An Aging Warren Buffett Shines a Spotlight on Succession Planning

Warren Buffett, CEO of investment firm Berkshire Hathaway and one of the world’s wealthiest individuals, is 84 years old. Last month, Buffett sent his 50th annual letter to Berkshire Hathaway shareholders, once again igniting speculation about what the company will do without him at its helm. Berkshire Hathaway has been criticized for not having a sufficient succession plan in place, and that’s surprising for such a public organization.What about your company? You may not have any leaders as prominent as Buffett, but chances are good you have people who would leave a serious void if they were to retire or leave suddenly for some other reason. If you haven’t even thought about succession planning, you should start. If you haven’t thought about it in a while, you should revisit and review your plans. These recent articles and blog posts can help you get started.Understanding Succession at Berkshire Hathaway After Buffett. The New York Times: “Berkshire’s succession plan has always called for dividing Mr. Buffett’s role in two. In earlier decades, investments were to be managed by Lou Simpson, the savvy portfolio manager at Geico, the company’s prosperous car insurance subsidiary. The executive function was to be handled by Charlie Munger, Mr. Buffett’s long-time No. 2. Both men share Mr. Buffett’s values and understand Berkshire culture. But that succession plan stopped making sense as all three men aged: Mr. Simpson retired and Mr. Munger is ninety-one.”Being Part of the Succession Plan isn’t an Entitlement. HR Bartender: “Employees need to be accountable for their future. Just because an employee is part of the plan doesn’t mean they can’t be taken out of the plan. Employees need to be accountable for achieving their career goals if they want to stay in the succession plan.”Most Small-business Owners Aren't Planning Ahead. CNBC: “...proper succession planning is essential, in particular, for family businesses, which will have to either identify family members who are qualified for leadership positions or consider other contingencies beyond the family. Succession planning for family-owned businesses, however, involves the nuances of family relationships and can be a difficult process.”4 Best Practices of Succession Planning. Boulay Group: “Involve your board and C-level executives along with your human resources leader. Too often the group selecting the future leader is limited to HR, one or two C-level executives and the current CEO. But to find the best possible fit, the pool has to widen and the board has to take an active part in creating a job description that goes beyond a list of bullet points and into the competencies and experiences desired from candidates. By getting the board involved early on the selection may become easier, as the applicant will be vetted based on its input; getting board members' approval will be that much easier.”Success: The Key Word Contained within Succession. Plan Now or Fail Miserably. MHP Financial: “Another example, which I wrote on in August 2013, is that of Berthold Beitz, dubbed an influential industrialist personifying Germany’s post-war recovery. Beitz was born in 1913 and was 99 years and 11 months old when he passed away, a great age, but not uncommon these days. What was unusual though, was that Beitz was still leading the supervisory board of ThyssenKrupp, the German multinational conglomerate consisting of more than 670 companies at the time of his death...Just days after his passing, Germany’s business media was painting a gloomy picture for ThyssenKrupp. Manager Magazin raised the company’s uncertain future, while Der Spiegel forecast a radical reconstruction of the company. And the Krupp foundation faces the same problem.”Want to learn more about succession planning? Read our white paper:Success Labs is a leadership development and management consulting firm in Baton Rouge, Louisiana. For more than 25 years, our expert team of consultants has worked with hundreds of companies to explore their business potential and improve their company and cultural performance. Contact us to get proactive about your people strategy.