business Succession Planning: Proactive Communication is Key February 05, 2024 When communicating your exit strategy, it is crucial to have the buy in of your current management team and other stakeholders. We share some guidance here. Every business needs to have a succession plan in place to help transition ownership to the next generation of management — or transfer ownership to third parties. Whether you plan to leverage internal talent or turn over the business to people outside your organization, it’s essential to have the buy-in of your current management team and other stakeholders. This can be an especially sensitive subject for family-owned businesses. Here’s some valuable guidance to consider when communicating your exit strategy. Company insiders It’s important to give your management team, existing employees and board members ample notice about your succession plan. Doing so can help minimize misinformation, rumors and power struggles that may come with leadership transitions. This also gives existing workers the opportunity to voice concerns about the new leader or the succession process in general. Consider involving your management team when developing and approving your succession plan. This helps make managers feel like they’re part of the transition process and engender their support. Plus, existing team members may have insights that you might overlook when developing your plan. Proactive communication strategies can help you identify and work through problems early on. Break the news gently to gain buy-in and provide staff with reasons to stay with the company after your departure. Pay special attention to internal candidates who weren’t selected to be the successor; these individuals may harbor resentment and adversely affect the morale of co-workers. If disagreements arise, discuss the issues with your successor to give them the opportunity to showcase leadership abilities, including the ability to compromise. When communicating your succession plan, establish a timeline for your transition and stick to it. Sometimes owners may temporarily serve as a consultant and advisor, but they generally shouldn’t remain active in the day-to-day operations after the transition date. Your Successor Of course, you’ll need to have an open line of communication with the person that you’re planning to hand over the reins to. But it’s not enough just to tell the new leader they’re in charge — you’ll need to mentor your successor for success in the new role. For example, you should ensure that your successor embraces the company’s mission, core values, financial performance and strategic plans, including any major opportunities and challenges. Your successor also must be well-versed in your products/services and industry, including the company’s market share and competitive position. If the new leader will come from outside your organization, be sure to get them engaged with your management team. Consider providing opportunities for your successor to answer questions, participate in management meetings and collaborate on projects — such as budgeting and compensation planning — to demonstrate competence. Such interactions can help reassure you that the new leader will fit into your organization’s culture. External Stakeholders Additionally, your communication plan for leadership changes should extend to customers, lenders, investors and even key suppliers. Neglecting outsiders during periods of transition can lead to business continuity problems. For instance, uncertainty about the company’s future, misinformation or internal conflicts may cause customers to take their business elsewhere. This is especially true in sectors where personal relationships are common. Tell stakeholders about the company’s succession plan and introduce them to your successor, long before your departure date. Doing so can help reassure them that business will continue as usual and alleviate anxiety. It shows that you have a solid plan for business continuity and capable managers in the cue who are prepared to carry on your legacy. For More Information Contact our executive search group to help communicate your succession plan to people inside and outside of your organization. We understand that times of change can be tumultuous and can facilitate a smooth transition process.