Have You Picked Your Replacement?

Suzanna DeBaca -- Expert Business Source, 10/4/2007 7:53:00 AM

CEOs and family business leaders:  Have you considered who you’d like to eventually succeed you in your company’s leadership role?  

“Most home builders typically are in denial about the need for a successor plan,” says Bill Carpitella, CEO of executive search firm Sharrow Group in Rochester, N.Y, in an August 1, 2007, Professional Builder article entitled “How Homebuilders Can Be Proactive About Succession Planning.” The article goes on to say that while bigger builders are often more aware of the need for developing a succession plan or selecting successors, that doesn’t mean they’ve actually addressed the issue.  

Why do companies and leaders avoid choosing a successor?   

Deciding who your replacement will be takes time and energy, which can be in short supply when you’re busy running a company.  There are many other non-business reasons, however, that CEOs avoid selecting a successor.  For many in top positions, selecting the next leader means confronting the fact that someday they will no longer be in charge, or contemplating their mortality.  Some feel it is too early to start the process, or that it seems too complex.  For others, the possibility of conflict with family members or other members of a management team is a good excuse for setting the successor project on a back burner. 
How can you be proactive about looking for potential successors?  

Here are some tips to help you get started in selecting the next leader:

1. Narrow the field gradually – There is no need to pick one successor right away; in fact, many companies identify a few potential leaders from within and begin to mentor and train them, delaying the ultimate succession until later.

2. Set up a management training program – For companies large or small, creating leadership training or management enhancement programs can be a time consuming but valuable exercise.  Not only will you develop stronger talents in your team across the board, unexpected candidates may show strengths or the ability to lead.
3. Look outside the company – If your company does not have a deep bench from which to select potential successors, consider scouting outside the company.  Keep your eyes open at industry meetings, job sites, and in the news for younger leaders who have potential and who may someday be a candidate for management in your company.  Develop relationships with those people and keep in touch with them.

4. Communicate family issues – If your family is company owned and the desire is to keep leadership within the family ranks, discuss this openly with your family.  There may be more than one candidate to run the business, and there may be many family members who can participate in the enterprise in other roles.  Ask your family members what they are interested in, and what roles they’d like to be considered for in the future.  

5. Set up clear expectations for family members – If there are more than one family member who would like the top job, navigate carefully and in a business-like manner.  Setting up clear expectations early on about what skills, experience, and performance levels are necessary to be considered as the next leader can help you select the right person. Taking the emotion out of the equation can be difficult, but can be crucial in choosing the right family member for the job.  

6. Consider involving employees, including family – While this approach may not work for every leader, creating an employee led task force to identify candidates for successor is an idea to consider.  Employees at various levels can contribute their time and energy in developing the hiring criteria and nominating candidates in a more organic process than you simply naming the next leader.

In selecting your replacement, you will need to pick the process that works best for your company, your personality, and if you are in a family-owned business, for your family structure.   These are just a few suggestions, but advisors and other CEOs are good sources of information on how you might approach selecting the person to continue your company’s success.

Suzanna de Baca is President of Private Capital Solutions Group.  She is a Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS), 7 Hanover Square, New York, NY 10004, (888) 600-4667.  Securities products/services and advisory services are offered through PAS, a registered broker/dealer and investment advisor. Private Capital Solutions Group is not an affiliate or subsidiary of PAS.
PAS is a member FINRA, SIPC.
Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal or investment advice. Although the information has been gathered from sources believed reliable, please note that individual situations can vary, therefore the information should be relied upon when coordinated with individual professional advice.