The Critical Importance and Challenges of Effective Succession Planning (Full Transcript)

Speaker 1: I thought this was a pretty good quote on succession planning. Succession planning is a deliberate and systematic effort by an organization to ensure leadership continuity and key positions to retain and develop intellectual and knowledge capital for the future and encourage individual advancement. Succession planning really is the means by which companies sustain themselves. Really without an effective succession plan, companies do really risk their ultimate future existence. So it really is a very, very critical process. It is, though, sometimes difficult for companies to get the process started. I can remember as a young staff accountant, actually I was a senior accountant I guess at the time, maybe with a company about three years, and Jack Kreischer, who was our founding partner and managing partner at the time, said to me, John, you really should be continually working yourself out of a job. Which made me a little bit nervous, quite frankly, being with the firm maybe three years. I don't think I slept real well that particular night. But really what he was saying at the end of the day was I needed to be really working with my subordinates, training them, developing them, so that at some point they could take my position, which really for me created an opportunity to step up to the next level in our organization. And that's really the essence of succession planning is that C-level executives really sort of take the time to develop, train, mentor their subordinates so that at some point, hopefully at the right time when they're ready to retire, but that they've got somebody ready to sort of step into their shoes. I think it's something that all business owners know that they need to do, but again it often gets pushed to the back burner like estate planning and some of those kinds of things. In a recent survey that I read, 90% of the respondents indicated that succession planning was really a very, very critical concept or something that they needed to do in their organizations, but only 50% of those respondents had any kind of effective succession plan in place in their organization. So I think it's not easy for people to sort of contemplate somebody stepping into your shoes. I think in some cases, some business owners, it's difficult to think that anybody could do a better job than you've done, and I think particularly for founders of successful companies, it's hard to imagine that somebody could really, really step into your shoes and take your place. The other thing is it's very hard work. Succession planning involves identifying, training, developing people underneath you, all of which takes away from the day-to-day activities that C-level executives get involved in. So there's an effort. It's work, and it's a process that's not easy to sort of work through.