When planning for the future of your business, you need to look beyond your own leadership. Whether you plan to sell, retire, or pass on your business to your family, someday someone will replace you as owner and CEO. By considering who your replacement should be now, and weighing the benefits of experience vs stability, you can create a plan that gives the right people the right experience to step into the role when the time comes.
Succession Planning vs Replacement Hiring
Many business owners confuse succession planning with replacement hiring. It is true that your succession plan will include hiring or promoting your replacement. However, succession planning is far broader than that. A thorough succession plan develops a list of strong candidates who can step into progressively higher roles as time progresses. It also includes strategies for:
- Bringing the business into a strong financial position to weather any obstacles in transition
- Providing you, the retiring business owner, with the funds you need to enjoy your retirement
- Training up younger, and less experienced team members
- Accounting for both managerial succession and a transfer of ownership interests
Replacement hiring means filling vacancies today (or in the near future). It is a reaction to people leaving the company. The best succession plan is in place well before it is needed, giving everyone involved the time to move through the transition gradually as they become ready.
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How Experienced Should Your Replacement Be?
The earlier you start your succession planning process, the less you need to be concerned about your replacement’s existing experience. You can choose a younger replacement – such as your child in a family business – because you know they will likely have time to grow into the role.
Your succession plan should still account for the possibility of someone stepping in temporarily should something happen in the short term. If there is anything to be learned from the last few years it is that the future is always unpredictable and even key employees can step away from a business at any time.
Still, assuming your ideal candidate has expressed interest in assuming a leadership role, you can fill any gaps in their work history and experience over time. This will allow them to be well-prepared to step into the position when the time is right. It will also project stability to your employees and primary customers, who will be assured that the company’s goals and priorities will not be forgotten when you step down.
Strategies in Balancing Experience vs Stability
If you are anxious about recruiting a young employee as a potential replacement, there are some steps you can take to make sure they will be up for the task.
Make Sure the Employee Wants to Be Your Replacement
Especially in family businesses, senior employees can sometimes assume a junior employee is more committed to the company than he or she actually is. Talk to your candidates and understand their professional goals and timetables.
Identify Professional Weaknesses Early
Asking replacement candidates to undergo a strengths analysis early in the succession planning process can help you identify areas of weakness. This will help you understand the limitations on their abilities while you still have time to provide additional training, experience, and support.
Transition Duties to Your Replacement Gradually
The less experience your replacement candidate has, the more time it will take them to transition into the role. You can prevent them from getting overwhelmed by gradually shifting responsibilities to them over time. This has the added benefit of making your replacement more visible within the company, providing your employees and clients a feeling of stability and continuity.
Offer Leadership and Executive Coaching and Mentorship
The biggest transition for many employees when they are promoted is taking on a leadership mindset. Younger employees, especially, may struggle with establishing their authority over their coworkers. They may need help developing the managerial skills and emotional intelligence needed to lead their team.
One of the best strategies to balance experience and stability in training up your replacement is to pair them with a mentor or coach. In many cases, this will be you, as you train them to do the job you will be turning over to them. In other cases, an outside consultant serving as an executive and leadership coach can help the next generation of leadership step into their role with independence and the skills needed to do it well.