Keys to Succession Planning
Many successful entrepreneurs possess leadership abilities, are able to plan and adapt for potential challenges and are not afraid to take a risk. Succession planning requires many of those traits. Careful planning and a keen eye for detail are critical to the plan's success. Entrepreneurs who plan on retiring or otherwise leaving the company need to be able to identify suitable successors. This will keep the company in good hands and help promote its future success.
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Plan Early
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When a business undergoes some form of transition, such as when the president resigns or the owner sells, it likely will experience some resistance and difficulty among the employees and clients. Succession planning seeks to minimize the discomforts of a transition. The first thing succession planners must do is realize that the plan needs to be in place long before it is needed. According to the Business Week website, succession plans can take years to come together. If an owner has a target date to retire, for example, the succession plan should begin well before this date, not the week before he is set to leave the company.
Identify Critical Positions Within the Company
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Many succession plans begin with choosing who the new chief executive officer will be when the current one retires. While the owner or CEO of any business is a critical position within the company, a well-rounded succession plan should identify all the positions in the company that need to have a ready replacement should the current person holding that position resign, retire or cease acting in that capacity. According to the Center for Association Leadership, because succession planning involves "replac[ing] one leader with another," succession plans should identify each position within the company that has a leadership role. The CEO, senior manager, chief financial officer and heads of departments are some examples.
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Choose Potential Successors
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The business could hire outside of the company and engage in headhunting for more qualified candidates when it looks for a successor. However, the business can control and train successors from the inside by analyzing potential candidates and developing a training regimen. The grooming process allows the current holder of the position to personally oversee a candidate's training and time his exit according to when the candidate is ready.
Plan for Contingencies
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Succession plans must be flexible and reviewed periodically to ensure that they stay relevant. Planners must be aware that potential successors could leave the company before taking over, so contingencies must be in place. Additionally, it might take longer than planned to train the candidate, so the plan should be revised as necessary to ensure that the transition is as smooth as possible.
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