Starting your succession plan

A succession plan is a strategy that a business uses to find and train people who can take over important positions in the future. The main goal is to make sure that leadership changes smoothly and that responsibilities are easily passed on when someone leaves a key position. By having a succession plan, you can avoid gaps in leadership and keep your business running smoothly. This helps your business succeed and last for a long time.

Succession planning is for every business!

It is very important to plan for the future of your business. Even though it may seem far off, life is uncertain. This means your business is always changing, so you need to be prepared for the future. Businesses of all sizes need a succession plan. From a small family business to a large company, this type of planning is always needed. You do not need any special resources. Just some time and thought can reduce uncertainty and make sure your business stays healthy for a long time.

"It's too soon – I or my director are not ready to leave yet"

This myth comes from the idea that succession planning is only important when leaders are close to retiring or leaving. However, life is unpredictable, and unexpected things can cause sudden changes in leadership. Waiting to do succession planning can leave a business open to problems and challenges.

"The person may think we're pushing them out "

Some leaders worry that talking about succession planning can make their current team members or people who might take over feel unwanted or not valued. However, you can explain that succession planning is a way to make sure the business continues to run smoothly and reduce risks. This can ease those concerns.

"I never plan to leave " 

Even if a leader does not plan to leave soon, it is important to think about unexpected situations that might require a change in leadership. Succession planning is not just about the current leader. It is about creating a group of talented people who can fill future needs in the business.

"Succession planning is overwhelming"

Businesses may think that succession planning is a complicated and time-consuming process. This can cause them to avoid it. Breaking the process down into smaller steps and using technology and outside help can make succession planning easier to do.

There are three main reasons why you should implement a succession plan:  

1. Mitigating risk 
2. Talent development and retention 
3. Leadership continuity  

Your succession plan helps protect your business from outside problems and gives your employees and stakeholders a sense of security about the future. It helps create a good work environment by creating chances for advancement, which encourages talented people to stay. Consistent leadership keeps your business stable during changes. It also makes sure that new leaders can handle problems and opportunities without causing disruptions. All these things help your business succeed and last for a long time.

Life continues to happen  

In addition to the myths surrounding succession planning, life events can impact leadership within organizations.  

• People leave their job or retire. Employees will inevitably leave or retire. Without a succession plan, businesses risk losing important knowledge and skills when key employees leave.
• People pass away. Tragic events, such as the death of a leader, can be unexpected and emotionally challenging for an organization. Having a succession plan in place ensures a smooth transition and provides stability during difficult times. 

Finding and training the right person to take over can take time and effort. This is especially true for leadership roles that require specific skills and knowledge. Businesses must be active in finding talented people, providing mentorship, and developing leaders. This will make sure they are ready when they need a new leader.

Planning for succession is important for smooth leadership changes and reducing business risks. Civitas Strategies has created a system called Leadership Legacy© that has been tested and improved over 12 years. The system is based on the idea of reducing risks to the business by planning for succession ahead of time.

How can I get started?  

Once a need for potential successors has been identified, it can be challenging to know where to begin. There are four key steps that will assist you in establishing an early succession plan. We will take a deeper dive into these steps in PART 2 of this guide series. Familiarize yourself with these steps to get a broad picture of how to shape your plan.  

The 4 steps of succession planning  

• Step 1: getting an emergency procedure in place – This step focuses on reducing the biggest risks to your business's ability to continue running smoothly. It does this by having a plan for handling an unexpected change in leadership.
• Step 2: capture knowledge – Having all the critical information on what a director or owner does can be crucial to a successful transition in leadership. 
• Step 3: create a pipeline - Building a group of talented people is essential for having potential successors ready to take on leadership roles. This step involves finding high-performing employees who have the potential to be leaders and giving them chances to grow.
• Step 4: transition – Preparing for leadership change is a critical aspect of the succession planning process. This step involves developing a clear and comprehensive plan for a smooth transition from one leader to the next.  

Before starting the succession planning process, have a discussion with the current director or leader. This encourages a positive and cooperative approach to succession planning.

Key points for the pre-step discussion:  

• Start with the owner, CEO, or board chair. The pre-step discussion should involve key stakeholders, such as the owner, CEO, or board chair (in the case of nonprofits). This ensures that the conversation carries the necessary authority and commitment. 
• Create talking points. Prepare talking points to guide the conversation. Emphasize that succession planning is not a reflection of the director's performance. It's a proactive measure to protect the organization from unforeseen changes. 
• Emphasize commitment to the director. Repeat that the business values the director's work and dedication. The discussion should emphasize that succession planning is about preparing the business for long-term success.
• Start with a commitment and deadline. To initiate the process, set a specific commitment and deadline for the first step of the succession plan (Getting the basics in place). This tangible goal creates a sense of purpose and progress. 
• Consider forming a small committee. If helpful, create a small committee consisting of key stakeholders, such as the owner, director, a parent, and an assistant director. This committee can provide valuable insights and support throughout the planning process.

The single greatest risk to an organization is an unforeseen change in leadership, which can occur due to various reasons such as relocation, sudden illness, or personal emergencies. Without a plan in place, the continuity of your child care business could be jeopardized.  

For example, consider the scenario of an organization that lacked an emergency plan. The owner was on vacation and isolated due to a storm, no one in the organization had authorization on the bank "signature card". Consequently, the organization almost failed to meet payroll because no one could legally access funds.  

An emergency procedure serves as a temporary measure when you or your director cannot fulfill their role. However, this plan does not replace the long-term decision to hire, promote, or sell the business.  

1. Determine the acting director. Identify the person who will serve as the acting director in the event of an emergency. This is usually someone on staff but could also be the owner's spouse, child, or a trusted and knowledgeable friend from outside the business. 
2. Outline critical functions. Find out which important tasks the acting director can do in an emergency. Usually, these include handling payroll and expenses, managing bank accounts, and keeping vendor contracts and other important agreements.
3. Formalize the emergency procedure. Write down all the details of the emergency plan and have the owner or board sign it to make it official. Give copies of this document to the leadership team so everyone knows what their roles and responsibilities are during an emergency.
4. Conduct periodic reviews. Review the emergency plan every year to make sure it is still useful and effective. Make any changes needed based on changes in staff or how the business operates.

To learn more about establishing an Emergency Procedure. Continue reading in Parts 2, 3, and 4 of this series to understand the next steps in developing your succession plan.  

Disclaimer 

The information contained here is for educational purposes only and is not intended to constitute legal, tax, or financial advice.