Succession planning is a critical process for organizations to secure their future success by identifying and developing future leaders. Succession planning is critical to streamlining the transitional process for your business. As an added benefit, having a plan in place can also help maximize talent development within your company and improve employee retention by providing opportunities for advancement.

However, several myths and misconceptions often deter organizations from actively engaging in succession planning. Succession planning is not just for those in the golden years of their career, getting ready to retire. It is the savvy business owner who understands the risk of not managing this process, that will find the greatest success in their plan. 

Understanding and addressing the concerns about who will be a part of your plan and when it may be implemented is essential in fostering a culture of preparedness and minimizes potential risks associated with leadership transitions. This tool will walk you through each step of creating and implementing your succession plan. Adopting these strategies will inform the trajectory of your business for the future and increase the success of your business beyond your years of involvement.

What is a succession plan?

A succession plan is a strategy implemented by an organization to identify and develop potential successors for crucial positions. The primary purpose is to ensure a smooth transition of leadership and facilitate the seamless transition of responsibilities when a key position becomes vacant. By having a succession plan in place, you can mitigate leadership gaps and maintain organizational continuity, fostering long-term success and sustainability of the business.

 Succession planning is for every business!

It is crucial to have a design for the future of your business. Despite feelings of distantness, the uncertain nature of life keeps your business in constant flux, highlighting the need for preparedness for the future. Businesses with varying scope all require a succession plan – from the small family business to one with complex corporate structure, a cascading need for this type of planning is apparent. There are no special resources needed – some time and thoughtfulness can dispel uncertainty and ensure the prolonged health of your business.

Myths Holding You Back from Succession Planning

1. It's Too Soon – I or My Director Are Not Ready to Leave Yet:

This myth stems from the belief that succession planning is only relevant when leaders are close to retirement or departure. However, life is unpredictable, and unexpected events can lead to sudden leadership changes. Delaying succession planning can leave an organization vulnerable to disruptions and challenges.

2. The Person May Think We're Pushing Them Out

Some leaders fear that discussing succession planning can make their current team members or potential successors feel unwanted or undervalued. However, framing succession planning as a strategic initiative to ensure continuity of the business and mitigate risks can dispel this concern.

3. I Never Plan to Leave

While a leader may not have immediate plans to leave, it is essential to consider the unforeseen circumstances that may necessitate a change in leadership. Succession planning is not solely about the current leader but about building a pipeline of talent for future organizational needs.

4. Succession Planning is Overwhelming

Organizations may perceive succession planning as a complex and time-consuming process, leading to avoidance. Breaking the process into manageable steps and leveraging technology and external resources can make succession planning more accessible and achievable.

Why do I need one?

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 to make your business less vulnerable to external challenges and provides your employees and stakeholders with a sense of security for the future. It assists in creating a positive work environment by creating opportunities for advancement, which motivates talent to stay. Leadership continuity stabilizes your organization in transitional periods and ensures that new leadership can effectively respond to challenges and opportunities without disruption. Collectively, these factors all contribute to the long-term success and sustainability of your business.

Life Continues to Happen

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

• People Leave Their Job or Retire – Employee turnover and retirements are inevitable. Without a succession plan in place, organizations risk losing critical institutional knowledge and expertise when key employees depart.
• 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.

It Can Take Time to Find the Right Person

Identifying and developing the right successor may take time and effort, especially for leadership roles that require unique skills and expertise. Organizations must be proactive in talent identification, mentorship, and leadership development to ensure they are prepared when the need for a new leader arises.

Planning for succession is a crucial process for organizations to ensure a smooth leadership transition and reduce business risks. Civitas Strategies has developed a proven system called Leadership Legacy^©, which has been refined and tested over 12 years of implementation. The system is built on the core idea of minimizing risks to the organization by addressing succession proactively.

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 Four Steps of Succession Planning

• Step 1: Getting an Emergency Procedure in Place – This step focuses on mitigating the most significant risks to the organization's continuity and stability by having a process for addressing 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 talent pipeline is essential to have a pool of potential successors ready to assume leadership roles. This step involves identifying high-performing employees with leadership potential and providing them with opportunities for development.
• 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.

The "Pre-Step": Talking to the Director about Succession

Before embarking on the formal succession planning process, it is beneficial to have a preliminary discussion with the current director or leader. This pre-step ensures that everyone is on the same page and fosters a positive and collaborative 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. These points should emphasize that succession planning is not a reflection of the director's performance but rather a proactive measure to protect the organization from unforeseen changes.
• Emphasize Commitment to the Director – Reiterate that the organization values the director's contributions and commitment. The discussion should underscore that succession planning is about preparing for the organization's 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.

Step 1: Getting and Emergency Procedure in Place

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.

Consider the scenario of an organization that lacked an emergency plan. During a crucial time when 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 faced significant challenges, almost failing to meet payroll because no one could legally access funds.

Creating an emergency procedure is a straightforward process and serves as a temporary measure when you or your director cannot fulfill their role. However, it is essential to note that this plan does not replace the long-term decision to hire, promote, or sell the business.

1. Determining the Acting Director – Identify the person who will serve as the acting director in the event of an emergency. This individual 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. Outlining Critical Functions – Identify the crucial functions the acting director can assume during an emergency. Typically, these include handling payroll and expenses, managing banking operations, and maintaining vendor contracts and other essential agreements.
3. Formalizing the Emergency Procedure – Document all the details of the emergency procedure and have the owner or board sign it to give it official recognition. Provide copies of this document to the leadership team to ensure everyone is aware of their roles and responsibilities during a crisis.
4. Periodic Review – Review the emergency procedure annually to ensure its relevance and effectiveness. Make any necessary updates based on changes in personnel or business operations.

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

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Disclaimer: The information contained here has been prepared by Civitas Strategies and is not intended to constitute legal, tax, or financial advice. The Civitas Strategies team has used reasonable efforts in collecting, preparing, and providing this information, but does not guarantee its accuracy, completeness, adequacy, or currency. The publication and distribution of this information are not intended to create, and receipt does not constitute, an attorney-client or any other advisory relationship. Reproduction of this information is expressly prohibited. Only noncommercial uses of this work are permitted.

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