Title:
Succession Done Right The First Time Around

Word Count:
1002

Summary:
In an ideal world, a CEO selects and preps a successor. He shows up at his retirement party, collects the gold watch, and heads for a life of bliss on teeing grounds and putting greens. His replacement hops onto the throne, transitions smoothly, and everyone lives happily ever after. Unfortunately, there’s a big gap between the ideal and the real, because outgoing business leaders unknowingly take the wrong approach to succession planning.

Most executives work on the prem...

Keywords:
business strategy, develop a strategy, future capital, venture capital, business broker

Article Body:
In an ideal world, a CEO selects and preps a successor. He shows up at his retirement party, collects the gold watch, and heads for a life of bliss on teeing grounds and putting greens. His replacement hops onto the throne, transitions smoothly, and everyone lives happily ever after. Unfortunately, there’s a big gap between the ideal and the real, because outgoing business leaders unknowingly take the wrong approach to succession planning.

Most executives work on the premise that their successor must be worked through the ranks. This is a common mistake that rarely yields the results you want. Say you run a multi-million dollar a year firm, and you know that in the next ten years, you’re going to step down. Your current strategy revolves around two main vice presidents and a cluster of managers. All of them are presently doing a great job, but none know how to fill your shoes at this time. The current plan is to take one or two managers and get them up to speed over the next few years so they can take VP-level positions: one for operations and one for finance. Then after a few more years, you’ll start training them to do your job. So what’s wrong with this approach?

First, the majority of workers will not complete the 10-year track. The average worker will probably leave for a guaranteed, higher paying title rather than wait out your term for a possible promotion. Long-term grooming may have worked in your parents’ or grandparents’ generations. But considering how frequently jobs and companies change today, most employees don’t stay in one company for the duration of their working careers. You don’t have a lot of time to waste: don’t watch from afar and then wait to act.

Second, if you teach someone how to become a manager or vice president, you’ll get a manager or vice president…not a CEO. The role of the CEO, owner, or president is NOT the same as a lower ranking position. Running a department requires different skills and knowledge than heading an entire organization. Grooming a top-rank successor takes two steps.

Step One: Take your someday-successor under your wing and teach him exactly WHAT and HOW you do your job. Someone with proven talent. Not an individual that may sell themselves on their long term aspirations. Perhaps you have more than one person in mind…maybe two. Put both in an executive position with a rotation for 2 to 4 years. After that, select one and let that person work side by side with you for a few years. He or she is much less likely to jump ship, because he sees the future and the goal. You can also see if this person can do what you need him to do without waiting too long and investing too much money. One-on-one practical instruction ensures that you meet your organization’s needs and your personal schedule.

Step Two: Teach from a top-of-the-mountain view. Don’t assume that the person you’ve selected is able to see what you see and from the same vantage point. Gaining the big picture takes time. You must cover seven key areas, showing how each impacts the firm at large. They are:

1. Financial Knowledge. How to read, interpret, and make ethical decisions from balance sheets and income statements. Prospects must know how to structure deals, work with banks, handle costs, develop budgets, and forecast operations.

2. Employee Issues: The CEO tops the hiring and firing food chain. Although relying on HR is important, the head executive’s strategic decisions have large impacts that the successor must understand. Deciding on benefits, vendors, and management is a complex task. Illustrate how a decision, such as selecting one vendor over another impacts many areas, from how your company gains access to prospective clients to how the firm retains employees.

3. Legal Basics: Executives make decisions involving contract law, environmental law, and OSHA law. Teach the mentoree the basics that you know, and how, when, and where to seek legal assistance.

4. Sales Tactics: The CEO sells all the time, and the executive sales process is drastically different and more far reaching than that of the sales and marketing departments. Executives sell to banks, media, employees, vendors, lawyers, accountants, and venture capitalists, in addition to customers. Each is a different sale. One may be for business, one may be for money, and another may be to save money or to develop partnerships. A prospect that has all the other skills but can’t sell their ideas well will never make a great leader.

5. Marketing Strategies: One CEO visits clients at least once annually, since the firm’s projects with clients involve big dollars. The personal contact enables him to meet client needs better than competitors who resort only to email. Though costly, with $5-20 million on the line all the time, his strategy is a smart financial move.

6. Industry Knowledge: Your operations VP could be on the job for 10 years and never know how to schmooze at a conference, whom to trust, and whom to build relationships with. A VP without your expert education may never know how to gauge trends or charge into the future successfully.

7. Strategy Thinking: A potential successor must know how to strategize and think of the business as one entity rather than as independent departments. This means building new products and services, purchasing new equipment, or viewing competition.

The right approach to succession planning is two-fold. Begin by being mindful of today’s competitive timetable and involve the successor early on in the process; this way you don’t lose your best prospect to another company. Then, make sure you teach him exactly how to become a CEO who can see the big picture; don’t bother teaching him how to be anything less. Using the information above, you’ll put yourself in a position of control, and you’ll build a stronger, more competent successor.