Succession planning is even more important in small companies
In the same month, the Volkswagen Group had no time for planning after an emissions scandal crisis that led to an instant succession requirement. The car maker traded up and appointed Matthias Müller, aged 52, who had spent the past 5 years as Chief Executive of Porsche. That led me to wonder what Porsche had decided to do… hire the chap from Rolls Royce? No, they’ve appointed Oliver Blume, a long serving VW and Porsche employee who, at 47, must be lined up for decades in the hot seat.
Whether haute couture or high street, none of these successors – not even the young Mr Blume – has any time to waste when it comes to thinking about their own successor. Every business leader, at every age, must plan for succession. Even those not planning to leave should have a succession plan in place. Shareholders demand it, especially as you get older.
Plan well ahead to ensure a smooth succession
At some point, you will retire. Or be sacked. Or move to a chairman role, as Mr Lauren has done. Or, unfortunately, die. One of these outcomes is inevitable, so there’s really no excuse not to plan.
Graham Mackay, who joined South African Breweries in 1978 and became chief executive in 1999 when it listed on the London Stock Exchange, had long planned his succession. So, it was no surprise when Alan Clark, long standing SABMiller employee, became Chief Executive in April 2013. Mr Mackay moved to be chairman and died, aged 64, in December of the same year. Even this eventuality was provided for; the Senior Independent Director, John Manser, stepped into the role whilst the company sought a new chairman. They found him in Jan du Plessis, who took over in July 2015.
Emilio Botín, Executive Chairman of Grupo Santander, died suddenly at the age of 79. Within 24 hours his daughter Ana, then running Santander’s UK business, was picked by the board to replace him. Her appointment, whilst in very sad personal circumstances, was very well organised and swift. It demonstrated the virtue of detailed succession planning in a moment of crisis.
And despite all of the heartening reassurances that Lloyd Blankfein’s lymphoma is highly treatable, the Goldman Sachs board needs to be thinking about the next in line. It may feel almost like a betrayal, but it isn’t – a solid plan not only gives Mr Blankfein more options should he decide to reassess his priorities, but also ensures that what he has built is not dismantled by a botched succession. It’s peace of mind for everyone, including Mr Blankfein who doesn’t need concerns about future plans weighing him down at this time.
The importance of succession planning for small companies
So, what does it all mean for you? You don’t have a company as grand as Mr Blankfein’s or as well-known as Ralph Lauren’s. Where do you stand?
You’ve got a small business. A little business. A business that depends on relatively few employees. A business that, let’s be honest, the world’s most successful CEO’s aren’t going to be clamouring to get hold of. You can’t shout from the rooftops and watch as hordes of highly experienced professionals, with decades of experience, come rushing to your door.
Your successor will, most likely, come from your family or your list of employees. You might be handing the business over to someone that’s eager to take the reins. Or, if you’ve not planned properly at this very moment in time, you might have big ideas about passing it down to a son or daughter. Meanwhile, that same son or daughter is at university and fully intending to move abroad once they graduate. Their sights aren’t set on your business.
Can you imagine the shock and disappointment, for everyone involved, if you’re close to stepping down and you call your first born with your big announcement? They might not take the words “you get to take control of this business!” as well as you’d been imagining. Succession planning avoids those awkward silences on the phone that happen exactly when a decision has to be made – get the uncomfortable conversations out of the way nice and early.
That ‘small business’ thing that you’ve got going on can also limit your talent pool. You need someone that knows what they’re doing, that isn’t going to drive your business into the ground in their third month on the job. Succession planning gives you time to train up your successor, show them the ropes, make sure that they really understand your business. Think Willy Wonka and little Charlie, without the office full of lickable wallpaper and chocolate rivers. In small businesses the skills are more thinly spread, each individual employee is a bigger part of what’s going on, and succession planning can even provide some ‘stick around’ motivation for your most important talent.
What’s around the corner?
Chief Executives and Chairmen need to know long before a life-changing event – be it a career crisis or an illness – who could and would succeed them. You never know when you’ll leave, voluntarily or otherwise.
Anything can happen in the next month. Unfortunately, when something does happen, planning for your successor is likely to be the last thing that you’ll want to be doing. Your company has always been a big priority, but it’s probably not going to be your biggest priority at every stage of your life. Or, indeed, at any.
I know who could run my company if anything happened to me. Do you know who would run yours?