By Simon Bittlestone
Adapting to staff changes at a senior level can be a challenging time for any organisation. There will naturally be a certain unease created by the appointment of a new leader, particularly when their predecessor has been at the helm for a long time.
For board changes in large corporations, media scrutiny can have a destabilising effect on a business. Large businesses will often have a rigorous set of processes in place to ensure the candidate is well vetted, however, and that the transition runs as smoothly as possible. It is also likely that there will be several other senior figures on hand to provide support.
Unfortunately, for smaller organisations, it can be a different story entirely. When a senior level employee joins a company, their predecessor – who is frequently also the founder – will often hold most of the working relationships that are vital to the running of the business. In many cases, the departing leader also leaves behind a legacy that is closely connected to their personal business vision. In this sense, it is not only easier for the replacement to stray from this, but also any diversion could cause even more disruption than might be experienced at a larger corporation.
Succession planning is therefore an important process for any business – regardless of its size – and should be modelled on the specifications of that individual business. That doesn’t mean it has to be complex, however. By planning sooner rather than later, management teams can prepare for many different scenarios, from the sudden loss of a popular CEO to a carefully planned family succession, and can mitigate the costs more effectively. This will ensure that the critical business information needed by the incoming CEO is easily available and well structured.
The handover process needs to include a comprehensive description of the current opportunities and threats facing the business and, where possible, an introduction to the company’s two key stakeholders: its staff and its clients.
One of the toughest challenges in the succession planning process is building a relationship with existing staff. A CEO can have all the experience in the world to help prepare for a new role but, when they step through the door, they won’t have a relationship with the staff. A trusted relationship needs to be earnt, and can be difficult for employees who have already built bonds with a previous CEO over several years. Early communication with employees is therefore vital to allow them the time they need to adapt and to raise any issues with HR. This approach will not only help employees feel valued by their employer, but also help them to coalesce more quickly around their new leader.
Likewise for clients, the sooner any board changes can be communicated the better. It is also crucial that the current CEO shares any key client information with their planned successor. Any delays in implementing a robust contingency plan of this type will increase the risk of creating a poor transition for the new leader. The existing CEO should also ensure that other senior managers are informed and on-board with any changes in personnel. Getting this buy-in is important, as it is never a good idea to leave the keys to the business with a single leading figure.
Next of kin
The client challenge is likely to be reduced in a family-run business. In most cases, it will be a relative who is in line to replace an existing CEO, so the individual will have had greater exposure to the business over the years. They may also have a greater vested interest in the business for sentimental reasons, which staff and clients appreciate.
Where the difficulty arises for family succession can be the reaction of the staff to the new leader, as doubts can sometimes exist as to the credibility of the appointment. Problems in this area can be avoided if the successor is able to show that they have the necessary experience to be a legitimate candidate for the role. Even so, it is important that the application process is transparent; the position should also be available to candidates outside the family, and the business should take steps to ensure that these applicants are fairly considered. Regardless, succession breeds uncertainty by its very nature, and it is down to the new CEO to prove their worth.
Finally, in any succession planning process, providing easy access to relevant financial and business data is crucial. Historical data preceding the appointment of a new CEO will help new leaders to make better business decisions and get up to speed much more quickly.
Once the new CEO has identified the organisation’s key performance drivers, this historical data can then be used to create a business plan that will provide some much-needed reassurance to any doubting staff.
Succession planning is ultimately an exercise in convincing the doubters. If the process is planned well in advance, and the transition is managed appropriately, businesses can answer any questions that are thrown at them, whether from staff, clients or the media. Rather than fearing a senior board change, businesses can and should embrace this as a positive opportunity to develop the company and pave the way for a bright future.
Simon Bittlestone is Managing Director of Metapraxis