What Are Your Succession Plans?
Ensure that no departure will damage your business
Jennifer Wheatley, SHRM-SCP, SPHR
I will never forget the phone call I received from a client who was distraught about a conversation he had just had with his key employee. This employee had just disclosed that he had been diagnosed with a progressive form of cancer, and the prognosis was not good. The business owner was obviously devasted by the news both personally and professionally. He said all the right things and took care of his employee, but privately the realization of what would happen to his business in this employee's absence sent him into a tailspin. His words to me were, "I don't know if my business can survive this." He was not prepared.
As the President of a human resources consulting firm that primarily serves small- to medium-sized businesses, I frequently have conversations with business owners about the future. These conversations are always interesting and enlightening. As you might imagine, many business owners have well-thought-out plans for the continuation of their business once they make the decision to step back. On the other hand, I also hear from many business owners who just do not have a good plan for after they leave. When I ask why, I hear many things, such as, "I just don't have time to think about it," or "I really don't have anyone that I think is ready or interested in taking over the business," or "My child is the succession plan." These responses, although not uncommon, cause concern. There is nothing more exciting than to see a business launch, grow, and succeed. However, it is just as sad to see a business with no defined plan for its long-term viability. Oftentimes, businesses do not think about succession planning until someone retires or dies.
In the aftermath of COVID-19, I have seen an uptick in interest and conversation around the topic of succession planning. As priorities have shifted, people have begun leaving organizations in record numbers. With the changes in the labor force and economy, it has become apparent to many owners that they are not properly prepared for the future. According to the 2021 Family Business Survey conducted by PWC, only 34% of the businesses surveyed stated that they had a robust, documented, and communicated succession plan in place.1 According to an article from Vantage Leadership Consulting, 80 million Baby Boomers are preparing to retire over the next decade, but in a recent Heidrick & Struggles survey of 140 CEOs and Boards of Directors from both public and private organizations, more than half could not name an immediate successor to the CEO.2 Does this resonate with you as a laboratory owner? Do you have a successor identified?
What is succession planning? Investopedia defines it as a business strategy companies use to pass leadership roles down to another employee or group of employees. Succession planning ensures that businesses continue to run smoothly and without interruption after important people move on to new opportunities, retire, or pass away.3
Every laboratory should have a succession plan in place, and this is not just for the laboratory owner. A good succession plan will consider all the key leadership roles within the organization and then identify potential replacements for those positions. The best approach for an organization is to look at succession planning in two ways—short term and long term. For the short term, laboratory owners should have some ideas on how they would replace certain positions in emergency situations. In the event of the resignation or death of an employee, it is important to be prepared to ensure the work continues. For the long term, laboratory owners should have a formal plan and focus on identifying key leadership roles within the organization in order to implement an official succession process.
The difficult part is understanding how to carry out the succession planning process. There are many thoughts, ideas, and resources available to assist a laboratory owner with this, and I would recommend working with a business coach or a professional who specializes in succession planning. It is a complex process, and one that requires an investment in time and resources to get right. Many succession plans fall through due to a failure to effectively communicate expectations with employees, a lack of inclusion, or insufficient active involvement in the process by the business owner.
As the laboratory owner, it is critical that you drive the process and serve as the champion for succession planning. Once you commit to it, then developing a sound program will begin with identifying the key positions within your organization, analyzing the current level of talent within your organization, and then finally putting a plan in place to either develop internal talent or begin thinking about how you can effectively source external talent.
Succession planning can feel overwhelming and that is often why business owners avoid it, but it is critical for long-term viability and business continuation. Doing nothing is not an option. Do not put it off any longer. Start small, commit to it, and seek professional guidance to ensure you put an effective plan in place.
4 Key Steps to Succession Planning
1. Ensure succession management is "owned at the top"
2. Identify key positions
3. Assess talents
4. Accelerate successor development2
References
1. 2021 US Family Business Survey. PwC. https://www.pwc.com/us/en/services/trust-solutions/private-company-services/library/family-business-survey.html. Accessed June 22, 2022.
2. Sowinski D. 4 key steps to succession planning. Vantage Leadership Consulting. https://www.vantageleadership.com/our-blog/dave-sowinski-on-keys-to-succession-planning-2/. Published August 24, 2016. Accessed June 22, 2022.
3. Kenton W. Understanding succession planning. Investopedia. https://www.investopedia.com/terms/s/succession-planning.asp. Published April 20, 2022. Accessed June 22, 2022.
About the Author
Jennifer Wheatley, SHRM-SCP, SPHR, is the President of HR Affiliates.
