Well, does it or doesn’t it? The answer is; it depends. There are really only 2 reasons to develop a strategic succession plan. It is either to Develop or Exit.
A Development strategy is designed to:
1. assess your existing staff,
2. determine who has the potential, interest & drive to move up & take on more leadership responsibility
3. develop these individuals.
A simple tool to start the process is to create a Potential/Performance matrix. This 1-9 scale requires you to make choices of where an individual fits relative to others. Once created, go through a list of your key staff. Individually rate each person’s Potential to be developed as well as their current Leadership Performance. (for our free Excel® model please contact us at info@BuildItBackwards.com)
Although there is much more to the process, this step will give you a sense of who you see as the future of the organization.
Alternatively, an Exit strategy is geared toward your leaving the organization. To begin answer the follow:
The why is really the most important question. What is (are) the reason(s) you are exiting? Health, financial, legacy, age, timing, etc. The answer to this question will drive the others.
The when refers to the date you want this to occur. Once you answer the why you will be in a better position to decide on the when to meet your needs. If you plan this right the decision will be yours & not others.
The who refers to what individual(s), groups or organizations you want to succeed you. There are many more options than you might think once you delve into the potential. With one client we recently identified 17 parties to further explore who had potential to be included in the discussion.
The what refers to the structure of your exit. What are the tax consequences of the deal? What will be the structure of the entity? Etc.
The how is the form the exit will take. In other words, do you prefer:
• Selling to a Friendly Buyer
• Initial Public Offering
• Management Buy Out
• Employee buy-in via ESOP
• Strategic buyer
• Financial buyer
• Leveraged Buy Out
Whether you are looking to develop your staff further or plan for you own exit, strategic succession planning is a critical step in your success.
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