FD Insight: Succession Planning
March 9th 2015 | Posted by phil scott
One of the hallmarks of a truly successful business is longevity. And when a business prospers over generations, it follows that key personnel will, over time, need to be recruited and replaced.
That’s not something which should be left to chance. Smart businesses will plot their evolution long before team members leave. Succession planning is a crucial part of strategy, but one that can often fall down the list of priorities until it’s too late.
We spoke to a group of the UK’s most successful finance directors, gathered at a recent FD Recruit – FD & CFO Conference, to learn ways in which they are assisting their organisation’s ongoing survival.
Leave your ego at the door
One of the main reasons given for the lack of attention given to succession planning is time and priorities. But one of the unspoken reasons that many individuals wrestle with is the thought that the business will not only survive, but thrive long after they have any influence.
If this is you, you need to reframe the problem. Succession planning is not merely about recruiting your own replacement, it’s about building a legacy. One day, you’re going to want to retire, or, for other reasons you either won’t want to or be able to continue.
Either way, it’s important for everybody else within the business that you establish a way it can continue after you. And if you do this successfully, your contributions will long outlast your presence.
Work out what’s needed
The best way to map out a successful succession strategy is not to identify who on your current team can step up into which roles, but to first define the roles and identify what tasks and responsibilities need fulfilling.
In some cases you may have already hired a perfect replacement, but in others you will need to look outside the business. But most of all, it’s important not to shoehorn the ‘best fit’ into a vital role, which will only upset the stability of the business.
Promote with care
Ideally, you will be able to promote from within to fill a future vacancy. This will give you the opportunity to mentor and train and ease an individual in gradually.
However, be careful when doing this, as that individual will have peers looking on. Make your selection process as transparent as possible, decisions should be made objectively. You don’t want your chosen recruit being envied because of their mentoring. And be aware that an interested party who isn’t selected might feel they are unappreciated, or that their future opportunities are limited. Many unsuccessful candidates will look for new pastures at this point.
Don’t hire a photocopy of yourself
Whatever made you successful at your role clearly worked, and that’s great. But your success was handling current issues, and those of five, ten or more years ago. A version of your business that is in the past.
Remember that when you’re selecting a successor, you’re installing somebody who will be making decisions based on a future variant of the business, addressing problems that will arise in five or ten years’ time.
Some skills you possess you will want to see mirrored in your replacement, but others, such as your background, your experience, your methods and your long-term goals, don’t need to be the same. Opt for someone who will be great in your role in a decade’s time, whatever that may entail.
It’s not all about the cash
If you’re looking to replace stakeholders and there’s investment on the table, don’t automatically opt for the highest bidder. Sure, that huge cheque will make your bank account look great once it clears, but how long is that good feeling going to last if you opt for someone with the wrong objectives, the wrong ethos or who simply has more money than sense?
Don’t be swayed by someone with deep pockets. Instead, pick someone with a deep understanding of your organisation, someone who will keep the business in good shape for years to come.
It’s crucial that you review your succession plan occasionally. Maybe every year. Situations change, people change, markets change, and what you put into place a year or more ago isn’t necessarily right for right now.
But that said, be careful not to chop and change on a whim. If you’re mentoring an individual, or you have other systems set up in place, don’t go changing things unnecessarily and playing fast and loose with an individual’s career. Check that your plan is still relevant, but don’t make sweeping changes unless it’s over something important.