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Sunday, 1 December 2013

Do You Know Who Will Inherit the Business? Start the Process Today!

My posting on leadership last week brought out a great deal of positive comment for which many thanks.  In particular my good friend Harold Woodward emailed me with some trenchant comments about the whole aspect of organisation. 

From his own vast experience he said that businesses need to look to a much longer period in terms of forward planning.  So many businesses think that a one year “strategy” disguised as a budget is adequate and that on the basis of merely checking at the end of the year to see if they had achieved what they said they would.

A budget should be only a reflection of the true strategy of the business which should have been developed in a proper analytical manner and communicated to everyone so that they all know where the company is going or at least planning to go. 

My old friend and Vistage speaker, the late Brian Warnes, derided the whole budgeting process and described it as a “limp forecast of limp performance”.  He was probably right in many cases. 

He had different ideas about how best to put in sensible and meaningful financial controls and his solution was the use of break-even analysis, a simple and daily tool to monitor performance and to help the leader in short term decision making. 

However, one of the real issues in longer term planning for a business is that if succession planning. 

Just take a look at any business, successful or otherwise, and particularly at the age of the top team.  It is self evident that if the average age is over 55 then long term planning can be based more on hope than on realism. 

Another old friend, and I do mean old, used to say that as I was tending more and more to the mature, he certainly wouldn’t give me a long playing record for my birthday and even suggested that I shouldn’t buy green bananas. 

All very amusing but in some cases in business this is a serious problem.  We all like to think or at least hope that we are immortal but we are manifestly not so and if we are running a business then we need to understand that age does wither us and if the business is to continue and thrive it will need new leadership. 

This can be a very painful realisation for a leader.  Some resist the decision until the last possible moment, some agree but, for example, say that they will “take on a few projects just to help out” and a very few actually walk away into the sunset without a backwards glance. 

The fact is that succession planning can’t be done at the last minute and it should be a regular feature of all the business planning at all times. 

Remember that it isn’t only the leader who will age; every key department or section leader needs to have a succession plan in place so that there are no surprises and any succession will be comparatively seamless. 

What it means is that there needs to be a constant review of people in the business and by that I certainly don’t mean by annual appraisals.  Gaps in technology must be filled, skills must be polished and improved and above all the right people must be groomed for stardom. 

They will be the ones who will inherit the business perhaps not in the financial sense but certainly as the next generation of leaders. 

Don’t wait until it is too late.  Start the process right now.
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