HR experts say companies need formal succession plans to be competitive. They indicate that internal talent mobility is the challenge many organizations face in developing leadership succession, and there’s recent research to support their claims.
A recent Korn Ferry study found that only 23% of senior executives reported that their organizations had developed a strong pool of candidates ready to fill top leadership positions. Other research by Harvard Business Review indicates fewer than 1/3 of companies surveyed now have a comprehensive succession program that makes certain a qualified and trained leadership hierarchy is in place when needed, to ensure and improve high performance standards across the organization.
For small or family-owned businesses, the outlook is more depressing. SBA statistics show that 2/3 of family businesses will not survive a leadership change. The high failure rate impacts the local economy, job growth and certainly the many people these businesses employ. Clearly, delaying succession planning can have fatal consequences for a business.
Why is succession so crucial now? It’s all about demographics. We have a limited number of people in the talent pipeline. Baby Boom-era business owners, entrepreneurs and CEOs are retiring by the thousands every month. Their businesses will be heavily affected by an aging workforce and a loss of experienced personnel.
Without a succession plan that facilitates constant internal talent mobility, where employees are continually developed and challenged with new responsibilities, a company risks incurring increased costs from recruiting and onboarding new hires; a reduced level of engagement due to shifting staff workloads, and a general loss of productivity from a diminished learning curve.
It’s likely you have been thinking about succession planning often if you are looking to continue or even sell your business. Having the right people in place to continue the operation on your organization makes it better for you to continue your legacy and keeps your business an important part of the local community. It also increases the value of your organization as it shows you have a plan to secure those client relationships as well. Succession should be included in your annual Strategic Planning, or year-end planning.
We find that some of our clients are discouraged about finding new talent today, yet those that have dedicated smaller effort over time have overcome this tough industry challenge. Years ago I met a man in North Carolina who told me that they had young, talented, qualified applicants waiting in line to work for his agency. When I asked him what he was doing, one of the first things he told me was, “Well, Brandie, first of all, we stopped the feeling like you were walking into a morgue when you walked through the door!” He continued, “WE had to change our perspective. On a lot of things.” He went on to tell me that they brought in younger talent, remodeled the office, and started really having fun. Younger generations naturally started referring their friends, morale increased and of course so did productivity! Another positive result? Yep, more clients, as well!
He had some great ways to recruit, and most important, he spent time EVERY WEEK talking to people in the community about their growth and pursuit of succession.
Businesses that adopt the practice of succession planning are proven to be a step ahead of their competitors. An example of a company that has been distinguished in implementing succession planning is General Electric under the supervision of Jack Welch. In 1991, Jack Welch said choosing his successor was the most important decision he’d make. It would occupy a considerable amount of his thought almost every day.
Regardless of whether you want to stay a step ahead of your competition or just hate the thought of your business falling apart when you retire, do give serious thought to creating a comprehensive and flexible business succession plan. Consult experts with experience in your profession if you don’t feel you have the required expertise to develop your plan. Most important, don’t put off succession planning; your business survival literally depends on it.
If you would like to talk about ways to find talent, and get some of the real world ideas our clients have used, just reach out to either of us. We’ll spend a few minutes with you sharing that have helped our clients, no strings attached.