The Greater Baton Rouge Business Report last month focused on the topic of succession planning in an article about local business leaders and the importance of identifying and developing the right people to move into leadership positions. While the article by David Jacobs focused on family businesses, it’s important to remember that succession planning is a vital task for any organization, and the lessons family businesses learn can apply to any business, large or small.
The article cited an Exit Planning Institute survey from 2013 that found more than 80 percent of private businesses have no written transition plan, and half haven’t done any planning at all. And that can set an organization up for trouble.
Hugh Raetzch Jr., president and CEO of Lyons Specialty Company in Port Allen, Louisiana, said the company faced difficulties upon the death of his grandfather who held onto the business until he died. Raetzch says relatives fought for years to settle the estate and to this day some of the family members don’t communicate with each other because of the hard feelings.
When there is good communication and planning, things go well. Baton Rouge-based Community Coffee’s 2012 succession was basically seamless and no one in the company was surprised. President David Belanger says the company’s organized successions have helped it defy the odds and keep growing through four generations of family ownership.
Putting Together a Succession Plan
Change is inevitable in business, and the difficulties some business owners discussed in the article make it clear that succession planning is a key factor in being able to make a smooth transition when changes occur. This strategic decision helps ensure continuity in leadership and the success of the business.
I’ve talked in the past about several factors that can help make your company’s succession plan more effective:
- Connect your succession planning with your company’s strategy. If your organization defines itself as an aggressive, ambitious company with its mission statement, then its succession plan is going to reflect that. Identify current leaders who embody the mission, and find ways for them to pass their knowledge and expertise to people who will step into their positions.
- Look at data realistically. Who’s going to be eligible to retire in the next 5 years? Who’s been on a path of advancement but seems to have stalled?
- Get buy-in. Even if an organization identifies the leaders of the next generation, the current leaders need to support the succession plan and the timeline of passing on knowledge, experiences, information, expertise and, ultimately, the reins to the organization.
Christopher Snider, president and CEO of the Exit Planning Institute, says the process can take years, and business owners may feel like planning for the future means the business is in trouble now. It’s important to remember, however, everyone’s tenure comes to an end at some point, and the health of the business relies on getting through a big change, whether it’s a crisis or planned.
Whether a business is family-owned or not, a succession plan can help smooth transitions to ensure the long-term health of the organization. Having one in place is an important part of business strategy that is often ignored.
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Success Labs is a leadership development and management consulting firm in Baton Rouge, Louisiana. For more than 25 years, our expert team of consultants has worked with hundreds of companies to explore their business potential and improve their company and cultural performance. Contact us to get proactive about your people strategy.