Succession Planning Helps Secure Businesses’ Futures

Shauna Feth is the executive director of the Alberta Business Family Institute at Canada’s University of Alberta School of Business. We talked with her recently about some of the basics about succession planning and what’s at stake when businesses don’t have a plan in place.

Here’s what she had to say.

What are the basics business leaders need to know about succession planning?

It’s really about going through a process of communicating about succession, who the successors are going to be and who will be stepping into leadership roles. What will it look like? Do they need development or additional support? Do we need to establish a mentorship program? The keys are communication and the governance around the process itself.

It doesn’t matter if you’re talking board succession planning or CEO succession planning — you need to have an idea on what the person is going to be.

When it comes to smaller organizations, there often hasn’t been a concentrated effort on recruiting people and pulling into the system people who will move up in the ranks. It’s critical to know how to train and develop people.

What are some of the mistakes leaders often make when it comes to succession planning?

The expectation that somebody is taking over is a common mistake — assuming you know who the successors will be without having a conversation about it. I may have one person in mind, but maybe that person has never thought of being in that role.

Another is not having the discussion about succession with plenty of time to spare. In critical situations, or in family businesses where there might be grief involved, people might not be making rational decisions. Assumptions are taken off the table when there’s a plan.

What are some business benefits of having a strong succession plan?

It builds a stronger business, makes it easier to obtain financing, ensures smooth transitions and helps retain people. You want to ensure the stability and growth and sustainability of the company itself. With succession planning, you’re doing that. And with an ongoing model — even if you’ve just transitioned in the last five years, you’re still looking at the next 10 to 15 years — the bottom line is that you’re ensuring the business continues to grow and thrive.

What should every succession plan include?

The very first thing that has to happen is that the owner or owners need to be willing to go down this road. If they’re not excited or willing to do it, it’s never going to happen. That’s the first critical piece: They recognize the need and buy into it.

The second piece is to focus on the communication and consult all of the key stakeholders. Keep them in the loop and make sure they’re feeling valued and heard throughout the process.

Once you have the communication in place and have had the conversation about roles where people fit — you’ll need to look at setting up governance if there are shares and taxes involved. A strong strategic plan looks at leadership development and how new leaders are trained.

And once strong plans are in place, it’s a matter of ongoing planning — not putting them in a drawer and saying “we’re ready to go.” The business changes daily and you need to go back and use them as living, breathing documents that are constantly changing.

Want to learn more about succession planning? Read our new guide:

Succession Planning: A Step-By-Step Guide

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.