There is no doubt that you are key to your company’s success. It is your “baby” and you have spent a lot of energy and probably financial resources to bring it to this point. It forms a substantial portion of your financial assets both now and what you hope to depend upon in the future. If things are going well, you likely deserve a lot of the credit for that.
If your company is struggling, you must shoulder a substantial portion of the responsibility for that as well. What is your involvement in the various aspects of the business? Do you limit your activities to areas in which you truly have expertise or are you a jack of all trades? Are you the center of everything? Does your team defer to you for most decisions? If so, you are weakening your company and making it less valuable.
Business owners, and leaders in general, often fall into the trap of trusting their own judgment too much – even in areas which are outside their main expertise. They are afraid to let others make decisions or, if they do, they are quick to criticize and to punish poor decisions so that team members are reluctant to make any decisions at all for fear of making a wrong one.
As a business grows in size and complexity, it becomes increasingly more difficult for the leader to “do it all”. The result is that the leader becomes the bottleneck in the organization, curbing growth through a slowdown in decision-making or through poor quality decision-making. The leader becomes overloaded, increasing stress and decreasing their quality of life.
Avoiding this inevitable problem requires the business owner to rely less on their involvement in the minutiae of the business and more on the development of systems, policies and procedures and the development of a strong and capable team that can run the various parts of the business under the ultimate control of the leader. Not only does this team need to be recruited and trained but it needs to be sustained over a long period of time. The key to team sustainability is the concept of succession planning.
Succession planning is an important strategy for any organization and recognizes the reality that the current status of team members is very fleeting and is likely to change constantly for a variety of reasons, most of which are beyond the owner’s control. The departure of a team member at any level can have a negative impact. Leaving the role open for a period of time will put pressure on other parts of the organization. Filling the role with the wrong person can be worse. A new person, unfamiliar with the role (and perhaps the organization), may take several months to reach anything close to operating efficiency. Departures happen on a continual basis, so while a particular departure may come as a surprise, they should not be unexpected in general. They are going to happen.
What to do about the ongoing turmoil created by unpredictable turnover? The answer is to have a formalized approach to succession planning. Succession planning not only prepares your company for what might happen should someone leave their role, it also lays the very important groundwork that prepares your company for its future state. In addition, the process provides for increased job satisfaction among current employees through career development and training, and thereby plays an important role in reducing employee churn.
Here are five steps that every business owner needs to take for the sake of their company:
1. Document the Organization Chart (Present and Future)
No matter what the size of the company is, the owner should be in possession of an organization chart showing names, titles and reporting relationships and (this is key) the date that this organization chart is effective. Over time, a growing organization will need a different structure and a thoughtful owner can plan for the future by creating future organization charts (with dates) to guide personnel decisions now and in the future that will be needed in order to achieve the future organization.
2. Document Individual Jobs
For every role in the business, a position description should exist in some form (anything is better than nothing) that sets out the responsibilities of that position. An interesting way to look at it is to imagine that every role in the organization is a non-employee contractual one. What is the arm’s length contract that you would enter into with the occupant of each position under which your organization is going to pay them tens of thousands of dollars every year? What are you expecting in return? How will success be measured? Write it down.
3. Focus on the People
For every person in the business, invite them to document what their career aspirations are – either within your organization or even beyond it. Where do they want to be in one year, three years, five years? What assistance do they need to achieve their goals in terms of coaching, internal work experience enrichment or external training? What are they expected to manage on their own and what can the organization do to assist them to achieve their goals?
4. Fill the Future Organization Chart
Planning to stay the same is better than no planning at all, but not much better. The leader’s job is to plan for the future, including getting ready to fill the organization chart that will be needed next year and five years from now. Yes, you will have to react to unpredictable turnover and backfill for those losses but that isn’t nearly enough. You will also need to plan for the filling of positions that will be required in the future but don’t yet exist, and you will need to plan for the replacement of individuals in your current organization who will not have the capacity to fill their current role as it necessarily grows more complex as the organization grows.
5. Plan for the Ultimate Succession
The owner also needs to have a clear plan in place for their own succession. Having no plan is not an option (at least not a good one). Planning to stay forever is the ultimate “big ego” mistake.
A specific leader succession plan can emerge from several well-planned options such as:
- Sale of the company
The greatest value will be achieved when the company can continue to operate effectively in the complete absence of the owner (i.e. No Ego).
- Delegation of Operations to a Champion
The gradual withdrawal of the owner’s involvement in the activities of the company and promotion of a “champion” can work well with a combination of very well thought out contractual and compensation arrangements. To be effective, the owner must let go. (i.e. No Ego).
By following the above steps and setting your “I do everything” ego aside, you will vastly increase the value of your business and create a legacy that will live on after you have left the stage.
Kathbern Management is an executive search consultancy based in Toronto, helping companies find the executives and senior managers who not only have the experience and credentials to fulfill their responsibilities, but also have the emotional and “fit” requirements that will enable them to be successful in a particular environment. We simplify the process and, through our deep research, are able to bring more and better candidates forward than would ever be possible through a do-it-yourself passive advertising campaign.
Contact us today for a free consultation about your key person search.