Despite the words of Daltrey and Townsend all those many years ago, making light of the changeover from the old to the new, “meet the new boss, same as the old boss, the transition from one MD or the boss as many are affectionately known, is a crucial phase in the lifecycle of any business.
Succession can be planned or unplanned – the decision for the MD to move on to a new challenge or retire can be sudden and unexpected. Either way, by the time a succession plan is needed, it is usually too late to start building one.
As such, it is the responsibility of the board and or the other Directors/senior management team to make succession planning a priority, in order to provide a framework for a smooth transition to a new leader for the business, when that time inevitably comes.
Succession planning is also good talent management
Creating a succession plan provides an opportunity for the business to drive the development of the next generation of senior leaders, aligning leadership at the top of the organisation with the strategic needs of the business – this can be easier said than done, depending on culture the departing MD is leaving behind.
The foundation for MD succession planning is the strategic direction of the business, from which the profile and selection criteria for the next MD can be developed.
Getting this profile right is key, because it provides a roadmap for internal candidate development plans and a framework for selecting potential candidates for the job.
The succession plan should think long term. Look beyond just replacing the current boss – who should be training up for the job after them?
MD succession is an ongoing process so it is important to have a pipeline of talented candidates undergoing development as they rise up through the business – it is a good idea to have promotional pathways open from all areas of your business as you never quite know where your next MD may come from.
Succession plans should evolve with your requirements
You should create a written succession plan. This document should detail how the Directors are elected and replaced, how successors are to be chosen and the respective roles of the MD, the chair and where appropriate the board and any management committees within the business.
Potential candidates should be assessed against industry benchmarks and these criteria should be detailed in the succession plan. An emergency succession procedure should be included in the written succession plan – in the case of a sudden vacancy for a new MD or Chair for that matter.
Once you create your written succession plan, the Directors/board should review it at least once a year as part of your ongoing risk assessment and to ensure that it is fit for purpose.
Future internal candidates in the business should also be reviewed as part of this process, in order to manage the pipeline of potential future leaders of the business. If the capability to manage this process doesn’t exist within your business now, it would be worth introducing this in 2022.
We can talk to you about how to go about getting started and we can make introductions to others who can help you to introduce talent management strategies, as well as MD search, if you have a pressing need.
Alternatively, working closely with your management team we can help you to prepare your business for sale and assist you throughout the process.
We can develop a detailed business brief which examines the business performance, assets, intellectual property and brand strength. And we will help to identify, research and approach potential buyers on your behalf >read more