With the economy experiencing a strong baby boomer shift, almost 14% of Canada’s labour force now belongs to the age group of 65 and above. And, even though the age of retirement has been a point of debate in the country, the standard age for initiating one’s pension plan continues to be 65. This is a strong indicator for industries to initiate their succession planning.
Effective succession planning not only provides stability to the organisation but also ensures the top management’s expertise and knowledge is passed on successfully to the latter generation.
Here are a few essential tips for succession planning:
1) Begin Early
A common error that business owners make while planning for succession is neglecting it till the last hour. Having a succession strategy is crucial for every company. It usually needs to be implemented upon an employee’s departure. However, this strategy may also be needed to deal with a crisis situation like the sudden demise of a majority stockholder or a protracted litigation against the company.
Starting your succession planning early benefits the company as well as proves reassuring for the employees and the investors.
2) Consult a Lawyer
It is highly recommended to consult an experienced business lawyer during the initial stages of your succession planning. There are several legal issues associated with the change in the key leadership of an organisation. Business owners need to inform the Canada Revenue Agency about the new director’s social insurance number and name.
Having a corporate lawyer corporate lawyer helps in the delegation of these responsibilities and also proves an effective counsel for the process of selection and transition to a new management.
3) Review the Candidates
Identify the core areas of your organisation that need immediate succession planning and the impact, change in leadership will have on these areas. Analyse the chief governance qualities required to excel and lead these specific business operations. Measure all the potential candidates besides these parameters. You can also refer to your business lawyer to evaluate each of the candidatures carefully.
4) Develop a Transfer Process
Developing a system that allows the senior management to effectively share the knowledge of their clientele, the expertise in their respective business areas and the influence with their contemporaries can be tricky. It is advisable to train the deputy under the departing employee’s management for a few months. You can also retain the exiting employee as an honorary advisor to ensure a smoother transition.
5) Be Flexible
Leave a little room for errors during the transition phase. Slow and steady is the key. Begin the conversion at a small but consistent pace to ensure minimum errors. Be flexible with your business policies and rules for employee conduct during this period to make the process easier.
6) Communicate the Decision
Change in management if not executed correctly can have serious consequences for your operations and employee morale. It is crucial to convey the decision of a senior employee’s departure neatly. Prepare a strategy for contention if the succession plan fails. Review and revise the plan intermittently.
Exiting from one’s business or managing the departure of a top management employee can be a complex situation for any organisation. Implement these tips for succession planning to make the process easier for you and your company.