Succession planning is continuing to represent a major obstacle for business owners and managers that want to be sure their company will continue to perform when they aren't in a leadership position. For a small business, this is especially important, given how difficult it can be to draft an effective plan to promote talent within your business.
According to a recent US study from Stanford University, companies that have a succession plan in place are in a minority. In total, only 46 per cent of respondents actually have a succession plan in place.
The figures for other areas are even lower. Only a quarter (25 per cent) of those surveyed suggested they had a solid pool of talent to take over a leadership position like a CEO.
Organisations who approach the succession process are also approaching this in the wrong way. The research suggested the main reason companies implement a succession plan is not to find and train the best candidate. Instead, the main reason for companies to begin implementing a succession plan is to reduce risks further down the line from not having the right personnel in place.
Scott Saslow, one of the authors of the research, emphasised that the root of poor succession planning often came down to the approach companies took to their long term development.
"The problem [with succession planning] tends to be cultural," said Mr Saslow.
"The majority of companies do not have honest and open discussions about executive performance, nor do they allocate sufficient time to the process of identifying and grooming successors."
To address the succession needs of companies, the study suggested making ongoing succession planning a core part of a business and to undertake this process constantly. Casting a wide net to find the right candidate, rather than solely promoting from within a company is also a useful tactics.
If you are looking to begin the process of finding a successor for your SME, make sure to discuss this process with a commercial lawyer who has expertise in succession planning.