16 Mar Getting Serious About Succession
Last month’s news that Jeff Bezos was stepping down as Amazon’s CEO put succession planning in the headlines. But you don’t have to be the third biggest company in the world to be concerned about succession. Every day, hundreds of business leaders wrestle with this issue without ever making the news. And while nearly all would say it’s important, a much smaller number are actually doing it. In fact, according to one study, the number of U.S. companies with a succession plan has decreased in the last five years. When it comes to succession, why do we say one thing, and do another?
Three Reasons You’re Not Planning for Succession (and Two Reasons Why You Only Think You Are)
Reason #1: The immediate future is the one you’re focused on.
It’s not surprising when leaders focus their energy on dealing with the immediate – especially now, with uncertainty still in the air. But the environment alone can’t account for the widespread lack of succession planning in private companies. It didn’t seem to be a top priority before the pandemic and it may not be one now. The reality is, unless a top leader pushes succession planning because she or he thinks it’s a vital, strategic issue, it won’t happen. Day-to-day business concerns will always get first dibs on your time.
Reason #2: You’re not ready for the difficult conversations.
Very often, when we say “I don’t have time,” or “the business needs my attention,” what we really mean is “I’m not prepared to look it (or them) square in the eye.” There’s no getting around it – succession planning requires difficult conversations and self -examination. But instead of putting it off because you’re not ready, think about what you can do to get ready. Susan Scott, author of Fierce Conversations, said it best: “The most valuable thing any of us can do is find a way to say the things that can’t be said.”
Reason #3: You don’t have a good reason to.
Whether you’re 48 or 68, stepping away from the business can seem like it’s light years away. So it may feel like there’s nothing pressing you to plan now. But in the back of your mind, there’s that niggling doubt. So how can you inject a sense of urgency into your thinking? You could set yourself a challenging goal, or give yourself a limited timeframe for taking the first step. You could “burn the boats” and go on record so there’s no turning back. Or you could recalibrate your thinking by talking to other business owners who’ve navigated succession. Widen your perspective and you might find just one good reason to start.
Reason #4: You’ve thought about ownership, but not management succession.
When private companies talk about succession, they’re almost always referring to ownership – who will own shares or control the business in the future. Management succession on the other hand, is all about who’s going to operate the company in a way that makes the shares worth having. It means preparing people to do the work that needs doing so that the company continues to be viable. Ask yourself these questions:
- Has anything changed in the business in the last two years? Have the demands increased? Are any new skills required?
- Will you have any retirements other than your own in the next five years? If so, how will you replace the talent?
- Can you fill those positions without over-promoting people and risking the “Peter Principle”?
- Do you have the people in place right now to fill key positions without making costly external hires at the last minute?
If you haven’t thought about management succession, you may be planning, but only partially.
Reason #5: You’ve developed a successor, but not the organization.
Business sustainability is all about replacing reliance on individuals with creating organizational systems. (This is one reason why franchises have a much higher rate of success than other small businesses.) When asked “What’s your succession plan?” far too many owners answer: “Karen. She’s been working here 20 years and knows everything I do.” But what happens if Karen decides down the road she doesn’t want to be the CEO? Or gets lured away by a competitor? Or the unthinkable happens and Karen becomes disabled? Some owners tell themselves they’ve planned for succession because they’ve chosen a successor. But it’s much more than that. Succession means developing the organization and its systems so that if something happens to an individual, the business can go on.
If you’ve been telling yourself that you don’t need to worry because you’re not ready to retire, or you have good people to step in, or you’ll figure it out when the time comes, take another look at the reasons why.