When it comes to choosing the person to take over your business, it isn’t about selecting someone exactly like you or someone you like. The key is choosing someone who’s not only qualified for the position but also has the vision and skills to lead your company when you exit.
You should carefully avoid these three common mistakes business owners make when naming successors. Such missteps can affect your objectivity and diminish your chosen candidate’s ability to take control of your business effectively.
1. Making an Attempt to Clone Yourself
It can be tempting to look for someone who thinks and acts similarly to you when choosing your successor. But choosing a successor isn’t about cloning yourself; it’s about finding someone who can build on what you’ve already accomplished and take your company to the next level. Indeed, the most qualified successor may be someone with a very different leadership style, skills, and business strategy than you. You shouldn’t let the fact that he or she manages things differently cloud your judgment as long as the two of you share the same fundamental values and vision for the company. You may learn that your successor’s approach, while different from yours, is actually more effective.
2. Not Thinking About the Future
Remember that your successor will be accountable for leading your company not only in today’s business environment but also in tomorrow’s. Because today’s economy is constantly changing, particularly in terms of technology, the skill set and business strategies that work now may not work in the future. Indeed, choosing a successor is about ensuring the long-term success of your company. Consider how you want your business to grow and evolve, and then choose the people whose skills and strengths best align with your vision for the future. Hire a successor based on where your firm wants to be in the next 10 to 20 years, rather than where it is now.
3. Process Is Not Transparent
When making a major change in your company’s leadership, it’s best to be transparent about the process. People are typically hesitant to change, especially when it involves their employer, and if your team just finds out about the transition after new leadership is announced, it may have a negative impact on their morale. Allowing your team to know that succession planning is ongoing also helps to build your team’s trust in the process. This is particularly true for those in senior positions who may wish to be considered for the role. If a person believes he or she was kept in the dark about a leadership transition, he or she may become resentful and perhaps consider leaving.
Finally, it is crucial that your successor has not only your trust and support but also the trust and support of your team. To that end, try to be as transparent as possible because no matter how qualified your successor is, they won’t be able to succeed unless they’re recognized and appreciated by the rest of your team.
Use a Trusted Advisor to Help
Choosing the right person to take over your business may be incredibly challenging, no matter how you look at it. This is especially true if your choice includes family members or close coworkers. Getting input from a trusted, unbiased advisor to help you make your decision on what’s objectively best for the company and not let emotions get in the way will be invaluable.
Furthermore, effective succession planning covers every aspect of your operation and planning for your leave. It is as important as any other planning you do for your business and isn’t just about naming your replacement. The right advisor will walk you through the entire process and help ensure that the business legacy you worked so hard to create continues to thrive regardless of who is in charge.
This article is a service of Greg Gordillo, Family Business Lawyer™. We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Schedule your LIFT Session today!