Michael Lodge, NCPM, CRTP: I sat down this past week with a family owned business to discuss the father retiring and who would take over the business. I enjoy these types of mediations because it allows the individuals involved in the business to plan an exit strategy in a peaceful state of mind. It also allows the business to plan for a key member leaves or dies.
In the past I have done succession mediation where no one wanted to take over the business and the just wanted to walk away, person emotions and past history was the main cause. However, last week I had very bright individuals that knew what they wanted done and to formalize it through mediation. I love business. I have owned so many businesses myself and knew what I wanted to do with the business and when to exit through a sale or close.
The process of meeting in mediation and working with the family and management members of the business creates a path to leaving and finding a new path. If you have a small or large business, mediate a succession plan. Makes it a lot easier in the end.
1. Start Early
Business is highly competitive, so the most talented employees will have a number of options available to them. Even more so with the rise of remote working and the ability to work from anywhere. 30% of CEO departures are unplanned, and sudden departures of senior leaders causes disruptive ripples throughout a business. Succession planning is one of the safest ways to reduce the issues caused by a sudden departure. Succession planning allows you to preserve and pass key knowledge before a critical employee leaves. It's important to get feedback on succession plans from senior management.
Early planning allows you to iron out any issues as early as possible. Consider the busy nature of senior employees and potentially strong personalities. Start early and give yourself time to sort out issues, disagreements, and organise training in time for any abrupt departures!
2. Prioritise The Most Critical Roles
You’ll need to decide which roles will be prioritised. Succession plans tend to focus on the most senior positions, but you’ll also want to consider succession plans for specialist roles and pools of talent. Are there key employees who may not be very senior, but the lack of their specialist knowledge and skills will disrupt the company? Technical roles such as full stack developers or machinery operators are often critical to smooth work processes.
Here are some questions you should ask yourself when deciding which roles are the top priority for succession planning:
After this you should have a key idea of the top roles to succession plan for first.
3. Promotion or New Hire
Employees are more likely to stay at companies where they know there’s opportunities for advancement and training. 94% of employers have reported seeing a positive impact on employee engagement due to their succession plan. 90% of 18 to 34 year olds find that knowing their company has a succession plan in place for employees improves their engagement.
Knowing these statistics, it's important to communicate your plans with your employees clearly, as it gives them something to aspire to. And with the high costs of hiring, it's important that your succession plans are linked to your talent pipeline plan.
Sometimes internal employees don’t always make the best fit for senior positions. You might want someone with external senior experience and a fresh point of view. In either case, you’ll want to set up a training plan for the new or promoted employee.
4. Training and Mentoring
As varied as humans are, it's difficult to find the perfect person to fit any role. 81% of HR leaders have found that the number one reason a potential successor wasn’t a right fit, was because they weren’t ready. This is why it's important to consider the development roadmap for the position. Decide which skills are key and what you can compromise on. Creating room for training and mentoring allows the new individual to bring in their own individuality and creativity to the role.
The most successful succession plans have high involvement from leadership and other managers. These leaders hold institutional information that should be passed on to other employees. Create a mentoring programme that allows your senior employees to guide your employees into future positions is an effective strategy. Mentors will share their knowledge with an employee who is eager to learn, and help them improve their leadership skills. This works to connect employees across departments, creating a more cohesive workplace. It's a great opportunity for employees to develop their leadership skills from experienced leaders.
5. Allow Room For Flexibility
Finally, one of the most important aspects of succession planning is allowing room for change. As businesses change, so will the needs and requirements of every role.
Employees may leave, some employees will need to spend more time on training programms than others, other employees may benefit from more than one mentor etc. It's normal for these things to be discovered at a later date. This is why we emphasize starting succession planning early, as it enables you to create an adaptable plan that acknowledges that businesses change, team sizes can grow and shrink, as can employee responsibilities.
Get feedback from the appropriate parties and communicate plans with your employees and you’ll be on the road to creating an effective succession plan that improves employee engagement and sets a standard for future succession plans!
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Michael Lodge is a Nationally Certified Professional Mediator specializing in business disputes, as well as family conflicts. He has written three books and hosts an international podcast on IHeartRadio and other podcast media stations.