6 Steps to Follow When Passing on Your Business to a Key Employee
For a proper succession plan, you’ll want to have the structure laid out long before leadership changes hands.
A succession plan outlines the procedure for a successful turnover of leadership. Investors do not like the instability caused by drawn out or uncertain succession plans, so set your business apart from the rest by planning ahead for who will be the next head of your business.
For a proper succession plan, you’ll want to have the structure laid out long before leadership changes hands. A quality plan will enable you to identify the skills in your employees that would make them a good fit for the job and start training them appropriately.
Large companies plan this far ahead, but small companies usually do not. More than half of small and medium-sized companies don’t put any serious thought into the succession plans for their most senior officials and this eventually leads to problems. Whether you’re a plumbing company, grease trap cleaning company, or a local pizza shop you need to a succession plan in place.
All employees leave their posts eventually, therefore you should not leave your business without a leadership position in place.
Succession plans solve this by ensuring that new leaders are constantly being groomed from the inside. New employees are hired based on whether they have the potential to take over the leadership role when the time comes and makes sure that they are ready. Succession plans do this by giving employees leadership training and constantly assessing their skills.
The success of any key employee succession plan is dependent on six key factors:
1. Spend Time Making Your Succession Plan
The entire business must take the time to familiarize themselves with the procedure for succession. For example, senior management will want to be involved in any discussions involving successors so that they are able to work with the new leader. They need to understand how the succession plan works into the company’s business strategy.
2. The Succession Plan Must Be a Priority
Organizations must make their succession plans a priority in which they stick to. Their focus must be on allocating the necessary time and resources which will make a succession go smooth and easy.
The first step is identifying employees who would be good leaders for the company. Once they are identified, they should be prepared to make the transition when the time comes.
3. Compare the Options
In some cases, the employees that you are grooming for succession may not have any experience as leaders. Analyze their skills and compare them with other industry-leaders so that you have an idea of how they will perform on the job. Your businesses future is too important to leave to chance.
Employees are always more interested in working for employers that give them a chance to move up the ladder, so try not to fall into the trap of looking for external replacements when the perfect replacement may already be in the ranks. If you are looking to find the right buyer for your business it is the best option to work with a professional business broker. An intermediary can help you identify the right successor and help you plan for the future your business.
4. Talent Development
Many employees have the right skills for leadership but are unaware that they do. As an employer, you want to implement a system in your day-to-day operations which puts your employees in positions to show that they have the aptitude for leadership. Good leaders generally require high emotional intelligence. Therefore, an employer can set up workshops which identify the employees who score highly for EQ.
These processes should be a core part of your management system. The focus should be on developing their natural leadership talents. A mentorship program is a great way to do this.
5. Employee Development Tracking
Employees learn a lot on the job. They are more likely to be better suited for leadership positions after working with you for a while. You want a way to keep track of their development and see who is the stand-out choice. A quality database will keep record of performance reviews and employee development plans for later reference.
6. Have a Clear Succession Plan
Taking on a new leadership role is always tough. Understand your business so that you can create a succession plan which makes it easy for the new leader to pick up where the last one left off. It is important to work with a professional intermediary throughout the entire process so that you know your business will fall into capable hands.
For example, you should also have a procedure already outlined for how you’ll help the new employee or buyer get settled in.
No single plan will cover all the issues involved in a leadership succession, however, if you chose the right person then he/she will be able to adjust on the fly.
Your Company Will Survive
Employees always work harder when they know that they have a good chance of climbing up the ladder. Always consider your employees as a part of your succession plan so that they work in your favor.
Grooming your employees to be potential leaders is a task that starts from the day you hire them. Keep that in mind when running interviews.
Also, remember that the succession process is not just about the new leader but also about the people that the new leader will be working with. So, do your best to keep your senior managers involved. Things will go much smoother if you have them working with you towards the same goals. Remember, working with a professional intermediary will ensure that the deal goes well while securing you with the best price at closing.