Do you intend to pass your company on to others someday? Ensure your business is prepared with a succession plan that incorporates talent management.
It takes hard work to maintain a successful business. The number of daily responsibilities can make it easy to get caught up in areas that need attention now. However, one of the most important things you can do to ensure your organization’s longevity is to plan for succession and leadership transition. By putting in the effort early, you significantly increase the chances of your company continuing to operate smoothly once you retire or leave your position.
What a Succession Plan Entails and Why You Need One
A succession plan details who will take over your business when you exit. This could be a co-owner, a family member, an outside party, or an employee. This plan contains important business and transfer details, including the following:
Standard Operating Procedures
Funding for Ownership Transfer
Research shows only 1 in 4 private company boards and only 1 in 3 small businesses have documented succession plans. Perhaps this is because the idea of transferring the company feels so far away…and maybe it is! But life is filled with nasty surprises — illnesses, accidents, emergencies, or other situations may force you to step away from your business sooner than intended.
Without a succession plan on file, your organization may suffer from gaps in leadership, loss of institutional knowledge, lowered employee morale, and decreased organizational performance.
If you don’t have a succession plan, now is the time to strategize and prepare. By planning ahead, you greatly lower the risk of your business crumbling down once you leave.
Mining for Talent: The Benefits of Talent Management
Talent management is the practice of growing your employees’ abilities. A strong process helps develop powerful candidates who can take over your business when the time comes.
Utilize the resources at your disposal to find and develop high-value employees. Look for committed candidates who wish to develop themselves professionally, are ambitious in their career goals, and appear open to gaining an intimate knowledge of the business.
By installing individuals who fit that description early, smoother transitions can take place — both unexpected and expected ones. Hiring and developing people before an urgent need arises benefits the rest of the company as well. Strong leadership teams composed of experienced, well-trained employees are able to take swift, effective action for the organization’s best interests when an executive or owner leaves.
Finding Diamonds: Utilizing Talent Management for Your Company’s Future
These specific steps can help you build a leadership pipeline that adds value to your company and your succession plan:
Source high-potential talent. Look for these individuals inside and outside your organization. Identify high performers who are innovative, take initiative, and care about the business. Recruit skilled people to join your company by accurately showcasing your brand, pre-screening applicants, and creating a thorough interview process.
Also, implement an onboarding process for new employees to learn about the work culture and get to know their coworkers. This encourages a feeling of belonging. (You can find more information about creating a successful work culture here.)
Train and develop talent. Continue to teach and train beyond the first few weeks. Create a mentorship program, host seminars, and encourage managers to conduct hands-on training. For a deeper dive into adding meaningful professional development to your organization, check out this article.
Professional development opportunities not only grow and enhance your employee's skills to support your business; they also improve job satisfaction and retention. As mentioned in this Forbes article, this is important in the long run because it ensures employees are ready and willing to step into higher-level positions and take on added responsibilities when other employees retire.
Retain top talent. You want talented individuals in all areas of your business and especially as successor candidates. A study based on 600,000 people found high performers were 400% more productive than average individuals. A retention strategy adds to your succession plan by keeping those powerful players with you. In addition to providing professional development, here are ways to motivate high-potential employees.
Acknowledge and reward good performance.
Provide competitive salaries and benefits.
Incorporate empathy into your work culture (see here).
Listen to employees’ ideas and feedback.
Develop your succession plan. Now that your company network contains high-talent individuals, you can develop a reliable succession plan based on people’s abilities and strengths. Ask yourself some questions: When do you plan to sell the business? Who are the top people you want (and are interested in) taking over? How will you ease them into new roles and responsibilities? The teams and employees you invested in will pay off in their capability to manage the business when you step down.
You don’t need to create this plan all by yourself. It’s smart to gather insights from a business consultant, attorney, and financial planner. If you know others who previously owned businesses, ask them about what worked and what didn’t when they passed it over to others.
It’s never too early to start planning for the future. Make and keep a succession plan on file. Review it often, adjusting as needed. If you want your organization to shine like a jewel long after you’ve retired, look for hidden diamonds among your employees. With some polishing, your organization’s future will be bright.