Groom Your Successor
One of the most important decisions a business owner or corporation makes is who will be the next CEO. Businesses that will survive and thrive have a successor prepared to take over at a moment’s notice in the event of a premature exit of the current CEO or during a planned business transition. This state of preparedness doesn’t happen by accident.
In a survey of business owners in 2010 , 42% said they didn’t plan on retiring. And while 50% indicated they would retire right now if they could, 70% could see themselves playing some continuing role in the business beyond age 65.
This means that although there are going to be a lot of owners who want to continue to be engaged by their company, for many reasons they should still groom a successor to take over when the time is right. Let’s look at those reasons:
You may die and if you’re the owner, that will leave the company in disarray. If you’re 50, you have a 15% chance of dying before age 65 and of course, the likelihood of expiring continues to rise with each passing year. Who will take over and be the new owner/CEO?
You may become seriously disabled, incapable of running the business. At age 50, your chance of contracting a serious disability before the age of 65 is 33%. Who will pick up the ball and manage, even if it is for a few months, while you recover?
You may become incompetent. You may lose your energy and drive. You may stop learning. You may not be able to keep up with the changes in technology. You may not be able to effectively manage or lead the younger generations. Who will have the courage to tell you it’s time to hang up your spurs?
You may have pressures from home to retire. Even though you may resist those pressures, you may have made implicit or explicit commitments to travel with your spouse or spend time with grandchildren. You may have to follow through.
You may get tired. In the past, you may have been happy to put in 12-14 hour days in order to keep on top of everything. You may have set up your business to run that way; dependent upon you to be there to make the decisions. You can’t do that forever. You will have to delegate more and enable others to take on more responsibility.
You may be getting a great income from the business and need to keep it flowing as long as you live. In such a case, the company needs to continue to be successful and profitable. If one of the above situations arises and you haven’t groomed a successor, you may find your business deteriorating, reducing your income-earning ability and even putting your security at risk. Many businesses fail because this important step wasn’t addressed early enough.
1American Express Canadian Small Business Monitor, August 2010, Conducted by AngusReid
What if you don’t have a successor now? What if you continue to procrastinate until you’re pushed to do it? Your choice for successor may not work out the first time.
That person could turn you down. Many managers or family members, who you had thought of as the right person, may not want the job. You better find out early enough to identify someone else.
That person may not be ready or as good as you thought. Running the business requires a different skill set than managing a department. They may need training, coaching and mentoring. That takes time. Putting them into the job without preparation could kill both the individual and your company.
They may not wait around long enough to take the job. Many managers who wait in the wings to be the next CEO lose patience because the owner won’t let go. Unlike Prince Charles, most successors aren’t satisfied to wait until the current ruler dies to get the job.
Not having a successor in place is irresponsible. It makes your business vulnerable and jeopardizes the security of your employees and your personal plans for retirement. Take these seven steps:
- Articulate the attributes of your ideal successor.
- Search for and identify the right person.
- Discuss the opportunity and get commitment to explore it.
- Groom the individual with training, coaching and mentoring.
- Assess their abilities by assigning them real-life projects to work on.
- Give them the job.
- Let go and let them do the job.
Letting go may well be the toughest step, but the right successor won’t want to be lame duck.
June 1, 2011
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