Articles

Create a successful business succession plan

People are now living longer and generally healthier than ever before – and they’re working longer too. UK companies employ over one million over the age of 65, and a quarter of Britons now expect to work into their 70s. So, how can businesses make the best use of their senior talent and ease their transition into retirement at the same time?

Following the removal of the retirement age, retirement has become an increasingly subjective issue, varying from person to person and company to company. Significant numbers of older employees enjoy what they do and feel a deep sense of commitment to their companies. They don’t want to stop working, they just want a better work / life balance.

Sensible open conversations are key

Working past the traditional retirement age of 60 to 65 can be really beneficial to both the individual and their company, who stand to benefit from their talents and expertise for longer. But because retirement is no longer a clear-cut, black-and-white issue, the potentially negative effect is that many businesses aren’t properly planning for retirement and succession. They are either, ignoring the situation until it’s too late or making assumptions that can cause stress, frustration or worse for both parties.

Regardless of the scale of any organisation, effective retirement and succession planning is vital for your company’s continuing success and your people’s health and happiness. At CMC Business Advisers we are working with a number of business owners currently addressing these issues. As someone who has considered the question of phased retirement after a fulfilling professional life, I have drawn on these experiences to compile some key considerations to take on board when managing your own future and that of your employees and thinking about succession planning.

1. Start the process early

A common problem is people not giving succession planning the time it deserves early enough. Unless forced to discuss it by a family member or an employee approaching retirement, many owners, and senior managers, don’t address the issue of succession planning. Start thinking about it as early as possible. At least 3, preferably 5 years ahead of an expected retirement point.

2. Be honest with yourself and your employees

More often than not, the hardest thing is having the conversation about what people really want to do. Do they want to leave as soon as possible, or would they like to carry on working as long as possible? If it’s the latter, what are the possibilities and options? What would they be willing to do? And what’s manageable from the business perspective?

Whatever the outcome of the conversation, don’t make assumptions. The lack of a clear plan can lead to unease ., with senior workers feeling a sense that there’s no future for them, while younger workers get frustrated waiting for them to move on so they can get on with the job. Employees with more physical roles may be looking forward to retiring at a more traditional age. But if they are a long-serving employee, the company can feel like a family they don’t want to be cut off from, so keeping a limited involvement might be more attractive. It’s not about forcing people to stay on if they don’t want to, neither is it about forcing them out before they’re ready. Sensible, open conversations are key.

3. Learning to let go

Generally, the biggest challenge with succession planning is the difficulty many people have in letting go – especially if they’ve started the business themselves and see it as their ‘baby’. If someone has been in a role for a long time, it’s easy to feel that there are lots of tasks only they can undertake efficiently. Using an external consultant to objectively approach issues around delegating and working alongside you and your successor can be extremely valuable. Emotions can run high, clouding judgment and making it harder to focus on coaching and passing on knowledge. This is where a third party can help by keep these feelings out of the whole planning and actions process.

4. Accept that keeping it in the family might not be easy

We work with a number of family businesses and while a straight generational handover can represent the ideal succession, it’s rarely that simple.

There are generally many plans and options to consider. The main issue, however, is business owners need to understand that their children may have other interests and ambitions. Once again, honest conversations as early as possible are absolutely vital.

5. Give it the time it deserves

Planning an effective succession strategy can be difficult to balance with more immediate business needs. But that’s no reason to delay it. Little and often is the key – allow time for planned regular conversations (followed up with simple actions). This will be much easier to manage than leaving it to the last minute and consequently getting to a point where it’s urgent and takes over everything.

6. Potential loss of skills or expertise

Consider how senior workers can pass on their skills and expertise, so it doesn’t leave your company when they do. When considering a business leader or senior manager’s succession, could they work alongside their successor for a specific period of time, then continue, possibly, part-time in a mentor-style capacity to support key decisions as and when required? Be sure to allow enough time for them to pass on their contacts, business and client insight, processes, tips and to help smooth

over any issues while they’re still around. Could older workers at any level of the business help with inducting and training new staff? Whether the focus is on using equipment or customer service, their experience and insight can be invaluable – so don’t waste it.

7. Deputies Development

Never assume succession is a simple matter of a deputy stepping up to a leadership position when a leader retires. Deputies can sometimes be more used to working in the shadow of their leader and haven’t been given enough opportunity to be challenged in the leadership role before actually stepping up to the position permanently. So, invest in their learning, development and leadership training before that leader retires, and give them the opportunity to make key decisions, coached by their leader if necessary.

8. Develop effective ways for generations to learn from each other

Older colleagues can benefit from their interactions with younger workers. They can learn new skills, like technology and social media, and often feel rejuvenated and energised after spending time with young workers. Through such things as reverse mentoring, the more time spent with each other can also bring a greater understanding and appreciation of each generation – their beliefs, values, and behaviours.

Older workers will need to show some humility and accept that younger, less experienced colleagues may be able to see a faster, better way of doing something. It’s not just about technology – from ideas generation to new approaches for customer service, older workers need to accept the fact that you’re never too old to learn. Experiment: try new approaches and then evaluate how they worked, so both sides can learn from the experience. It will promote positive communication and collaboration.

9. Explore all options

Be open minded about how succession could work; Appointing an individual successor and planning a smooth transition is not always the answer. Other options such as management buy in or out, trade sale, asset sale, transfer to an employee-owned businesses, are a few of many options to consider.

Discuss your situation with your external consultant and as many people as possible to see if you’ve thought about all the options that might be open to you.

10. Be flexible

Your succession plan doesn’t have to be cast in tablets of stone; it’s an evolving conversation, not a binding contract. Update it regularly as circumstances change. Both the business and the individual will need the flex to adapt to the unexpected – but doing this within a clear strategy is always more effective.

Considering family succession for your business? We’re running a webinar on 8th March, reserve your place here.

If you need help developing your approach to succession planning, feel free to get in touch. Either contact me via the form below or call 07803 023705.