Effective Succession Planning -

Succession Planning System

What is 'effective' succession planning?

At Business Success Tools, we recognize the importance of three kinds of succession planning activities that will help keep you and your organization safe.  All are necessary but have different benefits.  And, each has a time and place in which it should be used.

1. Key position succession planning - There are two divergent mistakes business leaders make when it comes to planning what to do when a key position becomes vacant.  Some assume it cannot be done well.  Others think it can be done quickly and at the last minute.  Learn what you can do to prepare for the inevitable, namely, key people leaving your organization.  Planning what to do with key positions before you need it is essential.
   
2. Back up planning - Helps fill the vacancy left by an employee in the short run but beware - it's not an effective long-term solution.  Read more about the pros and cons of backup planning.    
   
3. Business entity planning - This is what most of us think of when we hear the term 'succession planning'.  It involves the critical work a business owner does with his/her attorneys and financial advisors to protect the value of a business for either sale and/owner transition purposes.  Read about the things you need to do to ensure the continuation of your business by developing a business entity plan.

Key Position Succession Planning

"Who will do the work when those in key positions leave?"

Businesses need a process for benchmarking critical positions, including management positions, and preparing suitable employees through mentoring, training and job rotation, to replace key players within an organization, in preparation for their departure or retirement. 

There are two divergent mistakes business leaders make when it comes to effective management succession planning.  Some assume it cannot be done.  Others think it can be done quickly and at the last minute.

Organizations need to create a pool of multiple candidates with high  potential to fill each key position and then devote time, attention, and on-the-job training to provide these candidates with experiences that build flexibility and talent.

Is there a hiring and/or development plan in place for grooming the next layer of management and people to fill key positions in your organization?  If not, why not?

Back up planning

Some business leaders make the mistake of thinking they are doing succession planning when in fact they are really doing something we call 'backup planning'.

We define backup planning as the process of identifying people in an organization who are best-equipped to serve as backups for current employees, should those people leave.

These 'backup people' need to be good enough to keep the business afloat until a more qualified job candidate is found and put in place.  Think of backup planning as a short-term way to keep work flowing when someone is out of the office for a relatively short period of time, several days to several months.  Backup planning is critical to any organization in supporting unexpected interruptions but should not be used as a substitute for intentional, effective succession planning.

Do you know someone like Carl?

Backup planning, by itself, leads to problems.  “I don’t know what happened to Carl", lamented a business owner recently.  "Carl used to be the best cost accountant we had. He was a model employee with a great attitude. He was so good, in fact, that when our top sales person retired unexpectedly, we moved Carl into the lead sales position.  We even gave him more money.  But now he’s a different person. He's not opening doors and closing new business.  When he's in the office, he snaps at people and complains all the time.  His attitude is awful.  Our revenues have declined drastically since we moved him.  Bottom line is Carl's not selling.”

What went so terribly wrong with Carl?

Chances are there is a 'job fit' issue with Carl.  Carl's not doing what he enjoys anymore and he probably doesn't have the right skill set.  What often happens to the detriment of an organization and its backup people is that the person moved to a backup position is made the permanent replacement.  After all, if the backup can do an adequate job in the short run, why switch him or her back to their old job?  Over the long haul, organizations that rely on backup planning to fill critical positions on a permanent basis will suffer, as will those individuals in the backup positions.

Business Entity Succession Planning

Business entity succession planning involves planning for the smooth continuation and success of a business entity from a financial and legal perspective, once its key leaders leave, often through death or retirement, or decide to sell the business.

Proper continuation of the business entity from a financial and legal succession planning perspective can help prevent a business from being frozen and/or discontinued. It is essential to assess the risks to your business and examine available options, establishing goals for succession. 

Do you have a business entity succession plan in place and is it up to date?  If not, working with your financial and legal professionals (attorneys and accountants) to get proper advice and develop a written succession plan is essential.  It is necessary to explore what happens if an owner retires, becomes disabled or dies.  Does your business have the resources to carry it through?  Part of the planning should arrange for insurance, funding, allow for the transfer of ownership and actively manage the company's estate tax liability.

Effective succession planning requires using a logical approach, a succession planning system.  Learn more about implementing TriMetrix, a research-based management succession planning solution -   learn more about TriMetrix.

TriMetrix® has the tools and processes to support effective management succession planning.

Let us help you craft a solution that will work best for you and your organization.  Business Success Tools - contact us today.

© 2007 Target Training International, Ltd.

(The TriMetrix ® System is a trademark of Performance Benchmarking, Inc.)