02 Oct 7 Succession Planning Mistakes to Avoid

CEOs: Do you have an “exit strategy” for your reign?

I’ve been talking a little about the initial steps to consider before selling your business, but succession planning is a different animal. CEOs often don’t want to SELL, but rather leave the business in the hands of someone who will continue its legacy. 

Succession planning is a critical process for ensuring the long-term health and success of an organization. It prepares for the eventual transition of leadership roles and key positions, ensuring continuity and stability. 

However, many businesses stumble in this crucial area due to a series of common mistakes. If you’ve seen the Max series “Succession,” you know how turbulent (and downright cutthroat) the process can be.

The following represents some key pitfalls to watch out for.

1) Lack of Proactive Planning

Waiting until a key leader or employee is about to retire or leave is not the time to start planning. Ideally, succession planning should be an ongoing process that evolves as the organization does. Procrastinating can lead to rushed decisions and ill-fitted replacements.

2) Overlooking Internal Talent

Often, organizations focus externally for successors and ignore the potential within. By doing so, they might miss out on individuals who already understand the company culture, values, and operations. After all, having them within the organization so far has been successful!

3) Failing to Train and Develop Potential Successors

Merely identifying successors isn’t enough. Continuous training, mentoring, and development programs are vital to ensure they’re ready to step into their roles seamlessly when the time comes. They won’t know what they don’t know unless training is a focal point. 

In a recent Forbes article, contributor Rhett Power cites the case of Disney, in which the exchange of power from Bob Iger to Bob Chapek failed due to lack of mentorship and development. He says, “If even the House of Mouse can be brought down by poorly handled succession planning, it’s possible for any company to stumble when trying to replace one leader with another.”

4) Not Considering Cultural Fit

While skills and experience are essential, understanding and integrating into the company’s culture is equally important. An individual with the right skills but a poor cultural fit can disrupt the organization’s harmony and effectiveness. It’s crucial to recognize a misalignment in the early stages of succession planning.

5) Avoiding Tough Conversations

Conversations about retirement, potential replacement, or skills needed for advancement can be uncomfortable. Avoiding these discussions can lead to misunderstandings, unexpected departures, or potential successors feeling undervalued. Transparency and honesty is always the best course of action.

6) Relying on a Single Candidate

Banking on a single individual can be risky. Unexpected events or changes in career paths can leave companies vulnerable. What if the person you’re going “all in” on decides they don’t want the responsibility? It’s wise to have a list of potential successors for key roles.

7) Neglecting to Review and Update the Plan Regularly

Businesses evolve, and so do their needs. What worked a few years ago might not be relevant today. Regularly reviewing and updating the succession plan ensures it aligns with current organizational goals and needs. Depending on the size and scope of your business, you might review the plan anywhere from quarterly to every two years. 

Proper Succession Planning Ensures a Smooth Transition

Effective succession planning requires foresight, open communication, and commitment to continuous development. By avoiding these common mistakes, organizations can ensure a smooth transition of leadership and sustained success.

If you’re currently in this process or thinking about it, what are the biggest challenges you’re facing? I’d be happy to help you work through any roadblocks. You can contact me here via my website or email me directly at michael@consultstraza.com.