Understanding the role of succession planning for small business success: steps for better business.

• Author: Laforest, Sara
• Position: SMALL BUSINESS

Succession planning is most often associated with replacing the CEO and key executives within (a usually larger) business. This is a limited definition and application, which does not serve small businesses well.

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We find few companies with an up-to-date succession plan. When a change occurs in key positions or when there is a need to identify leaders to support growth initiatives, organizations are often caught "off guard." And it doesn't matter the size of the organization. Bank of America was ill-prepared to find a replacement for Kenneth Lewis.

A ROBUST DEFINITION

Succession planning is about having an identified plan to fill key positions (and we believe, not just executive positions) within your organization, whether this is due to someone leaving or due to new positions being required to support growth.

Succession planning is the process of identifying, developing and transitioning potential successors for the company's present and future key roles, aligned with the talent and ambition of its current employees and its talent network. For example, if you are in the construction or transportation industry, a logistics manager may be critical for the success of your business. Having a vacancy in this position could result in a decrease in service and an increase in customer complaints and possibly a decrease in customer retention.

SMALL BUSINESS VULNERABILITY

Small businesses are especially vulnerable. Oftentimes we find the owner (or president) doesn't believe there is a need for a succession plan. Their stated arguments are, "we're too small;' "we're too new," "we have good people in place," or "l'm not going anywhere soon." In (an unlikely) static environment where no one leaves, no one gets sick (including the owner/ president), growth isn't that important, and performance is exceptional--these arguments may hold true. But the reality is--we don't live in a static business environment: people do leave, they do get sick, the owner/president wants to grow the business, the employees are not all good performers, and some roles are hard to fill. There is also a tendency to hold on to marginal performers because there is no clear plan on how to replace them. The impact: the business suffers, the owner/president suffers, employee morale and productivity decreases, and the customers become less than satisfied with their service. And if the customers have other options, they'll take them.

Another argument we hear is...