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The Alternative Board Blog

Tips on Grooming Your Business Successor

Aug. 2, 2021 | Posted by The Alternative Board

It may not seem possible now, but the day will come when you no longer run your business (either as a CEO or business owner). Recognizing this inevitability is the first step towards selecting and grooming a successor who holds the same passion for the business as you. That’s the only way to ensure a smooth transition that keeps the business operating at full speed.

Even successor-candidates who look great on paper need real-world experience and skills at leading the organization. That’s why, as we have noted before, “building those skills should be at the top of your priority list.” Often, such training “can extend over a year or longer, in order to have time to work closely together at the outset and then to allow this person to start leading on their own.”

Here are tips to help make your successor a better “leader-in-the-making”.

Make sure there’s a strong team behind 

All leaders are only as good as the teams behind them. With an effective, results-oriented team in place, the successor can rest easy knowing that key decisions and operations are proceeding even while he or she is learning the ropes.

Create a program that expands the range of the successor’s expertise.

Grooming a successor is never an occasion for “winging it.” A formal program that encompasses the spectrum of his or her pending responsibilities will more likely result in strong leadership from day one, particularly if the process is thoroughly documented for use again in the future.

Business coach and trainer Jonathan Goldhill advises CEOs and business owners to “work with members of your leadership team to create a program timetable that will expose your successor to all areas of the organization.” This approach enables the team “to observe how they [the successor] merge accessible information with their own decision-making process.” This process will help you identify the individual’s strengths and weaknesses, paving the way for more specialized training.

Want additional insight? Read 9 Steps to Safeguard Your Business to learn more

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Take special care in choosing a successor to a family business.

Issues around family and an individual’s ability to lead can sometimes cloud the successor process in a family-owned business. Without the right mind-set, a leader’s objectivity may be compromised if one (or more than one) family member is being considered for succession.

To offset the potential hazards:

  • Bring in a trusted outside advisor—or, better yet, join a highly effective peer group organization like The Alternative Board—to help get some distance on the candidates.
  • Where possible, arrange for the candidate to work in several different parts of the organization, to see how well he or she does in those situations—and to help them acquire urgently needed experience.
  • Finally, address the challenges that may arise when a promising family member is not chosen to be the successor. Meet with this individual to ascertain whether they wish to continue working for the family business and will support the new leader.

“Do not make the mistake of keeping a candidate with the company simply because he or she is a family member,” advises the accounting firm Concannon Miller. If you and your leadership team feel the family member won’t adequately support the new CEO, “the company is better off terminating the relationship sooner than later.”

Finally, and perhaps most importantly, once the new leader begins their tenure, don’t stick around and gum up the works. Make yourself available, but refrain from offering unasked-for advice or guidance. Let the new leader establish their style—and build their own credibility—without interference from “the old guard.”

Want to learn more? Check out “Managing Family Business Conflicts.”

 

 

Read our 19 Reasons You Need a Business Owner Advisory Board

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Written by The Alternative Board

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