Articles of Interest

Succession Planning- How Do I Get There from Here?
by Nupur Talwal

So you’ve been hearing the media hype. You’ve heard the buzz that you need to succession plan for your business, but you’re not sure what that is and why or how it applies to you.  Well let’s clear the air. Succession Planning is the planning of succession of who succeeds the senior executives of a company. In a sense it is ensuring the leadership torch is passed on from one generation to the next.

So you’re thinking that sounds straight forward. “I’ll likely pass the business on to my kids or perhaps promote someone from within when the time comes. You’re thinking “I’m sure there are a lot of people who would love to take over my business”.

Well the answer to the question “Who will take over my business?” is not a simple one. For starters you can always plan to pass your business to your children. But they may not have an interest in your business or the aptitude to take over your business. Furthermore, you may not have appropriate individuals to promote from within your company.

Even if you did have someone who could step in to a senior position, chances are they are going to lack the skills and ‘know-how’ the senior person who is retiring has. So how do you make sure all the right information, including the relevant skills and ‘know-how’ get transferred appropriately?

To make matters worse the labour market is enjoying one of the lowest unemployment rates seen in recent years, making recruitment and retention an even greater challenge. These low unemployment rates are not going to change any time soon either as the Baby Boomer generation retire and the following population base of ‘Generation X-ers’ is not nearly as large to support the number of positions that will need to be filled.

Think you’re alone? Guess again. Business Development Bank of Canada (BDC) research shows that 95% of all businesses in Canada and the US are under $15 million ‘Mom & Pop’ operations. Of these 40% in the Metro-Vancouver area currently have senior executive that are of retirement age and have no succession plan.

Some businesses may have a ‘financial succession plan’ (a plan that ensures the finances of the business will be secure long in to the future) or even ‘key man insurance’, which helps protect the company in the event that the key man is not able to full-fill his or her duties. But it does not ensure business viability because the knowledge and expertise that these senior executive carry has not been passed forward.

Why is this so important? Well, in a small business (for instance under a hundred employees) there are generally a smaller number of employees, with folks (especially at a senior level) wearing more then one hat.

Regardless of the size of your organization it is true that senior executive tend to carry much of the burden and history of the company. They have often personally built up the assets of the company by building and maintaining certain key relationships.

For a succession plan to be successful it must consider all of these factors and ensure a proper transition plan is devised to transfer this knowledge. Otherwise the assets of the company are at risk.

Suddenly the problem seems much closer to home and more tangible. Anyone who has recently gone through a leadership transition, or is facing one in the near future needs to think long and hard about the road ahead. Without proper transitioning of the knowledge base there is a fundamental component of your succession plan that is missing.

So what is the answer? “How do I ensure my business is viable long after I’m gone?” Well careful planning in advance is critical. This can include such things as who’s retiring when and which positions are most critical? You also need to determine what tangible and intangible skills and knowledge this individual has and how best to retain them.

Once you have prioritized these you may want to look at your existing talent pool and determine who is suitable. Naturally you’ll want to match them against the skill set of the exiting senior executive to see how much work is needed. You may also have to recruit from external sources to get the critical skills you need. Additionally, you may have to consider developing such skills as leadership development, coaching and even mentoring.

All of these steps can take months and even years to fully transition the skills and knowledge plus years of executive history that you want to retain. But in the end, whether your business is small or large, you will see a return on your investment that’s as tangible as the pleasure you derived from building your business up in the first place!

About Nupur Talwal

Nupur has over 17 years of business and leadership experience through her roles as a Vice President of Human Resources, Regional Director and Industrial Relations Officer, in Union and Non-Union environments and has handled human resource transitions and leadership development through mergers and acquisitions. Her diverse background has given her experience in companies of all sizes and she has created and implemented succession plans for the Vancouver Police Department and the Ministry of Human Resources. She is the President of Succession Planning Group and has a Masters of Arts in Leadership & Training from Royal Roads University - Thesis topic: “Successful Succession Planning”. She can be reached at ntalwar@s-p-group.com.

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