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Succession Planning & Asset Protection - Part 2

The Importance of Good Advice in Running and Maintaining a Successful Family Business

IntroductionSuccession Planning with Image of 4 hands of people of different ages

Succession planning is a key aspect of any business. It provides a framework for ensuring that there are qualified people in place to lead, grow and manage the business. If you don’t have a workplace succession plan, you could be missing out on opportunities to better develop your family members/employees, as well as create opportunities for new hires and growth of your company.

This article explores what succession planning means and how it can benefit your business. I’ll cover everything from assessing current leadership needs to identifying potential successors and establishing clear transition timelines. By the end of this article, you’ll know everything that you need to start developing effective succession plans for your employees – and help move along their careers at work!

In our previous article – Part 1 of Succession Planning & Asset Protection, we explored subject matter on:

All of the abovementioned insights were directed at helping families to “getting it right when it comes to ensuring that the intergenerational transfer of wealth is set correctly”.

For the next episode on this journey, please – read on …. 

Assessing Current and Future Leadership Needs

CEO Succession Planning image of older man at top of stairs welcoming new leader

In assessing current and future leadership needs, you will need to:

🟢 Recognise the need for succession planning. It goes without saying that before you can begin to formulate a plan, you must first recognise that your organisation has a need for it.

🟢 Identify the organisation’s leadership needs. To determine whether or not there are any gaps in current leadership, it is important that you understand what skills are needed at each level of your company and how these roles fit into its overall structure. This particularly applies if they’re changing over time as part of an organic growth strategy and/or due to mergers/acquisitions (M&As).

🟢 Determine if there are any gaps in the current leadership team (if so, list them). This may require speaking with key stakeholders such as employees, other family members, clients, et al. You should also consider whether there are other factors such as location or gender balance that might make certain positions harder than others when filling them with external candidates. The factor of them not already knowing how things work within your organisation’s culture will require accounting for before making any decisions about hiring practices going forward into the years ahead!

Identifying Potential Successors and Their Development

Succession Planning image of woman receiving applause from men around a boardroom tableHere we look at:

🟢 Identifying Potential Successors

🟢 Developing a Plan to Develop Them

🟢 Communicating the Succession Plan

To guarantee that your organisation is ready for change, it’s vital that you have a plan in place for identifying potential successors and developing them accordingly. You should begin by identifying which positions in your organisation have high turnover rates, or are likely candidates for replacement due to retirement or other reasons (e.g., family-related). Next, create an action plan that outlines how these individuals can be trained so that they will be ready when needed–and make sure everyone knows about this process!

Finally, once you have identified who the potential successors are, it’s important to communicate this plan with everyone in your organisation. This may sound like an obvious step however, it can be easy for people to get caught up in their day-to-day tasks whilst forgetting about larger goals and what they’re doing to achieve them.

Establishing a Clear Business Transition Timeline

Business Transition Timeline image of plaque with message - Time for Change"In order to set a clear transition timeline, you need to define the problem before starting on a solution. A good way of doing this is by writing down your goals and objectives in detail. Make sure that they are ambitious but realistic. You want to set yourself up for success!

Once you have defined your goals, it’s time to think about how long it will take for them to be achieved (the duration). This should be based on how much effort and resources are required for each goal. It could be anywhere between 3 months and two years, depending on how much time it takes for someone in your department (or another department) who has been working at the company longer than you before they’re ready for promotion into your position when you leave. That’s because they already know everything there is about managing teams well, through experience gained during previous positions held elsewhere within your organisation.

Communicating the Succession Plan to Stakeholders

Succession Planning - Communicating with stakeholders image of two men seated discussing something on a tabletAs we have attempted to emphasise previously, business succession planning is an ongoing process. As you communicate your succession plan to stakeholders, it’s essential that you use a consistent and clear communication method. Since this is an important topic for everyone involved with your business, we recommend using written communication as much as possible. A natural back-up to this part of the succession planning process is to have everyone involved aware that you’re also prepared to discuss the plan on a face-to-face basis – an important aspect to the plan being open to scrutiny, genuine feedback and discussion generally. This will all help to ensure that all parties understand what is happening in the company and can stay up to date on its progress – or lack thereof!

It’s also important to keep things concise when communicating about succession planning; don’t overload people with too much information at once. If some details are still being finalised or need further discussion before being shared publicly, then wait until they’re ready before sharing them with others who might not be able to contribute any new ideas yet but would nonetheless appreciate being kept informed about what’s going on behind closed doors (or in this case: emails).

Implementing and Monitoring the Succession Plan

Once you’ve created a succession plan, it’s important to monitor the progress of your plan. Monitor how well your organisation is doing at implementing the succession plan and make certain that it is meeting its goals, as well as identifying any gaps in the process.

You should also communicate regularly with stakeholders about their roles and responsibilities in implementing the succession plan. For example, if an employee has been selected for promotion into a leadership position but does not know about his or her new role yet, then he or she may not be able to effectively take on their new responsibilities when they assume them later on. Failure to do this could lead to problems further down the track.

Succession Planning - Graphics Text caption Who Will Replace Me?Remember – succession planning is a continuous process. It’s not just about finding your next CEO and making sure they are ready to take over when the time comes. Succession planning is about identifying all the leadership roles in your organisation and verifying that each role has someone who can step into it if necessary. This can include:

Who will replace you as CEO?

Who will take over as head of sales?

What happens if there’s an emergency? Will someone else have to step up?

It’s not just about finding someone to fill one role; it’s also about understanding how all these different positions interact with each other. This is so that everyone has what they need in order for things to run smoothly when leadership changes hands or, becomes unavailable due to illness or other circumstances outside anyone’s control (like natural disasters).

Summary

Succession planning is not a one-time event, but rather a process that must be continually revisited and updated as your business organisation evolves. It’s also important to remember that succession planning is not just about finding someone to replace you; it’s about ensuring that the right people are in place at all levels of leadership so that your organisation can continue operating smoothly, even when there is no clear successor for any given position.

We hope that by now, you have a much better understanding of what succession planning is and why it’s so important for family businesses. If you’re still having trouble making sense of all the information we’ve given you here, we encourage you to talk with an experienced succession planning adviser about how they can help you achieve your succession planning objectives.

Our next article on this all-important topic will be focused on providing you with insights into Asset Protection Strategies.

How FBA Can Help You With Your Succession Planning

At Family Business Advisory (FBA), our purpose is to help family businesses succeed on a sustainable basis. As such, we provide you with access to specialist family, business and technical services with a goal being to generate opportunities for families in business.

In order to complement our own particular specialised skills, over the past several decades, we have developed a network of trusted, professional advisers in such areas as:

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Moreover, we work at all times to give you peace of mind and proactive support to help navigate any changes in the market brought about by legislative changes, geopolitical events and general market conditions – all to maximise your personal wealth and security.

These services are provided by FBA, in association with the Wealth IQ Group.

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