I’ve developed some of my best plans while driving to work, exercising or sitting on the patio.
The problem is that I can’t easily write them down, and by the time I find a pencil and paper, the idea has begun to slip from my mind. Worse, when I analyze these great plans, they are usually missing some key elements and turn out to be not so great after all.
Over the past few months, I’ve discussed the importance of operational succession planning and the initial steps in the process. This month, we’ll cover development and documentation of the plan.
The plan itself is much too important to dream up while driving to work because it’s designed to ensure the continuation of your business and the well-being of your family. It must be well thought out, take all factors into account and be written out.
Closing the gap between vision and reality
Once the first two steps are complete, you should have a clear vision and understanding of the situation in your company and realize the size of the gap between your vision and your team’s ability to achieve it. Closing this gap provides the basis for the succession plan. The plan is simply the road map for developing an organization and key management team capable of realizing the vision.
I hear so often, “Give it time, the organization will grow into it.” It may, but then again, it may not. Perhaps your vision is to be working a reduced schedule in five years and be totally out of the company in 10. The key is to make sure the organization will be ready when you are.
A series of action steps
Once most business owners understand the concept of closing the gap, some of the mystery (and fear) goes away. The plan becomes a series of action steps designed to develop the team. These steps could include:
- Planned career progression;
- Increasing responsibility for key management;
- Formal management development programs;
- Personal coaching of selected managers;
- Finding, hiring and evaluating new talent when necessary.
This may take years to accomplish, so the plan must be a fluid document that is reviewed and updated regularly. Building milestones and timelines into the plan can ensure it is working and taking the company in the right direction.
Undesired but planned
Your efforts in developing the plan are likely directed toward a desired planned succession. But there remains the real potential for an undesired and unexpected succession caused by the proverbial bus or other untimely mishap or illness.
If a contingency plan is part of the overall succession plan, it can ensure that even if unexpected and undesired, the succession may remain planned. That can help ensure minimal disruption of the operation and minimal loss of value.
I was involved in a situation in which the owner had no operational succession plan, even after learning that he had a terminal illness. Following his death, the company struggled for months, and as happens in these situations, its value began to decrease immediately upon his death. His children, who had not previously been involved in the business, were forced to take an active role to salvage its value.
To share or not to share
Once created, the plan must be implemented. A question often asked at this juncture is, “Should I share the plan with the organization?” The answer, in most situations, is yes … but sparingly, carefully and differently to different persons.
Sharing parts of the plan can give employees a feeling of security. They know you have thought about and are planning for the future of the company and their jobs. But sharing the wrong information can create insecurity.
If you tell them you are building the company so that it can be sold, they may feel their future is in jeopardy. Sharing the name of the heir apparent to the presidency or other positions can cause elation in some, but can also cause deep organizational strife.
We will further examine this question and other plan implementation issues and suggestions next month. Joel Strom ([email protected]) is president of Joel Strom Associates Inc. Growth Management. His firm works exclusively with closely-held businesses and their ownership, helping them set and achieve growth objectives while maximizing profitability and value. Contact him at (216) 831-2663.
