Identify Values to Help Start Succession Planning, Expert Says

Communication is at the heart of a successful succession planning process, says Sherry Herwig, the director of the Family Business Center at the School of Business at the University of Wisconsin. Leaders must be open to others’ thoughts and suggestions during the process.One of the most important things business leaders need to know about succession planning is that it can be a lengthy process, Herwig says. “It takes time -- years, in fact -- but the first step is to begin and preferably sooner rather than later.”And if you’re doing succession planning for a family-owned business, that adds an extra level of complication because of the emotions and relationships that exist among the family members. “Involving them in the planning and discussion can help,” Herwig says.

Putting Together a Succession Plan

First, Herwig says, “identify your values, vision and overall philosophy for both the family and the business.” Doing so can set the tone for the succession plan itself. “Identify potential leaders based on skills, knowledge and ability, not just family relationship. Get outside help to work through the legal and financial details of the plan.”There are several mistakes organizations make as they’re getting into succession planning, Herwig says. They include:

• Not having a written plan or failing to keep the one they do have updated as things in the family and business change.

• Not communicating the plan to others.

• Not preparing, training or educating the next generation.

• Thinking they have to have all of the answers.

Having a strong succession plan in place can make specific business successes possible, Herwig says. It can maximize the business’s opportunities, continue the founder’s legacy, ensure a smooth transition of leadership and ownership, strengthen relationships among family members, and even reduce stress, conflict and hurt feelings.Herwig recommends every succession plan incorporate these steps:

• 
Establishing goals.

• Identifying the decision-making process.

• Identifying potential successors.

• Making a plan for developing those successors.

• Estate planning (for family-owned businesses).

• Developing a leadership contingency plan that explains what will happen in case of an emergency, such as an unexpected death, a sudden disability or a quick retirement.

• Creating an exit strategy for current leaders and building a timeframe for executing that strategy.

Communicate, Then Act

Advanced planning with an eye on the long-term is one of the best practices for succession plan. “Put it in writing,” Herwig says, and then communicate the plan so everyone is on the same page. Then put that plan into action: “Develop a pool of potential successors and invest in the future leaders education and training.”This may include people outside the family for a family-owned business. “Find out if children want to be part of the family business and, if so, in what capacity do they see themselves. Have children get experience working outside the family business.”Staying flexible is vital, Herwig says, because while planning can help, every business is different. “That is why the process is so important.”When organizations don’t have succession plans, they’re vulnerable to unprepared or unskilled leadership, financial difficulties and confusion, Herwig says. “That can potentially represent a loss of the business and its legacy.”Want to learn more about Succession Planning? Read our white paper on the topic: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.