It is inevitable that organisations will have to eventually replace their C-suite for the sake of sustainability – so why do so many find it hard to succession plan for the right candidate?
In fact, according to Business Health, 70% of organisations have no written succession plan.¹
But where should an organisation begin the succession process and what should business owners consider when recruiting for future leaders?
Leadership consultant, Samuel Chand, suggests organisations should start with the following checklist of potential issues when searching for candidates²–
- The debate between internal and external candidates
- Tangible and intangible qualities
- Considerations for family owned businesses
- The possibility for one versus many candidates
- Generational style issues
- Successor naming issues
Similarly, Bob Neill from Seaview Consulting proposes that organisations need to first develop a solid understanding of their short and long-term goals and identify key cultural factors within the organisation when determining who the right candidate could be.
Neill also points to the influence of economic and emotional drivers when deciding on a succession plan, particularly for family owned businesses.
“There is an obvious need for diversity in these plans based on your desires: a business owner who hopes for their daughter to succeed them, and a business owner who seeks to sell their business will obviously have very different management needs,” he said.³
Family businesses usually have an extra layer of complexity in deciding on a successor, with legacy issues becoming a key deciding factor in determining the right candidate.
According to insights from Seaview, family businesses have a survival rate of 30% from the first to second generation and only 12% from the second to third generation, suggesting that these types of organisations are most susceptible to the volatilities of bad or no succession planning.
Want to know more?
If your organisation is in the process of succession planning or you would like to know more about what to consider, join Bob Neill in our on-demand webinar: The 5 stages of developing a successful succession plan for your financial planning firm.
Register by clicking the button below.
¹ Business Health (2017)
² Samuel Chand, "Planning your Succession." p. 52 - 53, 2008.
³ "Succession Planning and Management." Seaview Consulting