There can be unforeseen consequences to not creating an effective business succession plan. A rushed approach to succession planning can disrupt future operations and even threaten the viability of the business. The following are some common errors that businesses make in succession planning:
Mistake # 1: Playing Favorites
Getting along better with one person in comparison to others is not uncommon. In the purview of succession planning, however, favoritism can cloud your judgment when choosing candidates for your succession and derail the entire succession process.
It is possible that your favorite employee does not have the critical skills necessary to efficiently run your business.
Mistake # 2: Absence of an Objective Process for Identifying Successors
It is vital to have a proper assessment plan to assess all probable successors’ “Potential” and “Performance” factors. The absence of a justifiable, objective process creates the risk of choosing the wrong people or selecting successors who may not be ready to handle more responsibilities.
There is nothing more negative to a business’s performance than overlooking qualified candidates and upsetting your employees. The planning process should incorporate various employee data elements, such as personality profiles and 360-degree feedback, which can offer a comprehensive assessment of potential candidates.
Mistake # 3: Not Addressing Disappointment
Everyone deserves to understand why they are not being considered as a potential candidate. Thus, transparency in the succession planning process demands that employees are aware of why some people are on your list of potential candidates while others aren’t.
This task is a delicate one, and an honest discussion about what your employees lack can help address disappointment, making it easier for people to understand your succession decision.
You can take this opportunity and work with your employees to create a development plan that can help them address weaknesses and enhance their performance, which can be highly advantageous for your enterprise.
Mistake # 4: Turning the Process into a Competition
Two potential scenarios are possible: Competition may exist between potential successors for the same position, or leaders may see their successors as “potential threats.” The main purpose of succession planning is to ensure that the right individual is put in the right position. It is neither a competition nor the assessment of each person’s ego.
If you, as a manager, witness your successors compete for the same position, it is best to be forthright with each candidate and remind them that the outcomes will be based on how well they meet the organizational objectives and needs.
In the scenario when leaders see their successors as competition, it raises concerns on the succession planning process’s credibility. In addition, leaders may prevent the proper development of these potential successors.
Mistake # 5: You are Secretive about the Succession Planning Process
Employees develop more trust in both the company and the succession planning process if there is transparency. It is vital to clearly communicate the activities and objectives of the process. By doing so, managers can enable everyone to understand the need for a succession planning process and encourage employees to participate in this process.
If everything is out in the open, it signifies certainty and permanence to your employees. In turn, this can motivate them to enhance their performance.
Mistake # 6: Relying on only One Successor per Role
Some companies feel that they are on the right track with their succession plan if they have identified a successor for a key role. But this can be problematic if your one succession candidate decides to leave the company or accepts a role in a different department.
When it comes to filling a crucial role, a talented candidate pool offers you options and ensures that you have adequate talent to fill vacant positions as they arise.
Mistake # 7: Assumption that Success in One Role Translates into Success in a Higher Position
Assuming that high performing employees at one level will continue to perform well in a higher-level position is a common mistake made in succession planning. The continuity of success is not guaranteed. Therefore, it is critical to meticulously identify the competencies necessary for success in an important role. Assess all successful candidates against this criterion and not their past performance.
Mistake # 8: Not Documenting the Succession Planning Process Appropriately
Various elements are involved in the development and implementation of a succession plan. This process’s meticulous documentation can seem low priority compared to other things that need to get done. But this information is crucial if your company ever finds itself in a situation where it needs to defend selection decisions. The true value of having this information is apparent when you need it.
Hire a Knowledgeable Business Succession Planning Attorney
The seasoned lawyers at Davis, Bingham, Hudson & Buckner, P.C. routinely counsel private business owners in all aspects of business succession planning. We assist business owners in preparing for a seamless transition of ownership, intending to maintain relationships with family and vital non-family employees, and minimize estate and income taxes.
Business succession planning is intricately linked to personal estate planning. Our dedicated attorneys have expertise in both these areas to further the client’s best interests in the most efficient manner possible. For a free, no-obligation consultation, call us today at (334) 821-1908.