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The Importance of Succession Plans
At age 28, Richard J. Bryan took the reins of a $120 million car and truck dealership group when his father was forced to retire suddenly. This was a 100-year-old family business and he was the fourth generation of his family to be CEO. That alone was a challenge. Worse, the business was losing $3.5 million a year and there was no plan. With help from his mentor Frank, Richard was able to apply creative strategies, articulate a crystal clear vision, hire the right people and forge a dynamic team. Ultimately, he helped the business to survive and then prosper in a tough and competitive industry. Today, Richard shares with audiences the key strategies they need to hire future leaders to guarantee business success today into tomorrow. We recently talked to him about the importance of succession plans for business owners. Here’s what he had to say:
What is your leadership philosophy?
Leadership success is all about hiring, training and retaining a team of “A-Players” you can trust. If you surround yourself with a team of top performers who have complimentary skills to your own, you will always achieve more. The key is to learn to be more of a coach and mentor rather than a micro-manager.
What are the most important leadership lessons you’ve had to learn in the course of your career?
The three that come to mind immediately are:
- When hiring “A-Players” for your organization don’t just look for experience, but start by finding people with transferable skills and a great attitude. If you surround yourself with people who have great attitudes you can achieve amazing results.
- Make the best decision you can on the day with the information you have available, then move on. There is no time for second-guessing or “what if’s.” Hindsight is always great but as a leader the worst thing you can do is not make decisions.
- Persistence in business is more important than ability. If at first you fail, just keep going until you find a way to achieve your goals. Most successful leaders and entrepreneurs have had failures at some point in their career. The important thing is to learn from them.
Why are you so passionate about succession training?
I became the CEO of a large family business at a young age when my Father became ill and could no longer work. There was no plan in place for this eventuality and it was a very difficult time in my life. I inherited a weak management team and an organization that was not customer focused and was therefore losing both customers and money. My mentor Frank and I had to change the culture and come up with a succession plan that worked. Today, I share with other business owners and leaders why it is so important to have a succession plan and the risks associated with not planning for the future.
How should organizations prepare for succession?
Starting the succession planning process early is vitally important. The transfer of the business from one generation to the next can take between five and 10 years. Therefore, the business owner and CEO should be having discussions about this with trusted advisors, in order to create an outline plan, at an early stage rather than waiting for when they are close to retirement. After all, successfully passing on the leadership of an organization to the next generation is one of the toughest challenges facing leaders today – especially with many from the baby boomer generation approaching retirement age. Planning ahead is crucial to ensuring continuity of the organization.
What types of considerations do they need to make when developing a succession plan?
Think about why the organization exists in the first place and what do you want it to look like in the future? This process of starting with the end in mind can be very useful. For example, if you are a family business do you want the organization to continue for multiple generations under your family’s ownership or do you want to exit at some point and become an enterprising family with various other investments? It can be helpful to get an outside advisor to facilitate these discussions so that you are able to be creative and explore all of the options for the future ownership and leadership of the organization.
How should organizations approach developing new leaders?
Part of your plan should include a process for identifying future leaders. This can be easily built into performance reviews so that existing employees who demonstrate high leadership potential and have the right attitude can be identified and retained within the business. The next step is to understand what skills and experience are necessary so that they can be moved around the organization as necessary and be ready for when a leadership role when it becomes available.
What are the most common mistakes they make in this process?
Not planning ahead and allowing enough time for the new leader to grow and mature can be a real problem. Just because someone is an “A-Player” in terms of attitude and past performance in one role is no guarantee that you will get A-Performance without the proper training and on-the-job experience.
How can organizations approach hiring with an eye toward succession?
If there are not any internal candidates capable of taking on the business then hiring suitable external candidates becomes very important. The existing CEO should be networking and on the lookout for people in other organizations who are a good fit for the leadership role. Also, having a hiring process that is robust and explores past performance in detail together with references is very important. Recruitment agencies and headhunters can also be an asset in finding additional candidates.
What are the most common mistakes you believe companies make in hiring?
Too often organizations wait until there is a vacancy and in this scenario may end up hiring too hastily in order to fill the role rather than waiting to find the best candidate. It is also important to hire someone who is a good fit for the organization rather than just similar in personality to the CEO or business owner.
What advice do you find yourself repeating to clients over and over?
Get help from someone who has been involved in succession planning before as it is a complex and often emotional process. Finally, understand that conflict is a normal part of the succession process, and is, in fact, critical to finding creative solutions that will result in the long-term health of the business.