Smart business owners know that their important managers, leaders, and key employees will eventually leave their company and will take the right steps (before it happens) to minimize the ripple effect it causes. Business planning attorneys often advise business owners, partners, and leaders to have a well-written and easily understood succession plan to help smooth the transition. Read on to learn more about how to plan for the unexpected departure of a business leader within your organization.
Why You Should Create A Succession Plan
A succession plan involves the process of identifying and developing internal employees who will fill the key business leadership roles within a company after the resignation, retirement, or termination of a business leader, owner, or partner. Creating a succession plan helps to ensure a smooth transition by increasing the availability of experienced and capable employees who are prepared to handle the new roles.
Successful succession planning can be achieved by following these 3 steps:
Step 1: Identify Your Company’s Long Term Goals
Before you draft a succession plan, you must be able to clearly identify your company’s long term goals. Is your market share growing? How healthy is your industry? How long do you (really) want to stay in business? Knowing the answers to these questions and let you align your succession plan with your expectations of your company and its senior leaders.
Step 2: Analyze Gaps in Core Competencies
Determine what talents are needed for your long term growth. Look at the current skill set of your employees in comparison to what your needs will be. Provide them with all the training necessary to advance their skills. Consider cross-training certain employees so that your company isn’t crippled by a sudden absence of a key staff member.
Step 3: Develop & Implement Succession Strategies
Establish coaching and mentoring programs within your organization to help develop employee’s skills. Implement development strategies to achieve on a quarterly basis. This will help ensure your employees are on the right track in developing their skills.
In addition to implementing the above referenced steps, you also want to make sure you have a buy/sell agreement developed that protects the interests of the company upon the departure of a business owner or partner. Depending on the business leader that is departing, a stock-redemption agreement or a cross-purchase agreement may need to be executed. There should also be an agreement in place that states what will happen to a business partner’s interest in the event of his passage. Contact a Florida business planning attorney for more information.
Establish the Right Direction to Go In
A business leader’s departure is a pivotal point in the life of a company. If management does not establish the right direction to go in following the departure, company morale can suffer. Continuing a business beyond the departure of a successful leader requires planning. In order to ensure a smooth transition, your present leaders need to know who their future leaders will be. This is vitally important for ensuring business growth upon the unexpected departure of a business leader. Contact my law office for more information on succession planning for the departure of a business leader.