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

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.

Entrepreneurs

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.

Take Control

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.

It is that time of year – the end of the year when we review our successes and challenges from the previous year and vow to make the next year better.  In our personal lives, we enjoy the holidays and make New Year’s resolutions to improve ourselves and seek new accomplishments for the next year.

From a business point of view, we look back at the measurable results of our performance – typically financial results, product releases, new customers and other metrics that are important to our business.   We then craft a strategic plan, operating plan, budgets, and goals and objectives to achieve our strategic objectives.

It is Simple…Right?

Many individuals and businesses do not know how best to plan for the next year and establish reasonable, achievable goals.  As a standard practice, large corporations typically have a formal, three to nine month process where all the department heads and managers compile their operating plans and budgets based on the strategic goals and objectives of the company.   Literally thousands of hours can be spent in preparing detailed planning and documentation.   This requires thought, discipline and planning.

On the other hand, entrepreneurs can be just as effective at their kitchen table on a Saturday night outlining their plans for the next year.  In either case – the process is similar, and the results differing only in a matter of scale.

Strategic Vision

Start with where you want to be in 3 years.  Be honest.   Be specific.  Be realistic about what can be achieved with the resources and time you have.   With that longer term goal in mind, work backward and divide the time between then and now into annual chunks of time, and then divide the next year into monthly, weekly or quarterly time increments.

Operating Plan

The next step is to determine what must happen in order to achieve those goals. You should answer the question of resources: how do I (we) need to allocate and use our resources of time, money and people in order to accomplish the goals?  And, when do we need those resources?

Budget

Now work the numbers.   You know what it costs for facilities and people.  What does it take to generate revenue and how much?  Do I need to add people?  When?  It’s really all arithmetic.  At the end, you have a plan.  BUT it is important that you review that plan regularly throughout the year in order to make adjustments and react accordingly.  (Note:  Your financial reporting must be timely and accurate, and management oversight is critical in order to be successful).

Goals and Objectives    

If you have done all of the above, then Goals and Objectives are easy.  They should be obvious for each department and team member and be perfectly aligned with the Budget, Operating Plan and Strategic Plan of the company.

Of course, the goals also must be SMART.  That is Specific, Measurable, Achievable, Realistic and Time-based.

Execution is the Key

Whatever you plan for – you must execute!  Whatever plans you have – make them useful working plans, and not just good ideas that you store on the shelf until next year.  You must communicate those plans to your entire company (even if you are a sole proprietor).   You must follow up, measure and compare actual results to the plans.  Then – be willing and prepared to make adjustments. 

I’ll close with a quote from Success author Paul J. Meyer.  “Productivity is never an accident. It is always the result of a commitment to excellence, intelligent planning, and focused effort.”   Good Luck!