Benjamin Franklin once said, "By failing to prepare, you are preparing to fail." Although most businesses understand this axiom and emphasize strategic planning, foresight often extends only one or two years.
Pitfalls of Succession Planning
One of the main examples is failing to prepare an organization for future succession planning of its management team. Far too often top-level managers retire or leave without giving proper notice, forcing their organizations to scramble into a rushed hiring process, which usually doesn't allow time for proper training.
This hasty approach can have significant consequences; a staggering 50-70% of newly hired managers and executives fail at their new jobs and leave within 18 months; often due to poorly planned succession.
With the turnover cost of hiring an executive being equal to up to 213% of the position's yearly salary, and the cost of forced succession to shareholders for top-level management at an average of $122 billion in market value, the right hire the first time around will save your company tons of time and money. A company's value is measured by the strength of the management team, demonstrated sales, and profitability.
No matter your company's size or sector, one key to nailing the hiring process the first time around is implementing a proper succession plan.
Why Succession Planning is ImportantWithout a succession plan, new hires often struggle to integrate into their new organization. One survey revealed that 94% of employers reported that having a succession plan positively impacts their employees' engagement levels.
A succession plan is a roadmap that not only helps new hires instantly understand their place in the company, but also contextualizes where your business has been, it's direction, and how they can help.
Furthermore, a succession plan allows new employees to study previous successes and failures, allowing them to formulate how they'll put their unique touch on the organization's future.
Succession Planning Process
Generally speaking, organizations should start putting together their succession plans at least one year before they hire a new employee. Succession planning for family owned businesses is no different.
During the first six months, your business should sit down and evaluate itself holistically. This evaluation period includes looking at your company in general, as well as the position for which you're hiring, analyzing established goals, past successes, and directions that will be best for the future.
After understanding this broader context, it's time to define the position and the skills it will require. Defining the position requires organizations to discover where knowledge gaps exist between executives, senior management, and middle management. These gaps can lead to big problems over time.
It's necessary to implement training and mentoring programs among your employees to ameliorate knowledge gaps. Once these programs are in place, promoting from within the organization will be far smoother as you'll already have an eye out for the rising stars in the company.
Executing your Succession Planning Strategy
After defining the parameters for your new hire, during the second six months, it's best to hire an executive search firm to help locate the best candidates both internally and externally.
When you find a great candidate, it's ideal for them to engage in a lengthy on-boarding process. The on-boarding process will include reviewing the succession plan you created to contextualize their role in the organization, as well as where the organization currently stands.
If the incumbent position holder is still employed, it is paramount for new hires to shadow them. Shadowing the departing employee will help your new hire understand the current standards for the job and how they can work to improve them. During this deliberate transition, your new employee will have the time necessary to build trust and a good rapport with their colleagues before they officially begin.
All in all, taking the time to introspect as an organization, assess your past and future goals, and reflect on what strategies and operations are working will help you not only develop succession plans that return profits to shareholders, but also empower your organization to reach new heights.
By the end of this process you'll end up with a stellar new hire, a smooth transition, and a wiser business.