Succession Planning

I see and work with a number of CEO’s that are owner/founders of their organization.  These days, they all seem to be talking about the same thing… Succession Planning.

Now, before you stop reading any further – thinking that this does not apply to you – think again.

There is a HUGE number of businesses all around the world that were started years ago by an owner that has now reached an age where they are thinking about retirement. There is also a HUGE amount of businesses out there where the workforce is reaching an age where retirement is going to happen… very soon.

Who is going to take over?

The challenge for all business leaders is this: Who is going to take over?

In a family owned business, there may not be any successors ‘interested’ in taking over the company.  This leaves the owner/founder in a desperate position to find a buyer that will give a fair market price and not prey on their vulnerability. Even if the owner/founder has a daughter or son that wishes to take over, they may not be ready. Or there hasn’t been a good transition or succession plan established to equip the successor to take over and keep the business viable, let alone grow it.

A brewing crisis

In a traditional widely held ownership business, there is also a brewing crisis with the approaching mass retirement of key team members. Through the economic challenges of the last thirty years, conventional business logic has been to cut cost, reduce training, vertically load key staff and not develop talent for the future. Well the future has arrived, and leaders are looking through a lens where talent is incredibly hard to find and when they are able to find the talent, the skills required are non-existent.

And, if you are thinking of disruptive or innovative strategies to mitigate the lack of skilled or competent talent like Artificial Intelligence or Automated workforce (Robots), that solution is still years away from being viable for most businesses.

What are your options?

1. Run and hide.  That may have worked when you were three years old.  Probably not a viable strategy now though.
2. Acquire or Merge.  That could work. Make sure you are looking at a cultural fit first though before thinking the acquired talent will save you. Today’s challenge is that if team members in the acquired organization don’t like the change, they will leave because they have more employment options than ever before. Culture truly does eat everything for breakfast!
3. Plan.  Assess your landscape. If your business or team still has three to five years before you think there is going to be a talent or successor crisis, invest heavily now in developing talent that will be ready when mass retirements start. Part of your plan may be to create incentive programs where retiring team members can collect their pension and work part-time as a contractor for you. This gives them the flexibility to enjoy retirement without financial pressure. It gives you the skilled talent to train new talent.
4. Successor Alternatives.  For owner/founders that are ready to, or are thinking about stepping away from the day-to-day of the business and there is no other family member or logical internal candidate to take over, you may need to search for a professional GM that can step in and run the business for you. Benefits to this are that you get an annuity stream from dividends or from selling shares in the business. Also, there are a number of retiring executives out there that still want to be involved in business, just not on a full-time basis.  I know of a number of business owners that have been able to step away from the business and bring in a professional CEO on a part-time basis.

Whatever the challenge, the best time to start planning for this ‘event’ was ten years ago. The second-best time is right now.

Robert Murray is a Vancouver, BC based Business Strategy Consultant, #1 Best Selling Author, International Keynote Speaker, and TEC Top Speaker of the Year for 2018. For further advice, insight and inspiration on how to unlock your inner leader, follow Robert on Twitter, LinkedIn, and Facebook.

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