Small Business: Planning for Succession

Far too many businesses are caught without a plan when key personnel retire or leave for another job, staffing firm Robert Half has found.

The firm recently surveyed accounting and finance professionals, and found that only 10% felt that there was someone internally who could easily step in to fill their role if they quit.

A big business may be able to weather such a succession crisis, but for a small business it could be devastating. Just imagine if, instead of a finance pro, the irreplaceable party is a founder, or a partner.

One way to avoid this situation is to groom new hires for future responsibilities, right from the start. As Robert Half Management Resources advises:

Start during the hiring process. In addition to the open position, think about the types of advanced roles job candidates could grow into over time. Also, gauge applicants’ interest in building a career with your firm and their leadership skills.
Take a wide view. Only looking at the top of the company for succession planning is a mistake. Instead, develop plans for all levels. In the process, you’ll identify up-and-comers aspiring to join the management ranks.
Check with employees. Talk to staff members about their goals, and identify specific steps they can take to reach their objectives. This is also motivational and can help with retention.
Bolster professional development. Building out succession plans will help you more easily identify skills gaps and the training needed to address them.
Communicate openly. Let staff know about your goal of preparing them for roles of increasing responsibility, making this a reward for their contributions. Explain the succession process — including what is expected of them and what they can expect from you — and provide prompt updates if there are changes along the way.

Paul McDonald, senior executive director for Robert Half, suggests that some companies may need to bring in a consultant for a time should they find themselves with a sudden vacancy in an important role.

Of course for many small businesses, this type of temporary high-level staffing can get prohibitively expensive. Better to plan for the future, and avoid getting caught in a bind.