Succession Planning - how to leave your business in safe hands
According to new research carried out by Aviva*, 60 is the most popular age to retire early.
If you are a business owner considering retirement (at any age) and you want your business to continue to trade after your departure, you will need to have put succession plans in place a while before.
Creating a robust succession plan is good way to ensure longevity for the business you worked so hard to build, for possibly many years. It allows for a smooth transition not only for you, but for your employees and your customers.
Even if you’re not planning on retiring just yet, succession planning is vital to help you identify key roles within your business and an important part of the talent management process. With key areas and roles identified, you’ll be in a better position to manage your recruitment needs in-house, supporting potential talented personnel with suitable training and mentoring programmes.
Without a plan in place, you are risking disruption to your business and unrest amongst employees. A sudden change in the working environment may cause other key members of staff to leave, resulting further upset and may lead to decreased motivation. Turmoil within the company is likely to filter through to customers, have a negative impact on your reputation and ultimately future business success.
Developing a simple succession plan can be relatively straight forward. You may like to consider creating a succession planning committee to help gather the information you will need to allow you to make your final decisions.
Here is an outline of what you should include in your succession plan:
Identify key areas and positions
Think about what areas are critical for the business to operate effectively and the key positions that need to be in place to manage these.
This is also the perfect time to start to write down the knowledge that you have gained over your time in the company, which doesn’t already exist in formal documents. Typically, MD’s or business owners carry a lot of invaluable information in their head, and if it’s not written down, it disappears when they do. Putting this information into documents will be of vital use to your successor and will benefit the business once you have left. It will also bring clarity on everything that your successor will need to know to be able to manage effectively, making the creation of job profiles easier.
Identify principal capabilities for the key areas and positions
Now think about the capabilities that are required in your key areas and positions. Create job profiles for the positions, so you understand the expertise required. This will make the identification of the right people easier. You should think about the key leadership competencies or characteristics that will be required.
Start with an internal search by identifying talented employees and assessing them against the required capabilities. You may find that you already have suitable personnel that can potentially be mentored to move into key positions. Your existing staff will know the business well and understand your working practices and business nuances. Any training required will be easier to manage and they will be less of a flight risk, as they are more likely to be loyal to the company. Investing in people will typically have a positive effect on your business improving motivation and commitment of not only these employees, but your wider team.
If you don’t have an internal candidate for your key position/s you’ll have to recruit externally, which may take longer. Not only to find the right person, but also to educate them in the history and culture of the business and your working practices.
Develop and implement succession and knowledge transfer plans
Whether you promote internally or recruit from outside the business, you will need to develop and mentor your successor to ensure a smooth transition. Employees will need to adjust, as will suppliers and existing customers. Make sure you give yourself enough time to allow the transfer to be as smooth and effective as possible.
If you are the business owner, then you are probably likely to stay in touch with what’s going on at the company, after all this is your baby. This will allow you the opportunity to evaluative the effectiveness first hand and possibly help out, if necessary, should there be a few bumps in the road after you have officially departed.
The business itself will be able to evaluate the effectiveness of the succession by looking at employee and customer satisfaction, along with brand reputation. Customer orders, PR, client feedback and supplier relationships will all indicate how successful the transition has been.
Risk Management with Barnes Commercial
Succession planning is a crucial element of your risk management strategy. At Barnes Commercial we are always on hand to support our clients with expert advice and guidance on risk management. Think of us as an extension to your management team and free feel to get in touch whenever you need risk management support.
A comprehensive risk management strategy, underpinned with a comprehensive insurance solution will ensure your business is ready for the unexpected, and able to manage change as it arises.
Talk to us about the risks your business faces and we’ll offer tailored advice and guidance to help you safeguard the future of your business. Call to speak to an experienced commercial broker on 01480 272727 or send an email to email@example.com
Specialist independent broking and risk management
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