8 steps to a successful succession plan
It can take years to build a successful franchise and without a succession plan it could all fall apart.
A succession plan covers not only a founding director’s retirement or unexpected illness. It also includes the retirement, dismissal and resignation of executives and senior managers, and any large-scale staffing changes that may be fuelled by growth.
It can take two to five years to develop a succession plan that ensures human resources can meet these challenges and thereby reduce the business risk associated with the loss of key staff.
The size of the franchise will determine how many key roles must be included in the plan.
Large franchises generally have a wealth of talent already working in different positions and levels throughout their business.
A smaller or family run franchise will face its own set of challenges, and the founder can’t assume the next generation is willing or capable of taking over.
There is no simple template for the succession planning process. Every organisation is different, and each organisation must develop a succession plan that fits its specific needs.
4 things to consider for a successful succession plan
These four steps offer some insight into what’s required:
1. The franchise’s executives identify the company’s existing competencies in relation to leadership needs and the industry it competes in.
2. Current employees are evaluated and assessed to determine how they match organisational needs.
3. The business introduces coaching, mentoring, training, and recruiting methods that match personnel requirements and future needs.
4. Management and human resources work together to develop the actual plan. There are software programs available to make the task easier. A human-resources management system (HRMS) can provide visibility across the company. This is particularly crucial for global organisations, where talent can reside in dozens of different countries.
Developing the best leaders
Succession planning is complex and requires constant attention and ongoing resources. The focus is on getting the right people into the right roles at all levels of the organisation and developing candidates to replace them when required.
Employers will have their own career goals so it’s useful to compare their current position to their desired position and to assess their potential to achieve that goal and how they can contribute to the company’s future.
Succession planning should be linked to human resource policies, business development, merger and acquisition activities, and the corporate culture.
Skill acquisition and training can be incorporated into individual career development plans and employee performance reviews. This means that if there are sudden changes, key personnel can assume new responsibilities in a short period of time.
There needs to be policy on how internal management appointments are made to avoid confusion and resentment.
Finding a successor
Some founders put off choosing a successor because they don’t want to give up control of the company. They may be the “face” of the company and find it hard to trust that someone else will do the job as well as them.
They may also think it is better to maintain family control of the company rather than have executives from outside the family taking leadership roles. This can be risky for the business if family members aren’t properly prepared for leadership or executive roles.
In fact, the existing founding director may lack the necessary objectivity to recruit his or her replacement.
A succession plan is a long-term process. People don’t become leaders overnight.
4 steps to a smooth succession
Here are some steps that may help…
1. Prepare a business succession plan that includes objectives, timelines and milestones. Set dates but allow for changes.
2. Consult a lawyer, accountant and tax expert, particularly those who specialise in family business succession, to understand all the issues that arise when you sell, close or transfer ownership of a business.
3. Choose a successor. It may be a family member, or it may be an outstanding manager who has the skills and drive to lead the business. This is no easy task. Communication is the key to avoiding major conflicts.
4. Work closely with the chosen successor and share the critical skills they will need to take over and lead with confidence. This includes management of stakeholders, employees, sales, marketing, finances and strategic planning.
After the successor is in place, the business owner or executive needs to look beyond the company for new meaning in their life. Otherwise, the temptation to interfere with the business will be too great, and that could sabotage the success of the new leader.
The key is to take on a mentoring role and support the successor to grow in the role, while increasing the amount of time spent away from the business. This includes exploring interests and enterprises outside the business and staying healthy. Travelling, hobbies and more leisure time with family or friends will help the process and promote a positive attitude.