So you have grown your business to the place you want it to be and you are thinking of an exit strategy or just retiring. Congratulations! But the new question is who is going to run this company when you hang up your business cleats?

Succession planning is all about picking your successor and having them ready to take over when you want to leave, or do something different. Maybe you do not want to be CEO anymore, but still remain as part of the business. Maybe you want to go part-time or to start another business. Succession planning is all about making sure that someone is fully developed and ready to take over.

When does the process start? It depends on where your business or organization is and the talent you have in the bullpen. It also depends on how much control you want to give up. It could take months or it could take years. I have worked with one organization where the President decided he wanted to give up his role of President in three years and came to the realization that it would take his successor that amount of time to learn what they needed to learn to effectively take over the reins. Are you surprised at that amount of time? I wasn’t, given the level of development that the successor needed.

What should you look for in a successor? Start with the company’s business plan. Where do you expect the business to be in 5 years? From there, work backwards. What skills, talents and abilities are needed in the leader to get the company to that place? Develop an honest assessment of the capabilities of the most likely internal candidates. Such an assessment can be done effectively with the help of an outsider who is skilled at making such assessment and who can be objective. Honesty is critically important if you want the business to survive, grow and prosper.

Sometimes, given an objective assessment, you may come to the realization that there is no one who is on the inside team today who is capable of taking over for you. In that case, you must look to the outside. You begin the search process, which can take several months, and then the new person must learn the business, the market and gradually learn the role you want them to play. They have to bond with other senior management team members and learn your company’s culture. That could take a year or two depending on the person and the complexity of the business.

How do you let the other internal contenders know that they were not chosen? This can be difficult and there can be repercussions including some of the people deciding to leave. Is this the worst thing in the world? Only you can answer that question. The best approach is the honest approach where you tell the person(s) that you have made a decision to select someone else because on an overall basis you thought that person is better qualified for the long run. This conversation can represent a great opportunity to create a development plan for the person to grow within your organization and become the next successor. Or they may disagree with your decision and begin looking for other pastures. In the latter case, a contingency plan is called for in the event you have a sudden departure of a key player on your team.

After the decision is made, your role then shifts to that of a coach who works directly with your successor to ensure the transition is a smooth one. You must first assess the development needs of the successor. If the person is from the inside, you must develop a plan to provide this person with the skills and business knowledge they do not currently have. For example, let’s say you name your top sales and marketing person as your successor. They may need development in other areas of the business such as operations or finance. You must develop a plan that moves them into the decision-making process of situations they had no involvement in prior to now. They must begin to develop (and perhaps repair) relationships with others who may have been peers and will soon be subordinates. You will also have to begin to let go of the reins yourself and allow the successor to start making final decisions on company matters.

If the successor is hired from the outside, the development plan needs to cover learning the business, key customers and vendors, the culture, and the business strategy to accomplish the long-term goals. This person also needs time to develop effective working relationships with the internal staff.

How do you assure that your succession plan is a success? Like any other uncertainly in business life, you can’t predict something will have absolute success without trying it first. You can look back after the succession has had a few years and ask some of the following questions:

  • Is the company better off with this person at the helm?
  • Were the company goals met or exceeded?
  • Is there a greater market value now for this company?
  • Is there a top-tier management team in place?
  • What does the competition say about this company?

If you do not want to wait for a few years (and who would really want to wait that long), think about establishing some short-term (6 – 12 month) goals for the successor to achieve. It is advisable that these goals be as clear, specific and measurable as possible.