In order for any organisation to achieve long-term growth and sustainability, it’s paramount to have the structure and processes in place that reduce reliance on individuals within the business. This is standard practice in large organisations, but rare in small and medium enterprises (SMEs).
It’s thought that up to 60% of small business owners don’t have a succession plan. Our business consultants are here to explain why it’s so important to develop an exit strategy and how to go about it.
What is succession planning?
Put simply, succession planning involves identifying new leaders to take the place of senior managers in the future, and providing the support and training they need to do so. This ensures that when the business expands or loses key individuals, the company already has a suitable candidate to fill the role.
Why is it so important?
Successful businesses are built on strong leaders, but relying too heavily on individuals can present a threat to the sustainability of a business model. Employees can move on, partners can retire, and even you could find yourself in need of an exit strategy should a personal crisis arise.
As such, succession planning shouldn’t be an afterthought when you foresee a change on the horizon; it should be an ongoing strategy to nurture talent in your business, strengthen internal links and mitigate risk in your operations.
Leaders of SMEs should be doing everything in their power to support the longevity of their organisation. Looking at this from the perspective of a Director, the ideal is to make yourself redundant, while still in the business to guide and support the transition, maintaining strong relationships with customers and suppliers.
4 tips for succession planning
The importance of succession planning for SMEs is clear, but how do you go about it? We have a few tips to help you start developing a workable exit strategy:
Identify gaps – It’s worth appraising your current workforce to determine which roles are most likely to need a successor, and which managers or members of staff might have the skills and personality to take their place.
Train and develop – You might identify a talented middle manager in your organisation, but that doesn’t mean they will thrive at a senior level. To facilitate the transition, make sure you provide ample support and training in advance.
Be flexible – Developing a plan is great, but leave some room for manoeuvre. Bear in mind that an opportunity might not arise for promotion, or that someone primed for succession might move in another direction.
External help – With no prior experience in succession planning, you might struggle to gain the distance you need to appraise and develop your team. As such, consider partnering with external consultants who can guide you through the process.
It can be difficult to look ahead when you’re so focused on the here and now of your operations, but it’s vital to put a strategy in place that will protect your business from HR problems. Relinquishing control is the hardest task of all, yet doing so will ensure that you continue to go from strength to strength, no matter who’s in charge.