June 18, 2013

Who is next in line to run your business?

Professional recruitment company Hays have an interesting article on succession planning in their current Hays Journal. According to the article, succession planning is an important issue for all organisations but one which SMEs in particular are failing to prepare for.

The reasons given for this are worries about cost, wasted time and internal politics. For many, year-on-year or month-on-month survival often seems to be a more pressing concern than planning who might lead the organisation in some nebulous future.

The issue of succession planning becomes even more fraught when it involves a family business. Around 100,000 family businesses are passed from generation to generation in the UK each year and about a third of them subsequently fail. The business owners point to the difficulty of choosing between their children as well as their own reluctance to pass the reins to a younger generation. The Hays article points out that a lack of forward planning is likely to have a detrimental effect on not just family members but also other staff who are left unsure of their own role when it comes to the future of the organisation.

So how should organisations start their succession planning? The article has a case study in which key staff were asked to name their potential successor. If nobody sprung to mind then the organisation knew they had to start training existing staff or recruiting new staff.

Barney Ely, Director, Hays Human Resources, says, ‘You don't need a large HR department to address the challenge of succession planning. It's the job of leaders and managers to answer some basic questions and put the business in a better state of readiness. They need to ask themselves, which roles are critical? What capability exists in them right now? Who are the potential successors? Whatever the business, succession planning can seem like an unnecessary and uncomfortable chore. However, avoiding these occasionally difficult decisions will only create greater risk as the company grows and matures. With that in mind, in many ways, the key to succession planning is just to start.’

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