals in the firm. This means grooming one or more backups for each position. Start by developing a detailed job description, including a detailed list of daily activities and a prioritized list of duties. Identify critical clients and business relationships.
- Using the job descriptions, draw up a coaching plan. Allow your successor to work beside you on various activities. Use a vacation or extended business trip as an opportunity for the successor to assume an "acting" role. Adjust your coaching plan based on how the successor performs in these "acting" assignments.
- Take steps to broaden the grooming program and reinforce essential skills and knowledge. If the candidate does not work out, select or recruit a stronger candidate.
Do not be shy about letting an employee they have been selected as a successor. You may avoid losing a talented employee. But be careful not to create false expectations or to make promises that could be used against you later as an oral contract.
Even if you are a one-person operation, you should have a succession plan. That may mean simply deciding whether to sell or close the business when you retire. That decision alone can have a big impact on how you operate and invest in your business.