Succession planning is an activity that we all acknowledge should be done, but busy CEOs and leaders often don’t “get around to it”. They are generally distracted by the tactical demands of day to day business challenges. But proper planning gives freedom, flexibility, efficiency and continuity to organizations. Absence of a succession plan can jeopardize not only the future but the very existence of companies and organizations. This truth applies to Fortune 500 companies, non-profit entities, small companies and even volunteer groups as small as a Boy Scout Troop.
Worst Case Scenario
It is not all that unusual for important company leaders to be incapacitated or pass away by illness or sudden tragedy. We have all seen this many times. Clearly the human loss is devastating, personal and unfortunate – but companies and survivors likewise suffer unless meaningful contingency planning and training has taken place. The “victims” are all the stakeholders of an organization including families and customers as well as employees.
Large Corporations are usually very good at succession planning and they embrace it as part of their culture. Younger employees are often trying to work their way up the corporate ladder, while senior leaders are likewise grooming successors to replace themselves or enhance their team’s capabilities.
An even more dynamic example is military organizations. Embedded in their culture is a continuous flow of incoming personnel, promotions, geographic mobility and increase in experience and responsibilities. Every member of every military unit is keenly aware of who is in charge and who is next in line to take over responsibility.
On the other end of the spectrum, entrepreneur founders are generally limited by scarce resources, usually people and time, and are focused on maximizing efficiency and profitability. The notions that “it can’t happen to me” or even worse “I AM the organization” are too prevalent. In the case of a catastrophic event happening to the leader(s), even the future existence of the organization is often in question.
Other Forms of Succession Planning
There are other activities that I would still classify as succession planning, but are different and equally important: Family Business Planning, Strategic Planning and Leader Retirement Planning.
Family Planning is important when the founder assumes that the family will take over the business as a legacy, or likewise descendents assume that they are entitled to a role in the future organization when the older generation retires. Often, both sides have different expectations of future roles of family members. These families need to be on the same page, and plans clearly written and communicated. Strategic Planning in this context addresses the question of what do we want this organization to look like in the long term future. Are the founders going to sell, pass on to heirs, go public, or liquidate? Many times leaders and owners have very different future agendas for themselves and the company. Another important consideration is Leader Retirement Planning. Often founders, even after retirement, just don’t “go away”. Employees are confused about who is in charge and how to treat the “retired” former bosses (especially when families are involved!) Again, planning and communication are key.
The point is – all organizations, no matter the size, should have an active contingency plan. The plan should be thought out and discussed among the appropriate stakeholders. This organizational “life insurance” promotes stability and confidence in the future of any company or group, no matter the size or purpose.