For every CEO or founder, his company represents a vivid part of him. The same way your wife, husband or kids becomes an important part of your life, your company tends to become the kid in your professional life. These very important bits and pieces are very hard to let go.
Think about a parent’s feelings when their kid leaves the home for the first time. They become worried about the things that might happen to their kid and think about everything bad that might happen.
Now that you have this family portrait, it’s very easy to understand why the founder of the company is so possessive with their baby. There are CEOs with more than 600 employees who still participate in almost every recruiting interview. Why? Because they want only the best for the company.
Upon deciding to take a step back and retire, it’s very important to write out every step of this transition process. It needs to be planned, it needs to have goals, and it needs to be objective. For extra objectivity and professional planning of this process, it’s best to outsource it.
Here are 10 tricks you should consider when writing your personal succession plan.
1. Decide Upon the Best Moment to Start Planning
A succession plan takes quite some time to be created and implemented. Upon making this decision you need to consider some very important questions.
The first thing you need to consider is your company’s overall situation. Is it on a downslope or is it on an upward trend? For example, if a merger or an important acquisition is foreseen in the future, it won’t be a smart move to step back. Your company needs to show strength and cohesion. A leader leaving the boat in these times is a clear sign of weakness.
The second thing you should take into consideration when deciding when to retire from your own company is your personal and professional situation. From a professional point of view, you should ask yourself a few questions.
Have I reached my peak?
As a CEO, can I still add value to my company?
You need to play your personal life the same way you plan out of your professional life. You will have at least 8 extra hours each day, how are you going to cope with this extra time? Will you take care of your grandkids? Do you have any hobbies to keep you busy?
Going from full throttle to idle in a very short period of time can cause serious breakdowns. Here are a few activities you could try when you step back from your company.
2. Define Each Board Member’s Role
Your company’s board is very important for the succession process. That’s because its role is to ease the transition between you, the actual CEO, and the one taking over. They need to keep your new CEO in the loop and offer him all the information he needs for the best decisions to be made.
By defining each member’s role you should acknowledge the member’s expertise and put him in charge of that certain part of your company he’s specialized in. For example, one of your board members might be specialized in accounting. Make him the main link between your CFO and the new CEO. He will be able to better explain your company’s financial situation to the new CEO.
Remember, the board is the main transition point between you, the actual CEO, and the one replacing you. That’s why a clear definition of each member’s role is vital.
3. Choose the Best Employees to be Promoted
Human resources professionals give us plenty of reasons why you should promote employees from within instead of looking outside your company. Before starting to promote them, you should evaluate each employee’s potential. Is he a natural leader, can he take over a team? Is he good at one thing and one thing only? Can he cope with the new role?
Promoting your own company’s employees comes with lots of benefits.
Better Understanding of Your Company’s Culture
4. Recruit New Employees to Fill in the Gaps if Needed
Even though an internal promotion would be the most obvious option, sometimes it’s not the best one. Why? Because the employees in your company might not have the necessary skills or experience to take over your role. If this happens, you need to look outside your company. You need to look for someone with the needed skills, experience, and brains to take over your role.
Bryan Gray, a CEO in the IT&C industry who’s about to take a step back, says:
"You can’t just post an Ad saying "CEO needed". The main reason why is because even great paper writing services won’t be able to integrate all the needed skills and abilities in a decent-size ad. Apart from that, the general public shouldn’t know you are stepping back, it might be taken as a sign of weakness.”
This being said, the best way to look outside your company is to hire a headhunting professional. He will do all the digging, the initial interviews, and he’ll come back to you with the shortlist, the best candidates.
5. Outline Your Succession Plan
Now that you’ve solved your personnel problems by finding the most suitable people to take over key roles in your company, you need to outline your succession plan. Make sure that all the aspects are taken into consideration! Here are the most important ones.
Company’s Actual Situation- Include all your legacy. Your company’s status quo, its administrative, financial, and external aspects.
New Roles in Your Company- Your CFO might become the new CEO. The CFO position needs to be filled in by someone. Find the replacement and let him know.
Definition of Each Role- The CFO turned CEO needs to know his duties. Also, the one replacing him needs to be trained and informed about his role. This kind of processes imply lots of troop movements, they need to know where they are standing and the new roles they have.
Goals for the New Team- For your company to thrive and keep on growing it’s very important to set some goals for the new managing team.
Timeline for Transition- The Succession Planning needs to have a SMART approach. Thus it needs a timeline to be defined.
6. Set Goals for Your Succession Plan
Goal setting is the easiest way to make sure the company will follow the road you want. You don’t want it to go on a bumpy road, do you?
Like we said, a SMART approach should be considered when setting goals for your successor. Here is a good example of goals for your future CEO.
Year 1-The company, during the year following the succession process, should have a 3% growth in revenues;
Year 2-For it to keep on growing, an acquisition should be taken into consideration during the second year;
Year 3- Third year’s EBITDA should increase by 20%, compared to the succession year.
7. Review the Plan with Your Trusted Employees
Every CEO wants only the best for his company. This enthusiasm and willingness to see it grow might lead to impossible terms and conditions imposed to your successor. Impossible goals are something often found in succession plans. That’s why you should have an objective review of your plan.
An outside person might not know all the relationships in your company, its resources, processes, and so on. That’s why you should take two or three of your most trusted employees and show them the plan. Ask them to go through it and review it. Make them understand their review is vital and the succession plan needs to be realistic.
8. Implement the Succession Plan
Right, now that your succession plan is wrapped up, it’s time for you to implement it. All those changes that will take place in your company need to be announced. Your CFO needs to know he will be the new CEO. His new duties and responsibilities need to be clearly communicated. The one taking over the vacant CFO role needs to be informed and trained accordingly. Your entire company needs to be informed regarding the important changes taking place at the top.
Also, during the implementation phase, for it to be as smooth and coherent possible, it needs to take at least 6 to 12 months and its goals need to be disclosed right from the start. This way, you will have enough time to offer the needed information to your successor and he will be able to know the company’s direction.
9. Keep a Close Eye on the Changes
A close eye on the changes means that you should evaluate them on a regular basis. During the 12 months, you should have a monthly report meeting. During this meeting, the new CEO and his team should keep you in the loop and tell you every problem they’ve come across.
Remember, your company has certain goals, the new team needs to stick to the timeline and objectives. Keeping a close eye on the changes taking place, on the progress made towards the imposed objectives gives you the opportunity to intervene quickly when needed.
10. Be Flexible
Even though this is the last aspect of our list, it is one of the most important ones. As you might know by now, perfection doesn’t exist. Even though you’ve imposed some goals for the succession team, they might not be met.
This can be the result of internal or external factors. If it’s due to internal factors, you need to make sure your team fixes all the loose ends of the company. Even so, external factors, such as inflation, recession, etc. can pack a punch. They can cut your wings quite fast. That’s why you need to be very flexible, try not to be very harsh to your new CEO.
Succession planning is very important for every CEO or during major changes in your company. These 10 steps will make sure it will be a fruitful one and your company will not only stay afloat, but thrive. Outsourcing this process, offering it to professionals of the business, will be the best alternative because the process needs to be as smooth as possible. You need expert advice right from the start.
Mark Delarika is a professional content writer and teacher, successful entrepreneur and blogger. He is familiar with a wide range of spheres concerning running own business and education. Mark taught in more than 10 countries all over the world. He helps students and business people to improve their writing skills, shares his personal experience and gives practical tips
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