This succession planning consulting tool provides a snapshot of how strategic planning can lay the groundwork for success in succession planning. It shows the steps needed to make the two processes intertwine.
For partnerships, the questions of succession planning are double-edged: Not only are you picking tomorrow’s organizational leaders, but you are also selecting its future owners. Thus you need to evaluate a person’s fitness for operational leadership as well as their suitability for ownership.
Your company is not likely to be the same in five years as it is today. Predicting the future isn’t easy. But it’s a necessary exercise if the succession planning is to be successful.
Step 1: What is your vision for your company or organization over the next 5 years? For example, if you plan to expand geographically, or invest in different product or service lines, those decisions paint a picture of a future quite different than where you are today.
Step 2: What are the leadership skills you need tomorrow? How will they be different from the skills you have today? Imagine your next generation of leaders. What will they need to do more of? Less of?
Step 3: Consider the future structure of your management team. What roles do you envision? What structure will best create value for the company or organization? Are there people who will fit into the different roles you’ve envisioned?
Have they demonstrated that they put the company’s interests above their own?
Are you convinced that they can “own” and manage important client and customer relationships?
Do they show good financial acumen and the ability to manage budgets well?
Have they shown that their personal and professional values align well with the company’s values?
Are they effective in communicating internally? Have they shown an ability to address and resolve conflicts with their subordinates, peers, and supervisors?
In order to check the “fit” of potential successors, it’s important to gain perspective both internally and externally. Internally, you can set specific goals for each person you are considering. These goals should be a stretch beyond the requirements of their current role and test specific leadership skills that you desire. For example, if you’re looking for the ability to form strategic alliances, give that task to a potential successor and assess the results.
Externally, you can ask clients or customers for their impressions. These candid observations can be invaluable. For example, during a succession planning interview, a client revealed that he had felt mistreated by a senior project manager over a change in contract terms. The approach had left a bitter taste in his mouth. When he was asked whether he could envision this project manager as a future partner, the client said: “Yes, but I can also envision that I’d no longer be your client!”
Once you’ve identified a candidate’s strengths and areas of improvement, you should tie the succession process to leadership and management coaching.
Several key financial considerations come into play as partners plan how to bring in new partners to the company:
A practical consideration is how to phase in the buy-in process – and how much each existing partner will have to give up in ownership to make room for new partners. That decision should be driven by a vision of whether it benefits the company to expand the number of owners, or whether the goal is purely to replace the current owners with a new crop of highly motivated and invested people.