The Strategy of Succession Planning – Part Three
By M. Dana Baldwin
Note: This post is part of a series of posts from Dana Baldwin’s article The Strategy of Succesion Planning originally posted in Compass Points in January 2000. Part One introduced the topic and discussed the Succesion Planning Process. Part Two discussed Strategy for Succession Planning. Part Three will cover Succession Planning Pitfalls and Succession Planning Benefits.
Succession Planning Pitfalls
Some important ones include:
- Lack of a formal written plan for each key person or position.
- A rigid, inflexible plan NOT tailored to the needs and abilities of the personnel involved.
- Too long a wait for real movement/promotion, potentially resulting in the best people leaving due to apparent inertia in the system.
- Too superficial an approach, with the corresponding lack of real understanding of the procedures, processes and requirements of each area the individual is exposed to during the process.
- Selection of unqualified or unmotivated people for inclusion in the succession plan. Quality of the individuals selected is paramount to the success of the process.
Succession Planning Benefits
With a well-thought-out succession planning process, your company earns a number of clear pluses:
- A well-trained, involved and potentially deep stream of capable people who are well versed in the breadth and depth of the company.
- A continuous stream of people who are constantly reviewing, questioning and refining procedures and processes, helping to improve the quality inside the company, as well as improving the offerings of the company out in the market place.
- An increasing reputation as a good, challenging, stimulating place to work, which could result in your ability to hire ever better people.
How should privately held corporations handle ownership considerations versus management and operating considerations? Situations in which ownership and operations or management responsibilities are vested in the same people can be devastating to a family or closely held corporation if not handled wisely. While difficult, the duties of management and the family/stockholder relationships must be kept separate for the good of both the stockholders and the corporation. Private relationships which interfere with the effective operation of the company can only be harmful and non-productive. Nepotism can be either positive or negative, depending on the capabilities of the individuals involved. It is rarely neutral.
Business considerations should take precedence over family considerations when it comes to the welfare of the company. Private, family matters should never interfere in or be a part of the business. Failure to adhere to this advice can often lead to unfortunate or even calamitous situations which can tear a closely held company apart. These may be difficult situations, and may require an impartial source to mediate. In any case, clear, objective, unambiguous guidelines and goals should be set in writing so that the junior members of the family firm may have specific expectations of where they might go, how they are expected to progress, and the standards by which they will be judged. Family considerations must be kept outside of the on-the-job evaluations, or the entire process can become quite unsettling and less than objective for the individuals involved. Where possible, outsiders (to the family) might be involved in the mentoring and development processes to help the development of the younger generations. This can bring a degree of objectivity that parents and children can often find difficult to maintain in situations where the younger generation works for and will eventually succeed the senior people. Settling this issue is potentially the key to the effectiveness and even survival of some privately held firms.
The next post in this series will cover Succession Planning in Simplified Strategic Planning.
Are private relationships interfering with the effective operation of your company? Attend the Simplified Strategic Planning Seminar for more instruction on succesion planning as well as all other aspects of Simplified Strategic Planning.
M. Dana Baldwin is a Senior Consultant with Center for Simplified Strategic Planning, Inc. He can be reached by email at: email@example.com
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