7 Strategic Planning Steps to Support an Effective Succession Plan
September 10, 2021
Only 3 out of 10 family-owned businesses will survive into a third generation. The major cause of this high business mortality rate is the lack of an effective succession plan. It is all-too easy for business owners to become mired in day-to-day operations and allow planning for the future to slip away.
One way to help regain a focus on the future is to develop a clear strategic plan that can support a company’s succession and transition strategies. Strategic planning is the blueprint for achieving the established short- and long-term objectives. In addition, a clear plan helps to inform employees about what’s expected of them and ensures the team is working toward common goals.
For those businesses that have yet to create a useable, practical strategic plan, below are the common development steps:
1. Develop a Mission
A business’s mission is a statement that highlights its purpose for existence. It shows what the business does and what it intends to achieve in the current period. The mission serves as a reminder to the employees regarding the direction of the company and its core purpose for performance. It also communicates with outsiders (e.g., potential clients, investors) about the foundational purpose of the business.
2. Establish Values
Why should outsiders trust your company? What measures should you implement to assist employees in making the right decisions? The answer is to have a strong set of values for your company. Make sure that employees, customers and suppliers understand the company’s values and know how to incorporate these values.
The values will also shape and support your company’s culture. Businesses that are able to clearly communicate their values, integrate them into their performance management programs, and recognize and reinforce those behaviors in action tend to have the most engaged and productive workforces.
3. Create a Vision
Where do you see your business in the next 10 or 20 years? The answer can be found in your vision statement. A vision statement strikes at the heart, inspiring others to action. Write down the things you’d not only love the business to achieve in the future but that would be evidence of the business reaching its full potential.
4. Define Company Goals
The company goals are a clear statement of direction and give priority to the strategies that matter the most for the period of the plan. The goals give employees a sense of purpose when performing various functions and provide the basis for making key decisions.
5. State Departmental Goals
Some departments may struggle to see how to contribute toward the company’s goals and mission, particularly if they don’t directly impact revenue. Departmental goals clarify the roles of these departments and ensure that everyone can see how their efforts help the company overall.
6. Establish Individual Goals
An individual goal is a tool for tracking an employee’s performance and improvement. It helps motivate the team members by establishing things they each need to achieve in a given period of time.
7. Develop a Communication Plan
Setting up the right channels for sharing information ensures smooth operations. The employees understand their roles and know how to communicate in case of any issues.
A clear, concise and meaningful strategic plan assists company owners in creating an effective, practical and implementable succession and transition plan because it provides the framework for answering a few very key questions, such as:
- What is the potential of the business?
- What skills will be necessary to achieve this potential?
- What are the business priorities?
- Does the leadership team have talent gaps that need to be filled?
A succession plan is about planning for the long-term success of the business by identifying the knowledge, skills and abilities the company will need for the future. How can a business identify those needs without having a strategic plan that identifies the vision and goals? Understanding the potential of the business can help the current leadership team pinpoint those skills the company will need to reach its goals.
A transition plan is a specific road map for the owners of the business to determine the best way to transition away from the business, meeting both their personal and professional goals, while leaving the company in the best shape possible. Again, having a strategic plan in place can help business owners determine the key milestones the business and the management team need to achieve before the owners feel comfortable to move to the next step in their transition process.
Once the strategic plan is in place, business owners can then move through the steps of developing both their succession plan and transition plan, knowing that their actions align with the best interests of the business while also supporting their personal needs.