Attention, business owners: If you left your business — voluntarily or otherwise — would it struggle to survive, or have you groomed a qualified successor to carry on your legacy?

The solution to this problem could be right under your nose. Internal candidates are a known commodity. That is, they already understand the company’s operations and core values. Plus, during their tenure, they’ve likely developed rapport with co-workers, suppliers and customers.

However, succession planning doesn’t happen overnight, even when you choose an existing employee. The keys to a smooth transition are twofold. First, you need to identify an internal candidate with the right skills, experience and drive to take on a leadership role. Second, you must mentor that person to become the leader of tomorrow.

Who Can Fill Your Shoes?

Picking a successor is difficult decision — and some owners lack the objectivity to make a rational choice. For example, your daughter may have worked for the family business since high school, but she may lack the requisite skills (or desire) to run the entire show after you leave. Likewise, a trusted employee — say, your top salesperson or your most technically skilled worker — might lack the full skillset of a well-rounded CEO.

Business owners may have trouble admitting that their children or superstar employees aren’t the right fit. So, it may be helpful to assemble a succession planning committee to brainstorm a list of objective qualifications for the job. Then the committee can help identify existing workers who have, or are capable of developing, skills to carry on your goals before you leave.

Top criteria to consider when selecting successors candidates include:

Relevant experience. In addition to the roles someone has served at your company, consider his or her education and prior job history. For example, someone who’s currently in your IT department may have formerly worked in the field with another company’s sales team or on the front lines of a competitor’s production floor. Discovering an employee’s work history may require some digging, so include someone from your HR department on your succession planning committee.

Personality. A strong CEO needs to be passionate yet diplomatic, competitive yet rational, and an effective communicator yet a good listener. If you choose a particular candidate, will others follow his or her lead? Charisma isn’t necessarily something you can be taught — some people are just born with it. Owners may need to build relationships with lower-level staff to get a feel for who might have the “it” factor.

Learning agility. While experience is an important consideration, seniority may not be as important as an individual’s potential. The ideal successor candidate needs to be willing to take risks, try new things, learn quickly and adapt, especially in today’s volatile marketplace.

Sometimes the succession planning committee will confirm the owner’s gut instincts about certain candidates, but they also may identify strong candidates that the owner overlooked. Remember: Successors can come from any department — and they may not yet be part of your management team, especially if your other top managers are also nearing retirement age.

What’s Needed to Hone the Successor’s Skills?

One of the benefits of choosing insiders to take over the reins is that you already know many of their strengths and weaknesses. However, some internal candidates require additional cross-training, mentoring and on-the-job testing before the owner is comfortable relinquishing control.

For example, if you choose your controller as the successor, he or she may already understand the tax and financial reporting aspects of the business. But that individual might need to work for six months in sales and six months in production to develop a more holistic understanding of day-to-day business operations.

In addition, the owner needs to introduce that individual to external stakeholders — including board members, lenders, investors, suppliers and customers — as a potential successor candidate. In effect, the candidate needs to “shadow” the owner to learn what’s needed to run the show.

As an internal candidate develops, the owner can test how he or she responds to challenging tasks or situations. For instance, you could involve a successor candidate in budgeting, profit analysis, tax planning and strategic investment projects. A strong candidate will pass most tests with flying colors. But occasional mistakes can teach valuable lessons, too, so it pays to be patient. It’s also important to recognize that a successor candidate may have a different leadership style than you do.

The succession planning committee can reconvene periodically to assess whether your preferred candidate is the perfect fit, or if it’s time to compare them to external candidates.

We Can Help

Is your future successor already working at your company? Contact our executive search group to find out. We can help assemble your succession planning committee and guide you through the process of picking an internal successor candidate and preparing that individual to take over the business in due time.