Succession planning is vital for a company’s longevity, yet people often avoid talking about it. I can only assume those reasons align closely with the reasons many people avoid estate planning – a mixture of being distracted by daily activities, assuming the people around you already know your plans, even if you haven’t clearly articulated them, and an unwillingness to look at one’s own mortality.
Whatever the reason, companies rarely give succession planning the time and consideration it deserves. In fact, a 2017 survey of 500 executives revealed that over a third of those businesses had no succession plan. Here’s how I look at that stat: Employees at those 167 or so companies have no idea their paychecks are at risk.
In contrast, this topic is top of mind here at Nabholz — we recently announced several major leadership changes that correspond to a larger succession plan. On January 1st, 2022, I’ll be stepping down as CEO and working solely as Chairman of the Board. Jake Nabholz, formerly the President of our South Region, will assume the CEO role on this date. We’ve learned a lot during this process, and I hope these lessons can be of use to others in similar positions.
All companies are different, but this is a good starting point you can tailor around your organization’s needs:
- Lay out a clear timeline and start planning your transition well in advance – earlier than you might think is necessary.
When you are first promoted to CEO or open your own business, mentally set a deadline for when you want to step away from the daily pressures of being the ultimate decision-maker. This will help you stay focused on building a succession plan and evaluating potential successors.
With your deadline in mind, work backwards. A few years before your departure date, select a group of candidates to take over your role — ideally, if you’re developing your team, it should consist of internal candidates only.
- Make a list of key factors or traits your ideal successor would possess.
Rely on your own successes and failures — as well as company culture — when creating this list. This should act as an unofficial rubric by which to evaluate your chosen pool of candidates.
- Select an advisor or advisors.
Your advisors should be people you’ve worked with closely who understand the company’s culture, strengths, and weaknesses — and who don’t want the job for themselves. They should also be comfortable discussing your strengths and weaknesses honestly with you and capable of objectively evaluating the potential candidates you’ve selected.
- Choose a diverse group of employees to ask one-on-one who they think should succeed you.
This group should include
- Major shareholders
- Your executive team, even if it includes candidates or employees who have expressed interest in the position
- Corporate-wide managers who are not in line for the job but understand your company as a whole — and who have told you hard truths before
- Someone you feel exemplifies your company’s values
- People who have worked closely with your candidates, including peers and direct reports
In the end, your company’s success largely relies on how well your successor will work with the people instrumental to your business’s day-to-day functions.
- After you’ve collected this feedback, look for trends.
You might be surprised by how differently (or similarly) people perceive each candidate. It helps to write down the feedback you’ve received — it’s often easier to see truths when they are on paper.
- Set aside time to spend in solitude digesting all of this information.
It might not be easy to find this time in your schedule, but this step is vital. Even with all the feedback, it is ultimately your call whom you select or recommend as your successor. In the end, you must trust your instincts. Your gut will point you in the right direction.
- When you have a clear choice in mind, it is time to develop a communication plan to roll out the news, both internally and externally.
If your company has a marketing team, engage them in this step of the process — they should know the best way to sculpt and distribute this message. Generally, key stakeholders should be informed first, followed by direct reports, and then all employees. Once the news has been announced internally, only then should it go to media outlets and external platforms.
If you need any further encouragement to start planning, look to best-selling author and leadership coach John C. Maxwell, who declared, “A leader’s lasting value is measured by succession.” Put the time in now to determine what your legacy will be.
