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Creating a Succession Plan for Your Company

Creating a Succession Plan for Your Company

May 10, 2023

If you own a business, you may have already considered who will take over the company once you retire. As you know, this may include tasks like identifying and training potential replacements for key roles in the organization, as well as being able to foresee future staffing needs. This is a difficult but necessary process for successful organizations. Creating a succession plan can help ensure the longevity of your business and can help mitigate the risks and address the pain points associated with organizational change.

5 Steps to Begin Developing a Succession Plan

1. Assess
Assessment is the necessary thorough first step of succession planning. Start by identifying key positions in your organization and associated risks if those positions become vacant. This is also the time to develop job profiles and determine a timeline for your plan.

2. Evaluate
After assessment comes evaluation, which is also the beginning of the recruitment process, as you begin thinking about succession candidates for key roles. Consider starting by sourcing talent already within your organization.

This is also a good time to formalize your Standard Operating Procedures (SOPs) and perform a valuation of your business to inform your succession funding plans.

3. Develop
The development stage is where you manage talent by developing existing personnel and concurrently build up a strong talent pool. You need to hone in on what you want from your successor, both in the present and the future of your organization.

At this stage you should also work on developing the financial aspects of your succession plan, including funding plans and timelines.

4. Decide
This is the moment to be decisive and determine your successor. When appropriate, you can go public with this decision.

While you should be working on funding throughout the entire process, now is the moment to really zero in on funding your plan. Then, follow through on your decisions.

5. Transition
A bittersweet moment in your succession plan (and retirement) is the transition period. Appoint your successor and help them through the process of taking over your role. Be sure to thoroughly document the transition for organizational records.

Challenges of succession planning

Some of the challenges of succession planning might include:

  • Maintaining company morale
  • Underestimating the changing nature of the organization
  • Failing to regularly update the plan

Succession planning should be addressed at least annually, especially for companies experiencing rapid growth. An effective succession plan can help keep hiring costs down, improve your brand and boost retention rates. Most successful business transitions are the result of careful planning, sometimes years in advance.

As you near retirement and begin considering how your business will continue after you retire, let’s discuss creating your ideal succession plan. If you’re ready to plan for or implement an effective transition, give the office a call.

This material was developed and prepared by a third party for use by your Registered Representative. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. The content is developed from sources believed to be providing accurate information.