Succession Planning

4 Steps to Successful Succession Planning

Most owners don’t think about or actually plan out their succession plan. Even the ones that do, only think about the financial, tax and estate planning aspects of succession planning. There are typically no formal buy-sell agreements or, if any, only impractical or outdated ones.  No ability or tools exist to handle family or remaining partner or senior management disagreements.  (Why Management Succession Planning is Important?)

Our focus in Succession Planning is the transition or succession of the MANAGEMENT of the company. Creating a Management succession plan is what gives your business real, salable value. This is even more important than systems, processes and, surprisingly, sales and profits. Imagine what would happen to your company if you or a key employee suddenly was unavailable.

Management Succession Planning and Business Continuity / Business Legacy are Directly Linked

We all know or have witnessed companies that have failed in the second or third generation hand-off. Let’s look at some of the reasons why they fail:

  1. No Succession Plan.
  2. Multiple internal suitors for the same roles (bad internal competition, duplication of efforts and missing key pieces or ‘gifts’).
  3. Lack of training by the Founder (CEO) of the ‘secret sauce’.
  4. No clear understanding of the Passion / Brand / Business Purpose / Vision by the Senior Team and workforce.
  5. The Passion / Brand / Story is not embedded into the fabric or culture of the company.
  6. CEO was ‘too’ strong of a leader and didn’t allow their future leadership team to develop.
  7. CEO avoided the ‘family’ challenges of making role selections for the transition.
  8. Senior managers or family members pressed into roles they don’t like or aren’t capable to perform.
  9. Did not involve trusted advisors with a coordinated approach. Each discipline (insurance, personal estate, corporate tax, personal tax, legal, banking, management consultant, human resource development, etc) had wants and needs that sometimes run counter to other areas of discipline wants and needs.
  10. No plan for the unexpected. We all know owners who get sick or pass away, leaving undecided issues and unprepared heirs to try to make a go of it.
  11. Should we keep going?

4 Steps to Management Succession Planning

1. Revisit the Vision / Brand / Business Purpose of the company.

Figuring out the right people to lead the organization has a lot to do with matching the skills, experience and perspective of your successor management with the Vision and Brand of the business. Think about the skills and talents required to drive the brand first, before trying to match people and place people into specific roles. Most owners will inventory their people first, and then try to figure out a place to use them. You will likely over-emphasis or mis-focus aspects of your business instead of staying true to your brand and corporate story.

2. Sit with your people and find out what they want

Tying desire and passion of the individual to their primary role and responsibilities is best.  People perform at their highest level with less turnover if matches with what they like doing. What they like doing is usually what they are best at doing. This discussion should be very open and have most of its focus on the future, where do they want to go, even if it’s not with your company.  If done right, it will be a very open and interactive discussion than will give you clues for how to leverage the gifts of your existing people.

3. Most likely you are missing some parts of the puzzle

Most successful founders have more than 1 gift, business gift. Most of us average people only have 1 gift, but we have at least 1.  Don’t oversell yourself on which gifts your favorite person or family member has. Be honest. Have integrity for the other employees, customers, the brand….and your Legacy.  The business Legacy is key, not the mechanics of making revenues and profits. Quite the opposite. It is the integrity of the Brand and the (positive) institutionalization of the brand into the daily culture. Key is that the Brand is independent upon any individual person, including you, the owner.  We will likely need to go outside the business to find part of the solution.

4. Use your team to build it

If you have a senior team, get them involved in the process. If you don’t have one yet, that is your second step, identifying potential members of your senior team (see above).  Use a third party facilitator like a business coach.  This is not a role for the CPA, the attorney or other trusted advisor can play. We are talking about getting to know your people, their talents and their desires.  These other advisors will play important roles in the legal, tax and financial funding aspects of the succession plan, but not this most important part.

Management Succession Planning is the key driver in the current, future and resale value of your business.  Make a plan ahead of time so you have time to design and implement it. It won’t get built overnight and you will make changes as you test your plan and your people.

Please leave comments below for discussion of Management Succession Planning. Share your concerns as well as what has worked or not worked for you. Please join our Community of 6 Pillars of Business Success.

Next Step on the Path to Business Legacy

The above will be enough of a guide to get started today. However, at iMPACT Business Coaching, we recognize that it is difficult to change course and as well as to implement ideas. We are skilled at helping companies clarify their vision, develop strategies and implement action plans.  Along the way, we build employee buy-in and the strong leadership and performance focused cultures where employees want to be part of the future.

Please contact us at info@iMPACTbizCoaching.com.  Vision executed with iMPACT.

847-544-6878

Lack of Leadership

Are you losing your Best Employees?

Lack of leadership can drive your best employees away. These are the hard working employees with ideas and initiative. The ones you want to keep.  These Best employees will not wait for a leader’s direction (or lack thereof). They get frustrated when their ideas are killed or conflict with other equally hard working initiative driven peers. They get confused and disappointed when you don’t recognize or support their idea.  This is underlined when you, as their leader or manager, don’t explain why the idea didn’t fit either today or at all.

Lack of Leadership

Leadership Vacuum

Does your company provide a lack of leadership?

Most of us were never taught how to be leaders. If we learned it, it was from on the job or on the (sports) team training. Sometimes it comes naturally, but old school thinking of less dialogue and too many assumptions (that an employee should know what to do) doesn’t work in today’s world.

3 Questions:

  1. Does your employee know what they are supposed to do?
  2. Does their list (of top 10 items) match yours?
  3. How do they rank their 10 items? Is it the same Priority as yours?

If you really do this test (yes, really do it), you will be sadly enlightened that it is not clear. The basic job expectations, prioritization (not everything can be done or at the same time) and big picture (how their job connects and fits in the rest of the company) have not been spelled out clearly enough.  Vision without leadership will not allow you to put your Business Purpose into action.

What to do to regain Leadership?

The good part is you can start today.

1) Take Responsibility:

Employees will respect you if you schedule a meeting one-on-one or company-wide and state that its your responsibility to lead.  If there has been a misfire on what people are working on and focused upon, then its your fault. Today’s employees respect a strong, but open leader.  Tell them that, starting today, it is going to change.

2) Written Job Expectations:

Job Expectations are different than Job Descriptions. Job Descriptions tend to focus on the tasks, not the priority or how the tasks fit together.  Job Expectations focus on the goal of the effort, the result for the customer or fellow employees that fits in with the overall Vision and Business Purpose of the company.

3) Function Chart:

Out with the Person driven organizational chart. In with the Function driven chart.  Nothing happens without people, but we need to understand how the parts (Functions) work together, what High Performance looks like.  We need this before we know who to hire or how to apply our existing talent.  The chart is designed not around our people, but around fulfilling our Business Purpose. We then backfill with the people to make it happen. Use a Function chart to help explain the big picture and how each person and function area fits in. Explain the dynamic of requiring all parts to work well (and well together) in order to fully deliver on our promise to our customers.

Function Chart

Leadership through Function Chart

4) Set Goals for Performance:

Each Function area should have a set of goals or targets to achieve.  These performance goals are set as a range of values (from low to high) for which the manager of each Function Box is responsible. Exceeding the value by enough margin creates real (extra) value and then becomes the basis for any incentive plan. Because it creates real and extra value, the incentive become self funding.  The performance goals should be reasonable, yet challenging and must fit into the overall goals of the company. Many of the individual function goals may relate to successful interaction or hand-off between other Function Boxes.  High performing companies excel at not just the ‘solid lines’ of hierarchy, but also the ‘dotted lines’ laterally across various Function Boxes.

5) Measurement and Feedback:

Create easy and visual tools to capture data on the performance goals.  Weekly, not monthly. Open for all to see, not hidden on a reactive manager’s desk or in a filing cabinet. Timing between action and feedback on that action must be kept short otherwise there is a disconnect between the two.  See it and celebrate it.

Too many companies and managers think that feedback and reporting is for the benefit for the manager. It’s actually less than 1/2 of the story. Most importantly, the feedback needs to get into the hands of the person doing the work, the person making decisions through out the day and week, the person interacting directly with the customer and the other action teams.

Next Step on the Path to Leadership

The above will be enough of a guide to get started today. However, at iMPACT, we recognize that it is difficult to change course and as well as to implement ideas. We are skilled at helping companies clarify their vision, develop strategies and implement action plans.  Along the way, we build employee buy-in and the strong leadership cultures where employees want to be part of the future.

Please contact us at wgermanetti@iMPACTbizCoaching.com.  Vision executed with iMPACT.

847-544-6878

iMPACT Leadership

Leadership Training and Implementation -iMPACT

Business Coaching in Chicago, Illinois.

Based out of Geneva, Illinois, iMPACT Business Coaching assists Leaders and Leadership for today and tomorrow.

Go Play Outside – Helping your customers and employees make good choices

“Go Play Outside” – Helping your customers and employees make good choices

Go Play Outside. Well, that is generally a good idea; however, this post about how to make good choices, or more importantly, instilling that in others. This can be applied to both customers and employees.

Story. Some say true, others not. This is how I remember it.

My daughter was around 11 or 12 at the time. On a Saturday morning, she comes to me and says, “We want to go to movies.” I said, “Great, have fun.” And off she went.

She comes back a few seconds later and asks, “Could you drive us?”. I asked who, where and when and then quickly agreed to do so later that afternoon.

A full minute later, she comes back again. “You’re going to pay for it, right?”. Well, that was the first she had mentioned that part. I should have known it was coming, but, I stopped and said to myself, she’s young, movies are expensive. Then I offered, “How about if I pay for half?”. She thought about it for a moment and replied, “Humm, I think we are just going to play outside”.

I was more than happy to help her have some fun (get value), but it was also easy for her (employee or customer) to spend someone else’s money (time, effort, energy). I wanted to help, but wanted to make the connection to helping where she would most value the help (priority) verses helping on everything, in unlimited quantities (flexible customer service vs. being abused by your customer).

A little value judgment on her part, with a little skin in the game, changed the dynamic. She made a good choice, for her (it was about her value not mine), and she didn’t get mad or disappointed about it (when she didn’t get what she originally wanted). I still look back at this as a good effort on helping her start figuring out choices, impacts and planning as a life skill.

Homework for you:

How can you input value-based decision making and value judgment into your employee and customer dynamics? How can you make sure those decisions are well in line with your iMPACT statement for clients, employees and other stakeholders?

Please share some practical experiences, tips and stories below.  Thank you.

If would like help bringing delegation and leveraged teamwork and culture into your workplace, contact us at iMPACT Business Coaching.