Succession planning is a process, not an event. It doesn’t matter if your chosen exit strategy is a transfer within the family or an outright sale. The process takes time, effort and planning to ensure an orderly transition of the business. Unfortunately, appropriate succession planning is not something that most companies do well and may be the primary reason that only 30% of family businesses survive to the 2nd generation.
A recent study conducted with family business owners showed that the key items they focused on in retirement were health, wealth management and ownership transfer. Last on the list was leadership succession. While 60% of business leaders will retire in the next 10 years, only 15% of companies have any formal training program to prepare the next generation leader to assume such a challenging position. We feel that this represents a critical omission in the succession planning process. The bottom line is this – succession will only work if your business is passed on to someone who has the skill and confidence to run it.
We believe there are three key competencies that should part of any training program for emerging leaders:
1. Financial analysis and profit improvement
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Dynamics of financial leverage.
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Causal ratios and their use in spotting potential financial problems.
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Seven common causes of waste in an organization and how to eliminate them.
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Using key performance indicators (KPIs) for measuring progress toward established goals.
2. Sales and marketing
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Identifying and leveraging competitive advantage.
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Understanding customer buying behavior.
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Developing strategic marketing and sales strategies.
3. Leadership
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Delivering effective performance feedback.
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Building high performing teams.
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Resolving conflict.
Succession planning should not overlook the training needs of the successor. Craft a plan to integrate leadership development into your business strategy. After all, the ultimate goal of succession planning is to position the company for future prosperity.
For more information about our Emerging Leaders Program call (712) 324-4614 and ask for one of the following individuals:
Mark Ellsworth: mje@
Matt Heemstra: mrh@
Stacie Dykstra: srd@
