management succession business plan

Succession Planning

Ivan Andreev

Demand Generation & Capture Strategist, Valamis

February 23, 2022 · updated April 3, 2024

16 minute read

This article is going to explain what succession planning is and how it can be applied to your business.

After reading this guide, you will have a strong idea of creating or improving your succession planning process and the best practices involved.

What is succession planning?

Business succession planning, benefits of succession planning, succession planning process, succession planning best practices, faq about succession planning, succession planning template.

Succession planning is the process whereby you identify new leaders and develop them to take over the role of the incumbent.

For businesses to thrive, it needs to avoid moments of crisis and lack of leadership.

At some point, succession planning will help with such a situation by preparing a candidate for a planned or emergency replacement. This could be because of retirement, a new opportunity, or in the event of death.

Succession planning is your safety net to ensure that business operations can remain smooth. A robust process will help you identify key individuals who could fill leadership positions.

In the best-case scenario, you will be given advance notice when someone is going to leave. A succession plan prepares you for the worst-case scenario and no notice.

At the same time, an effective succession planning strategy will avoid any questions of succession where leadership positions are concerned.

In the monarchy, this is often resolved through the order of succession. A well-understood model that passes the office to the nearest descendant. This model is also common with family-run businesses that intend to leave the business to their children or next of kin.

It can help you navigate crises and leadership transitions with ease.

In business, succession planning plays a vital role in identifying candidates to take on more challenging roles. When an important postholder departs they leave behind a void that can disrupt the company.

No matter the size of your business, a succession plan is a key to having a smooth transition.

Large companies such as Pepsi , Microsoft , and General Electric have well-known succession plans for executive talent.

For large corporations, it will typically fall to the CEO and the board of directors to oversee the succession plans. They will evaluate employees to identify leadership qualities and provide training for those in consideration.

Often the succession plan will look internally for candidates to take over positions. However, some companies may look to external candidates and may even employ the use of headhunters.

Smaller-scale companies may not need a comprehensive succession plan compared to large businesses. However, there will still be a need to identify someone to take over in the event of an emergency.

Therefore it is wise to train potential successors so they are prepared to step up if the need arises.

Types of succession plans

There are two types of succession plans that should be considered. This will give your business something to fall back on in the case of an emergency.

1. Long-term succession plan

The first type of succession plan you should consider is your long-term succession plan. This is the plan that you will more or less stick to as a standard for key positions.

A succession plan of this nature can be reevaluated and changed as the company grows. For large companies, this would be the plan that outlines the details of succession for all key positions.

2. Emergency succession plan

A secondary emergency succession plan can also be created, where appropriate, to be deployed in the event of an emergency.

This type of plan may involve more temporary measures but is intended to keep operations running smoothly.

This could see other senior members of staff take on extra responsibilities while a replacement is sought.

Many small and medium businesses do not have a succession plan. Of those that do, some of them have only informal plans.

This can be a risk for your business as there could be unforeseen incidents that could occur such as death. It is worth creating a formal, written succession plan that is developed and easily accessible.

Here are some of the benefits for businesses of any size to create a succession plan:

1. Candidates ready to start

When an upcoming promotion, retirement, or departure is approaching you will have the next generation of leaders ready to go.

Thanks to your succession plan the replacement will already have the skills required to take over the role.

2. Encourages managers to develop junior employees

Your succession plan can help your managers to start developing lower-level employees.

The plan helps to define clear progression routes through the company so managers can share appropriate training and information with junior staff.

Managers will also be able to start training their replacement when promotions are approaching.

3. It leads to higher job satisfaction

Employees report higher job satisfaction when there is a succession plan at their company. This is because it helps to define routes to progressions and lowers job insecurity.

A succession plan can help employees understand what they need to do to achieve a promotion. It can help with goal-setting and giving employees a sense of direction at work.

4. Helps to track progress

Succession planning can help your managers to track employee progress through performance reviews.

Internal opportunities can also be quickly filled with knowledgeable employees who have been upskilled and crossed trained.

5. Keeps shareholders confident

Whenever a high-ranking postholder leaves the organization it can leave shareholders feeling uneasy.

In some cases, they may look to sell their shares. A good succession plan can help keep investors on board.

For positions like CEO or CFO, the board may have had some input into the choice of successor. This will give the shareholders confidence in the company and the new postholder.

6. Cultivate and maintain company loyalty

Having a strong culture of promoting from within can lead to increased company loyalty.

You can attract talented employees who will stay with you for a long time. This helps them to have a strong understanding of the businesses, morals, and expectations.

Employees are more likely to stick around for the long term if there are defined advancement opportunities.

Instead of an informal plan, it’s a good idea to make a comprehensive document that outlines how succession should work.

Small and family businesses may only need a limited plan that outlines succession for a single person.

Larger corporations may need a comprehensive document that starts with the hiring process and works its way through the ranks and details different leadership positions.

The fundamentals of your succession plan will remain the same which is what we’re going to look at now.

It’s also worth pointing out that this document can be revised and amended whenever it is necessary.

1. Determine the scope

You will need to figure out how comprehensive you want your succession planning to be.

A small business might only need to find a replacement for ownership. Medium and large businesses may only want to consider the succession plan for their C-suite of employees.

It may also be the case you want a succession plan that covers every eventuality from store manager to distribution to CEO.

Ask yourself the following questions to decide what is best for your business:

• Do you only need a plan that covers senior management?
• Do you want a succession plan that covers the entire organization?
• Are there any vulnerabilities in your business? Such as having a division with a higher amount of employees nearing retirement. Are you prepared for that?
• Should performance reviews be used to help identify potential candidates?
• Should the talent acquisition process be a part of your succession plan?

It’s important to understand what your specific needs are as well as the needs of the business.

The size and type of your business can help to inform some of your decisions but ultimately every business will be different.

2. Identify key positions and skills

First, you have to identify the key roles in your organization that will be good to secure.

It could be the CEO, CFO, CCO, CHRO, and different heads of departments.

Second, you might have some specific specialists that are unique to the industry or your business, e.g. it might be some highly skilled engineer, programmer, scientist, etc.

Consider the following questions to identify key positions and the skills needed for that post:

• How does this position impact the company?
• If this position became vacant, how would that affect the company?
• Are there some big risks if this position became vacant?
• What skills (both hard and soft) are needed for this specific role?

The objective is to figure out how crucial the position is. If the company would be severely affected by a vacated position then this is one that should be considered within your succession plan.

You will also need to understand what specific attributes are needed for the role. That way you can build your training and development around nurturing those key skills.

3. Identify potential candidates

Perhaps the most crucial stage is finding the employees that might be suited to a tougher challenge .

You could ask the current postholder for help determining who could step up in their absence.

It’s also worth considering that the right person for the job isn’t necessarily the next in line. Candidates could be sidestepped in the role or there could be other promising candidates in the business.

You may wish to make hiring a part of the plan and therefore can use interviews to vet potential recruits for career prospects.

Try to answer the next questions:

• Who are the strongest candidates to step into this role?
• What skills do they possess that could benefit their new office?
• What skills are the candidates lacking?
• Does this person have the appetite for more responsibility?
• What training will they need to succeed?

It’s important to identify people who want more responsibility. Your top choice maybe someone who is happy in their current role and not looking to change.

This is something that can be gauged during annual reviews or in meetings about their professional goals.

4. Speak to the candidates

It would be wise to speak with the people you are considering.

This will give you a clear answer if they would be interested in the role.

Don’t make any promises but explain that they are being considered for leadership.

Explain that nothing is guaranteed as there are plenty of moving factors to consider. This includes the current postholder, the company, and the candidates.

However, you can gauge their interest and it may help to encourage high-performing individuals to remain loyal to the company.

5. Work on professional development

Leadership development is worth investing in particularly for employees you have identified for succession into key roles.

There are a variety of ways to develop potential successors and help them to develop leadership skills.

You can create a leadership development plan to ensure candidates have the right skills and are a good fit for leading positions. Employees being groomed for leadership roles can be developed in several ways .

You need to test your employees to make sure they can meet the demands of the increased responsibilities.

Some of the ways this can be achieved are through:

Connect the candidates with business leaders in your company. They can help to develop the skills of succession candidates and even share knowledge that might not be immediately obvious.

You can send prospects on courses to help develop their skills. These could be in-house courses or ones run through independent third parties.

Task forces

Task forces and project management is a great way to test your candidates. This will give them the opportunity to lead a team and test how well they cope under pressure.

When you think about development consider the following questions:

• What is the best way to upskill?
• What resources are required and available?
• Are there some additional skills needed?

The focus should be on improving a candidate’s interpersonal abilities and communication skills that are important in a leading position.

You will also want to give them the opportunity to learn and develop the necessary skills required to do the specific job.

6. Trial and error

There should be ample opportunity to give your succession plan a trial run with the candidates you are considering. For example, if the postholder is away on holiday or off sick for an extended period you can use this as an opportunity to try someone in the role.

The benefit here is twofold, the candidate will get a feel for the position and appreciate the opportunity. While you can assess whether they are the right candidate for the position.

Note: Such tests can affect the team so pay close attention to this . This is especially true for external candidates and people from different teams. Not everybody will like it, unless the candidate is a strong leader from the inside of the team.

This is what you need to consider:

• How does the employee interact with others?
• Have they kept the department running smoothly?
• How do they handle issues that arise?
• How do they react to stressful situations and conflicts?
• How much help do they need in the role?

You want to see them step up and take control of the position. This will help identify if there is any specific training they need to take the role full-time.

You can gauge whether someone is wrong for the position. This may come down to their interpersonal skills or ability to deal with new challenges.

7. Refine and redefine

Your succession plan is something that can be developed over time.

It may be that what was working years ago isn’t quite the same now.

You may need to adjust the succession plan to adapt to a changing business landscape. As the business grows you may need to redefine what is included in your succession plan.

It would be prudent to start with the most important roles in the business. After all, you can’t totally predict when a key position will become vacant.

Once you have those key positions locked down you can start to expand the scope of your succession plan.

1. Start from key roles

You should start with the most important roles first.

Which of the positions will have the greatest effect on your business if the postholder doesn’t turn up tomorrow?

Roles at an executive level are going to be the most disruptive ones. From there work out the specific skills and knowledge required for the role. This will help you to create your plan and identify potential successors.

Once the most pressing roles are covered you can look at what other roles are important to include.

2. Talk to your employees

Your succession plan will affect people and may make some people feel nervous.

It’s important to explain the scope of the succession plan and why certain roles are included in it.

You may only look to include executive positions or your plan may include managers and supervisory staff as well.

By giving a clearly defined scope you can avoid members of staff second-guessing their position.

3. Collaboration between management and HR

This is a process that should be driven by the business leaders with support from HR where necessary.

It is not strictly an HR process and therefore senior leadership should be communicated with regarding the succession plan.

Gain insights, input, and information from across the senior positions to help the succession plan run smoothly. Interviewing the post holders about the wants and needs of their job can provide crucial information.

4. Forecast your business needs

You should have an emergency succession plan in place that can deal with the untimely vacancy of a position.

Alongside this, you can create a detailed forecast and a longer-term plan. This is necessary to address things like upcoming retirement and promotions.

You will also need to consider how quickly the business can mobilize to fill this position.

A strong succession plan will understand how it will impact the business in 6 months, 1 year, and 5 years.

5. Create a pipeline of talent

Create a pipeline of talent so you have individuals ready to take up new challenges as they arrive.

A pipeline of this kind is essential for finding a talented successor but it’s also a good idea to help fill newly created positions. New recruits can be included in your pipeline of talent.

You can learn about this in our talent acquisition guide.

Even if you don’t have any open positions currently, you can still start cultivating a pool of talented individuals.

6. Annual talent reviews

Your succession plan is something that should be continually developed.

This includes reviewing the candidates on an annual basis or more. People may have moved on or into new positions within your company. Promising candidates may no longer be performing at the standard you would like.

Take a look at your succession plan every year and adapt and change things where it is necessary.

7. Build the learning culture inside your organization

It will help you nurture and grow potential candidates as well as new talents.

When you have identified the individuals that are being considered for senior positions you will need to develop their skills.

You can work with the candidates and they can lead their own individual development plan.

This ensures that their progress is actively monitored and they can take ownership of the process.

Managers should be on hand to provide guidance, resources, and provide timely reviews.

Why is succession planning important?

Succession plans make your business disaster-proof. They provide a concrete plan for filling key roles and help to avoid times of uncertainty. It can be reassuring for investors to know that there is a carefully considered plan in place.

How to do succession planning?

Succession planning should be conducted by business leaders with support from the HR teams. All affected individuals need to be involved in the process. Start with the end goal to identify what you need to achieve. Each business will have different needs so consider which positions will have the biggest effect on operations.

What is business succession planning?

Business succession planning is the process whereby you identify candidates to be groomed for senior positions. Specifically, when the incumbent leaves the role, this could be for a promotion, retirement, or an untimely death. Your business succession plan is in place to facilitate a transfer of power and keep your business sailing smoothly.

What is the correct order of the succession planning process?

• Identify which positions need to be included
• What specific skills are required for those roles?
• Identify people who could be a good fit
• Start grooming them for succession
• Review your succession plan and candidates annually

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Business Succession Planning: A Step-by-Step Guide

Business succession planning is a valuable tool for both small businesses and growing enterprises. In small businesses, succession planning means effectively managing changes in ownership or leadership. In larger organizations, it that can help to avoid potential talent gaps that have a detrimental effect on the company. The right strategy can help you plan ahead so that you can transfer knowledge and retain employees in key roles. And this is a top priority in these uncertain, post-pandemic times.

With that in mind, we have created a step-by-step guide to help you design and implement a plan that sets your business up for long-term success . We will take a look at the benefits of succession planning in HR and break down the succession planning process to help you understand everything that’s involved.

What Is a Succession Plan?

Why is business succession planning important, what is succession planning in hr, the business succession planning process in 5 steps, business succession planning best practices, succession planning template, succession planning tools.

• Create a succession plan with performance management software 🚀

So, what is the definition of succession planning? How can you apply it to your business?

Business succession planning is a process that helps you prepare your company for the future. Essentially, it’s about creating a strategy and process for identifying potential future leaders and developing their skills so that they are ready to take on a new role when one of your key employees leaves the company.

Through careful planning, communication, training, and feedback, you can create a successful change management strategy that prepares you for potential transitions in your business. This helps you avoid key player talent gaps. It also helps you proactively develop your inclusive leaders of the future.

Despite its valuable role in business planning, according to a survey conducted by SHRM last year, only 44% of HR professionals claim that their organization has a succession plan in place. What’s more, only 21% of those that do have a plan in place have created a formal succession management plan.

Do you have a detailed succession plan in place? If not, then you’ve come to the right place.

According to the 2021 Global Leadership Forecast , companies around the world are facing a leadership crisis. In fact, only 11% of surveyed organizations reported that they have a “strong” or “very strong” leadership bench, the lowest rating in the past 10 years (it has been in decline since 2011’s reported 18%). This drop has been attributed to a decline in leadership development and transition training in organizations.

Understandable given the distractions the world has had over the past couple of years.

Nonetheless, this figure shows just how important it is for organizations to work on their succession management strategies. This is the most effective way to ensure that the leaders of the future have the right skills and experience to guide them to success . And this is what business succession planning is all about.

By preparing strong leaders for the future, you can help your organization reach its long-term goals, reduce employee turnover , and build a stronger and more resilient business that’s ready to thrive.

Benefits of Business Succession Planning

In case you’re still not convinced, let’s take a look at some of the specific benefits of business succession planning in a bit more detail.

• Identifying and developing your existing employees for future leadership roles helps you to promote from within . Aside from reducing turnover and hiring expenses , this also helps you ensure your future leaders have the right organizational knowledge and internal relationships , something which external recruits will lack.
• Promoting the development of your existing employees shows them that you are willing to invest in their future . This can be a great morale boost that motivates employees to stay at your company. This helps you stay competitive and attract top talent to your business.
• A well-designed succession plan helps you formalize training for both present and future leaders. It keeps your business moving forward and helps you retain your top performers .
• Business succession planning is also an effective tool for mitigating the risks of organizational change . This helps you avoid any potential talent gaps when someone leaves your company. It also helps you pass on valuable institutional knowledge to future leaders before it’s too late.

Succession planning in HR consists is a vital part of talent management. It’s all about your role as an HR professional in identifying key roles and positions that may need filling in the future and finding and developing internal candidates who may have the right skills and experience to fill them. The right strategy can help you retain staff, cut recruitment costs and better manage your internal recruitment processes .

HR succession planning is the process of identifying, selecting and developing employees who could potentially become key players with the right development. This helps you prepare for potential organizational changes so that you have skilled and engaged employees waiting to fill key leadership roles when the time comes.

As an HR professional, you play a significant role in preparing and facilitating your organization’s succession management strategy. However, for your succession planning in HR strategy to succeed, it’s equally important to get the support of senior management so that your plan is as effective as possible and aligned with your organizational goals .

Talent Management and Succession Planning: Employee Buy-in

Business succession planning is also about managing your existing talent so that you are able to retain as much institutional knowledge and experience as possible. This means that, aside from working with senior management, you also need to rely on the feedback of your employees.

What do we mean by this?

Essentially, it’s all good and well managing and developing your existing talent, but they need to be on board with your succession plan and have a genuine interest in remaining at your company and developing their skills. Otherwise, the time and money you invest in preparing them for future leadership positions will be wasted.

Make sure the potential succession candidates you select are:

• Interested in learning new skills
• Comfortable with change
• Motivated and engaged
• Able to adapt to uncertainty and new working environments
• Willing to take on more responsibilities
• Up for a challenge

Now that we’ve discussed what business succession planning is, let’s take a look at what you need to include in your succession planning process.

Make sure your succession planning framework includes the following 5 key stages.

Define & Align Your Goals

The first step is creating a succession leadership plan. This means you need to define your goals and align them with your business. You may need to meet with senior leaders for this phase to ensure your goals are aligned with your overall strategy.

You also need to have a clear idea of who you are as a business before creating your succession leadership plan. Once you understand “who” you are, you will be better equipped to identify your potential new leaders.

Finally, to complete your plan, you need to:

• Define the roles, skills, and experience that each successor will require (your succession profiles). Make sure you gather as much feedback on this as possible from your team to help you get a full picture of what you need to include in your succession plan.
• Create a forecast of your company’s needs . Where do you need to be as a company within the next 5 years? How will your organizational structure change over this time? Think about your turnover trends, compensation strategies, who may be due to retire, and training and development plans for the future.
• Update your job descriptions to reflect the information you’ve gathered. Make sure you are clear about your expectations . This will help you define the right candidate profiles for your succession plan.

Create Your Succession Strategy

Defining your goals is one part of your plan, but you also need to create a comprehensive succession planning strategy to make sure you are on the right track – you need a business strategy game plan !

So, what does this mean, exactly?

Put simply, you need to define a series of actions and strategic moves that help you align your succession goals and objectives with your overall HR strategy .

Consider the following:

• Where do you want to be as a business? What roles, positions, skills and experience will you need to succeed?
• Which senior/leadership roles do you need to create a succession plan for?
• Will you take business succession planning into account during performance appraisals in order to identify potential candidates throughout the year?
• Does your business have any specific vulnerabilities that may affect your succession plan? (For example, a high percentage of employees that are due to retire soon)
• Have you considered adjusting your hiring strategy to account for successor roles?

The key here is to be as proactive as possible with your strategy. Anticipate potential gaps in your workforce before they occur.

Identify Potential Candidates

The next step is to evaluate your current workforce in order to identify key positions that may need filling in the future, and key employees that may be suitable replacements. This is where you will implement the succession profiles and job descriptions that you created in the previous step. The more information you include in your profiles and descriptions, the easier it will be to identify the right match within your existing workforce.

Generally speaking, the best candidates will be supportive, proactive, engaged with learning and development, great problem-solvers, adaptable and able to take on more responsibility.

It’s important to be as objective as possible in this stage. You also need to consider that potential candidates may not currently be in leadership roles. It’s all about finding potential. The most effective way to do this is by using succession planning tools and metrics, rather than relying on personal opinions. More on this shortly.

Establish Professional Development Opportunities

As soon as you have your list of potential candidates and you know what skills they need to work on in order to eventually fill the role you have matched them to, it’s time to create a professional development plan to help them get where they need to be.

Which skills does each candidate need to develop? What learning opportunities would help them get the right experience and expand their current skillset? Are there any knowledge gaps that you need to address?

Create a list of the skills each candidate currently has vs. the skills they need to acquire, then work out the best way to offer them suitable opportunities for learning and development. Create individual development plans, offer formal training, consider creating a mentoring or coaching program to support them, and encourage continuous feedback and communication.

Implement Your Plan

The final stage is implementing your business succession plan. This will usually be a gradual transition with multiple short and long-term layers.

The first layer involves officially announcing your succession plan and notifying potential candidates. You then need to roll out your individual development plans and arrange training. Introduce candidates to their mentors, if you are using them, and encourage them to meet regularly. This will show your employees that you support their professional development, and you can see that they have potential.

Most importantly, make sure you collect regular feedback to see how your individual development plans are progressing, and if potential candidates are on track to reach their succession objectives.

Here are a few business succession planning best practices to help you create a plan that sets you up for success:

• Formalize your plan . The sooner you create and formalize a detailed succession management plan, the better. Make sure your succession planning process focuses on all key stages. That means not just identifying the roles and skills you need for your future leaders, but also implementing individual development plans to get your workforce where they need to be.
• Make sure your succession planning in HR plan is dynamic . Succession planning is all about change management. Be prepared to adapt to change by constantly updating your plan.
• Collect regular 360-degree feedback . This will help you keep track of your employees’ interests, skills, performance, strengths, weaknesses, and opportunities.
• Promote open communication . This will help you build trust and set clear expectations.
• Consider your entire workforce . Don’t just focus on your managers. Your leaders of the future might be hiding in lower-level positions. Look for potential, not existing skills.

One of the most valuable tools you can use for this strategy is a succession planning template. The right template will help you define key roles within your company and identify suitable replacements. Make sure you include a template in your HR audit checklist (check out this HR audit checklist template if you don’t already have one!)

Here are a few examples of the information you can collect with a succession plan template:

• Current key employees and potential replacements
• Key skills and experience that each position requires
• Candidate training and/or experience level
• The time it would take to onboard a candidate for an existing position
• An overview of upcoming vacancies (for example, key employees that are due to retire)

In order to create and manage an effective business succession planning strategy, you need to use the right succession planning tools. These are the tools that will help you identify which candidates could potentially be future leaders at your organization. They also help you identify potential succession gaps and map the right candidates to the right positions.

Ideally, you should be using a range of tools to help you get a full picture. Here are a few examples of succession planning assessment tools that will help you with this:

• Personality assessment tools : to help you get a comprehensive picture of your existing culture (e.g. tools for tracking motivation levels)
• Behavioral assessment tools : to help you identify and analyze employee leadership skills and assess how they behave at work (e.g. situational judgment tests)
• Cognitive assessment tools : to evaluate critical thinking and reasoning skills related to performance (e.g. a cognitive aptitude test)
• 360-degree feedback : to gather valuable input from employees and their peers in order to understand their readiness to take on future roles (included in most performance management software solutions)

Succession Planning Software

Finally, once you have designed and implemented your business succession plan, you need to regularly monitor progress. This will help you determine if your plan is working and if potential candidates are on track to reach their succession goals.

And this is where succession planning software can help.

Succession planning software isn’t as daunting as it sounds. In fact, most HRIS systems can provide you with the data you need.

The first thing you need is access to key metrics and KPIs . This includes turnover rates, retention rates, cost-per-hire, time-per-hire, and the rate of planned positions being filled. You also need to evaluate performance metrics to determine if business succession planning candidates that have taken on their new role were ready for it.

Did they achieve the training and experience they needed during the development phase in order to take on their new leadership role? If not, what could you have done better?

By analyzing the right data, you can determine what areas of your business succession planning strategy you need to work on in order to continuously improve the quality of your succession candidates. And by using the right HR software and performance management software you can easily identify talent gaps, make comparisons between employees, and simplify the succession management process.

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Home » Human Resources » Business succession planning: The complete guide

Business succession planning: The complete guide

Business succession planning (BSP) is the best way for HR to ensure they retain the institutional knowledge and experience they have worked hard to accumulate in a business. 

It also helps ensure your enterprise’s survival in an age where HR focusing on employee retention   and quality talent is vital to business resilience .

BSP involves handing authority to lower levels of staff to avoid role gaps and ensure a successful transition for staff to leadership roles when companies lose employees through passing away, departing the company, or experiencing termination. 

40% of businesses fail within the first three years which can be due to a lack of succession planning or the fact that 42% of leaders rely on HR to carry out BSP rather than spreading the responsibility between all enterprise leaders.

However, effective business succession planning can benefit the culture, operations and finances of any enterprise. 

In this guide, we’ll explore:

What is business succession planning?

Why is business succession planning important, the 7 types of business succession planning, benefits of succession planning, barriers to business succession planning, how leaders and hr can achieve succession planning.

Succession planning in business involves strategically transferring leadership roles from one employee or a team to another and is often a care aspect of businesses owned by multiple owners.

This business strategy aims to maintain the seamless operation of a business, ensuring continuity even when key individuals transition to new opportunities, retire, or pass away. 

Additionally, it can facilitate a liquidity event, allowing the smooth transfer of ownership to emerging staff without impacting employee productivity while preserving the business’s ongoing viability.

Business succession planning is crucial for continuity and yet 43% of businesses do not have a BSP plan . These businesses are missing out on an approach which can ensure a smooth transition of leadership, preserve wealth, maintain employee morale, and safeguard the company’s legacy. 

Let’s go into more detail about why business succession is important to help you understand why it may benefit your organization.

Business resilience strengthening

Ensuring business resilience is paramount for sustained success, whether maintaining the current structure or navigating transitions like sales or restructuring, safeguarding assets for continual growth and prosperity.

Ensuring harmony between owners

In business partnerships, fostering harmony is essential. Balancing owner or CEO relationships within the business dynamic ensures effective operations and long-term success, nurturing a supportive and cohesive work environment.

Minimizing taxes

Minimizing estate and income taxes is a strategic goal in business succession planning. By implementing tax-efficient strategies, businesses can preserve wealth, allowing for seamless transitions and securing financial legacies.

Streamlining the retirement process

Streamlining the retirement process for the current leadership generation is a key aspect of business succession planning. Efficiencies in transitioning leadership responsibilities enable a smooth and effective handover, promoting continuity.

Control over decisions

Retaining control over decision-making processes is critical in business succession planning. By avoiding the delegation of crucial choices, businesses can ensure a strategic direction that aligns with their vision, values, and goals.

Benefits even in failure

Business succession planning remains valuable even in failure. It supports a successful transition to a new owner, offering opportunities for recovery and revitalization, ensuring that the business legacy endures despite setbacks.

Consider why BSP is important if you need to implement it in your enterprise as you consider all the reasons above.

It’s challenging to understand a concept like BSP without examples, so here are some ways you might use succession planning strategies in practice.

1. Performance management

Performance management involves setting performance objectives and assessing employee performance against them. 

Its primary goal is to ensure high-quality work, optimal performance, and efficient work processes. 

Identifying high achievers and areas for improvement is a key outcome of performance management.

2. Career planning

Collaborative efforts between management and employees define career objectives and align them with prospects as you strategically move employees into key positions. 

This process identifies employee strengths and interests, matching them with business needs. Career planning contributes to employee retention and enhances job satisfaction.

3. Mentorship and coaching

Active coaching and mentoring by managers and senior staff for employees with leadership potential assist them in gaining the necessary skills for promotion. 

These programs aid personal and professional development, unlocking individuals’ full potential and preparing them for leadership roles.

4. Internal competition

Fostering internal competition among potential leaders through assigning comparable responsibilities at the same executive level.

This approach, for instance, is seen in hedge funds, where potential fund managers control portfolios of similar sizes, aiding in identifying suitable candidates for senior positions.

5. Recruitment

The success of succession plans relies on recruiting individuals capable of filling essential roles. 

Developing broad sector relationships allows recruiters to swiftly fill crucial positions with external applicants, ensuring the continuous smooth operation of the organization.

6. Evaluation of metrics

Organizations assess succession planning programs through metrics such as bench strength, talent retention, leadership development, knowledge management, and competency management. 

This step involves evaluating leaders’ training readiness based on competency assessments, providing insights into the reliability of succession plans.

7. Knowledge management

The capture, identification, transfer, and utilization of organizational knowledge are integral to succession planning. 

Knowledge audits ensure the recording of sufficient information in specific divisions and functions, enabling future leaders to assume responsibilities in these areas seamlessly.

Having a formalized succession plan offers numerous advantages for both employers and employees.

Employee advantages

Employees know the potential for advancement and even ownership, fostering empowerment and increasing job satisfaction.

A plan for future opportunities reinforces employees’ commitment to career development because every staff member is a key employee in their role in the larger scale of the company.

Management and tracking advantages

Management’s dedication to succession planning results in supervisors mentoring employees to transfer knowledge and expertise.

Improved tracking of employee value enables leaders or HR to fill internal positions promptly when opportunities arise.

Improved communication

Enhanced communication between leadership and employees facilitates each business partner’s shared understanding of company values and vision.

A new generation of leaders is essential during mass workforce retirements.

Proper succession planning is particularly beneficial for public company shareholders. 

Having the next CEO actively involved in business operations and well-respected long before the current CEO’s retirement ensures stability. 

A well-communicated succession plan prevents investors from selling the company’s stock when the CEO retires.

Additionally, succession planning can cultivate a new generation of leaders, serving as an exit strategy for business owners looking to sell their stakes.

Recent academic sources suggest there are three major barriers to business succession planning: Tax, finances and legal issues. 

Tax poses a significant barrier to business succession planning due to complex regulations and financial implications. 

Transfer of ownership can trigger substantial tax liabilities, discouraging smooth transitions and hindering the effective implementation of succession plans.

Financial challenges hinder business succession planning, creating hurdles in funding the transition process. 

Lack of resources may hinder adequate preparation, limiting the ability to address critical aspects and ensure a seamless transfer of ownership.

Legal 

Legal issues pose a barrier to business succession planning by introducing complexities and uncertainties. 

Ambiguous regulations, contractual disputes between owners, and compliance challenges can impede the smooth ownership transition, creating obstacles in executing succession plans.

Consider these barriers and try to integrate them within your business succession plans by liaising with finance and legal teams and explaining the barriers and urge them to consider the best way to overcome them. 

More than 74% of leaders report they are unprepared and lack the training for the challenges they face in their roles . Knowing how to work with HR to achieve a business succession plan before attempting it ensures leaders’ approach is systematic and successful. 

Here are seven tips to initiate the succession planning process within your company.

1. Proactively develop a plan

Leaders must work with HR to anticipate potential departures via a workforce management plan to fill gaps during planned retirements or unexpected resignations. 

Leaders must assess the impact of critical roles on daily operations and consider the possible consequences of personnel changes. HR can then consider how to negate the impact of these changes in future. 

To develop your plan, follow these three steps:

•  Outline roles

Outline the roles, skills, and experience essential for successors (succession profiles). Seek extensive team feedback to comprehensively understand the requirements for your succession plan. 

• Anticipate future needs

Anticipate your company’s future needs through a 5-year forecast. Assess organizational structure changes, turnover patterns, compensation strategies, potential retirements, and future training plans. 

• Regularly revise job descriptions

Revise job descriptions based on gathered insights. Clearly communicate expectations to define suitable candidate profiles for the succession plan.

2. Identify succession candidates

HR can recognize team members capable of stepping into crucial roles. They must look beyond immediate organizational chart hierarchies and consider employees with skills conducive to higher positions.

Discovering suitable successors is pivotal in crafting an effective business succession plan. Methodically assess current talent, evaluating their skills, experience, and potential. 

Consider leadership qualities, adaptability, and alignment with organizational goals. Engage in open communication with potential candidates to gauge interest and aspirations. 

A meticulous identification process ensures a smooth transition, maintaining continuity and fostering the long-term success of your business.

3. Communicate the plan

Effectively communicating a business succession plan is essential for a seamless transition. Start by informing key stakeholders, such as employees, clients, and investors, about the plan’s purpose and benefits. 

Use clear and transparent messaging to address concerns and ensure understanding. Implement a phased communication approach, providing updates at appropriate intervals. 

Foster open dialogue to address questions and concerns, promoting a sense of stability and confidence in the transition process.

In private HR discussions, inform selected individuals that they are under consideration for roles of increasing significance. 

Emphasize the absence of guarantees and acknowledge that circumstances may alter the plan.

4. Enhance professional development

Elevating professional development within your business succession plan is crucial for future leadership. 

Intensify investment in the career development of chosen successors as part of workforce engagement management efforts. 

Implement job rotations to broaden their knowledge and connect them with mentors to enhance soft skills like communication, empathy, and diplomacy.

Identify key skills and competencies required for successors. Implement tailored training programs, mentorship initiatives, and continuous learning opportunities. 

Encourage collaboration and cross-functional experiences to broaden expertise. Regularly assess and adjust development plans to align with evolving business needs. 

Prioritizing professional growth ensures a robust pipeline of capable leaders for a seamless succession.

5. Trial the plan

Test potential successors by having them assume some of the responsibilities of a manager during a vacation. 

Pilot your business succession plan through a phased trial. Select a small-scale scenario, monitor its execution, gather feedback, and make adjustments accordingly. This trial ensures a smooth full-scale implementation.

Doing so provides valuable experience for the staff and allows you to identify areas requiring additional employee training .

6. Integrate with the hiring strategy

Align your hiring strategy with the business succession plan by identifying potential successors during recruitment. 

Foster a culture of mentorship and skill development, ensuring a seamless leadership transition.

Identify talent gaps left by potential successors and use this information to shape future recruiting efforts.

7. Consider your succession

When crafting a succession plan, consider your eventual replacement. Identify an employee who could step into your role and initiate measures to aid their preparation for the transition.

Your workforce is dynamic, and change is the only constant when it comes to employee behaviors. 

While predicting departures may be challenging, effective succession planning ensures business continuity, securing a stable future for your company using an agile approach to financial sustainability.

Implement business succession planning to ensure your survival

Implementing business succession planning is crucial for ensuring the survival and continuity of your enterprise as you keep ownership and avoid a buy-sell agreement scenario.

By identifying and nurturing future leaders, clarifying legal obligations, and addressing financial and tax considerations, senior leaders fortify their enterprise against unforeseen challenges. 

This strategic approach secures your company’s legacy and fosters resilience and adaptability for sustained success for any enterprise.

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Succession Planning Basics: How It Works, Why It's Important

Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

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What Is Succession Planning?

The term succession planning refers to a business strategy companies use to pass leadership roles down to another employee or group of employees. Succession planning ensures that businesses continue to run smoothly and without interruption, after important people move on to new opportunities, retire, or pass away. It can also provide a liquidity event , which enables the transfer of ownership in a going concern to rising employees. Succession planning is a good way for companies to ensure that businesses are fully prepared to promote and advance all employees—not just those who are at the management or executive levels.

Key Takeaways

• Succession planning is a business strategy for passing leadership roles on to one or more other employees.
• The strategy is used to ensure that businesses run smoothly after employees retire and leave the company.
• Succession planning involves cross-training employees to help them develop skills, knowledge, and an understanding of the business.
• Plans can be long-term, which are meant to account for future changes, or for emergencies whenever anything unexpected arises.
• There are many benefits to succession planning, including inclusivity if companies have a strong plan to diversify their workforce.

Understanding Succession Planning

Succession planning is a contingency plan. It is not a one-time event. Rather, it should be reevaluated and updated each year or as changes dictate within the company. As such, it evaluates each leader’s skills, identifying potential replacements within and outside the company and, in the case of internal replacements, training those employees so they’re prepared to assume control.

In large companies, the board of directors typically oversees succession planning in addition to the chief executive officer (CEO), and it affects owners, employees, as well as shareholders. A larger business may train mid-level employees to one day take over higher-level positions. For small businesses and family-owned companies, succession planning often means training the next generation to take over the business.

The process takes a lot of time and effort. As such, it requires:

• Recruitment or Proper Hiring: The goal is to choose candidates who are capable of rising through the ranks in the future. For example, an experienced person from another company might be courted and groomed for a higher position.
• Training: This includes the development of skills, company knowledge, and certifications. The training might include having employees cross-train and shadow various positions or jobs in all the major departments. This process can help the person become well-rounded and understand the business on a granular level. Also, the cross-training process can help identify the employees that are not up to the task of developing multiple skill sets needed to run the company.  

Businesses may want to create more than one type of succession plan. An emergency succession plan is put in place when a key leader needs to be replaced unexpectedly. A long-term succession plan, on the other hand, helps the company account for anticipated changes in leadership.

According to human resources (HR) experts, succession planning involves preparation rather than pre-selection. This means that those responsible must identify the skills, practices, and knowledge. Although it may seem like a complex process, it doesn't have to be, especially if businesses and leaders are able to organize and plan ahead of time. The whole process can take anywhere between 12 to 36 months.

In small companies, the owner alone may be responsible for succession planning.

Special Considerations

One way to succession plan in a business partnership is for each partner to purchase a life insurance policy that names the other partner as the beneficiary. This type of succession plan is called a cross-purchase agreement and allows the surviving partner to continue operating the business.

Here's how it works. If one partner dies at a time when the surviving partner would not otherwise have enough cash to buy the deceased partner’s ownership share, the life insurance proceeds make that purchase possible.

Succession planning is also commonly known as replacement planning and often involves passing on ownership of a company to someone else.

Benefits of Succession Planning

There are several advantages for both employers and employees to having a formalized succession plan in place:

• Employees know that there is a chance for advancement and possibly ownership, which can lead to more empowerment and higher job satisfaction.
• Knowing there is a plan for future opportunities reinforces employees' career development.
• Management's commitment to succession planning means that supervisors will mentor employees to transfer knowledge and expertise.
• Management keeps better track of the value of employees so positions can be filled internally when opportunities arise.
• Leadership and employees are better able to share company values and vision.
• A new generation of leaders is needed when there's a mass exodus of people from the workforce into retirement.
• Proper succession planning benefits shareholders of public companies, especially when the next candidate for CEO is involved in business operations and is well respected years before the current CEO retires. Also, if investors observe a well-communicated succession plan, they won't sell the company's stock when the CEO retires.

Succession planning can also cultivate a new generation of leaders, thereby providing an exit strategy for business owners who want to sell their stake.

Succession Planning and Diversity

One of the key drivers to success for any company (whether it's a small business or a large corporation) is how inclusive it is. Companies are now recognizing the need to diversify their work environments in order to remain competitive and successful. Not only does it boost employee morale, but it also aims to broaden the pool of talent and make attempts to fight bias.

But how do companies do this? This involves a well-structured succession plan that includes hiring individuals from different backgrounds, those who have different leadership abilities, and people who bring different experiences to the table. The plan should also include removing any barriers that may exist internally for employees of all levels and ensuring a comfortable work environment for all employees.

This only works if succession plans are put into place wholeheartedly rather than to boost corporate images.

How Does Succession Planning Work?

Succession planning is used by businesses to streamline the process involving a change of leadership or ownership. It involves recognizing internal employees who merit career advancement and training them to assume new roles within the company. These plans only work if companies take the steps necessary to prepare. Plans are often long-term to prepare for inevitable changes in the future. Emergency plans can be set in place to account for unexpected changes.

What Is Succession Planning in Business?

Succession planning is an important part of any business to help it run smoothly and without interruption whenever there needs to be a change in leadership. Changes can be the result of people leaving the workforce (changing companies, switching careers, or retiring) or if there are unexpected circumstances, such as the death or displacement of a team member.

What Are Some of the Common Mistakes Companies Make During Succession Planning?

Succession planning requires careful organization and (as the name suggests) planning. Companies may miss opportunities or make missteps if they can't communicate their vision with employees, don't adopt a formal agreement or plan (including a shortlist of candidates and conducting regular reviews of positions and employees), assume their talent has the skills and knowledge to advance and succeed, fail to use succession plans for all employees, and ignore the need to diversify their talent pool.

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The leader’s guide to effective succession planning

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What is succession planning?

The succession planning process helps organizations recruit, identify, and develop employees to take on new leadership positions or replace current leaders when they retire or leave the company.

A necessary part of business success is preparing for every possible outcome. Proper planning means the difference between weathering a storm and drowning beneath the inevitable changing tide.

Succession planning, then, should be treated as a necessary failsafe against change and a way to keep your business running smoothly.

A responsible and self-aware owner, human resources department, or senior executive embraces change and knows that a rotating employee base is natural to any company, even while striving for employee retention. The most enlightened leaders know that sometimes top performers will outperform their position and need to move on. Some may even change careers entirely, moving on for more fulfillment, more money, more opportunity, or myriad reasons people leave positions behind. And it doesn’t have to be bad.

In fact, with proper planning, effective people management, and responsible communication, your succession plan may end up serving the company even better in the future as you navigate through changes.

Succession planning is the process whereby an organization ensures that employees are recruited and developed to fill each key role within the company. During the succession planning process, you ensure that you will never have a key role open for which another employee is not prepared. This process is also significant as you develop your talent bench strength within your organization.

Effective succession planning involves having a long-term vision of your company and may involve lateral moves, assignments to special projects, leadership within teams, and internal or external development opportunities.  Understanding the needs of both leadership and employees is vital to the succession process, as it can involve both vertical and lateral advancement for company employees.

Ever wonder why NFL teams keep a second and third-string quarterback ready? This is a key example of effective succession planning. A proper succession plan not only prepares for unexpected employee turnover—it plans for employee promotion and leadership development, creating a self-sustained internal advancement model from the mailroom to the boardroom.

Benefits of a succession planning process

Organizations at every size benefit from organizational succession planning. Consider even the small 10- to 12-person team of a lean startup: Succession planning for companies of this size leverages against the risk of losing a vital team member who takes up a much larger relative percentage of the work output.

By cross-training all members of an organization, a leadership team can mitigate against the often volatile startup space by having employees ready to fill in roles for anyone who may transition within or outside of the company.

Perhaps the company wants to cut costs by eliminating a position and redistributing responsibilities laterally within the company. Succession planning, then, would entail making sure that current employees are trained on the duties of the role to be eliminated. Management succession planning for small companies could also mean preparing current employees to onboard a new process, new service offering, or even developing a new leadership position.

Let's break down how succession planning will specifically benefit management, HR, and individual employees.

The value of a management succession plan

Managing a successful operation becomes increasingly difficult when you rely on many employees to support your company, from creating the actual products and services to reinforcing the mission statement and vision. Losing key members puts all of those ends at risk. You need prepared employees to step into leadership roles as the company grows or shifts directions.

A management succession plan, which ultimately results in more prepared, well-trained employees, will enable your company to create or supplement leadership positions based on industry growth potential rather than scrambling to adjust and undertraining, potentially missing major opportunities.

Now especially is a time for established companies to actively invest in succession planning for management as baby boomers reach retirement age. As new technology provides a range of business opportunities for digital natives, management succession planning is the perfect opportunity to transition companies into a digital future.

The value of human resource succession planning

HR succession planning begins at the recruitment phase. Companies save valuable time in the succession planning process by onboarding exceptional employees and drawing from their built-in human resource pool rather than headhunting for new positions when leadership roles become available. The human resource cost can add up—in time, money, and energy—and bringing on the right people from the beginning is the best way to both prevent added HR cost and to increase HR value in the long run.

Succession planning for HR begins with H promoting on-the-job shadowing for the right employees, facilitating transfers to different jobs, and developing a top-notch recruitment plan. All of this ensures that there is a systematic succession process for preparing employees to fill key roles as they become vacant. The goal for all future-minded companies should always be to prepare employees for advancement or promotion into ever more challenging roles within the organization.

The value of an employee succession plan

Entering a new company comes with a range of emotional and mental processing: the stress and excitement of learning entirely new information, the rush and anxiety of meeting new co-workers and superiors, the wonder and uncertainty of your future within the organization. Employee succession planning has a myriad of positive benefits for the employees as they make this often awkward transition into a new space.

When succession planning for employees, consider Maslow's Hierarchy of Needs. When new hires are primed with the knowledge that the company plans on advancing them internally, it fulfills not only a vital career need of security but also a need for social belonging. 

Additionally, employees who know that a higher position awaits them receive a boost of self-confidence and self-respect as a result of feeling valued. This confidence enhances their performance within the organization. By fulfilling these more basic needs, employees can start working toward self-actualization, where they develop their skills and find creative solutions to problems. 

Further, as an added bonus to management and leadership, employees who feel valued, who are looking forward to additional responsibility, and who share that information within the company are likely to contribute to training or preparing other employees to fill their role. A shared effort to continuously train employees improves overall company culture and saves valuable human resource time and energy expenditures.

Planning out succession will make an already effective leader look like a genius. But doing it properly requires transparency across your organization, prepping potential leaders by arming them with the necessary information for any potential transition. Take the next step and learn how to succession plan.

See our 9 steps for creating a succession plan and preparing for change.

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Buying and Selling a Business | Templates

Succession Planning Template & 5 Steps to Write a Succession Plan

Published October 14, 2019

Published Oct 14, 2019

WRITTEN BY: Robert Newcomer-Dyer

A business succession plan includes step-by-step instructions that establish procedures in the event a business owner or key employee leaves the business. Our succession planning template helps business owners as they answer questions like who will take over the business, how long will it take, and what standard operating procedures need to be passed on.

There are five common steps involved in succession planning:

• Timeline of succession
• Determining your successor
• Formalize your standard operating procedures (SOPs)
• Value your business
• Fund your succession plan

Download Succession Planning Template

Click below to download our succession plan template as a DOCX or PDF:

• Download as PDF
• Download as DOCX

How Succession Planning Works

Succession planning is the set of events, timelines, and standard operating procedures that are established ahead of a change of ownership in a business. Business owners can create a succession plan in a number of ways, including by following this succession planning template, as well as by engaging a professional who’s well-versed in the process.

Who Should Create a Succession Plan?

Any business owner with a successful, thriving business should consider creating a succession plan. Often thought about in the context of retirement or sale of a business, a succession plan is also a critical tool in the event of untimely death or illness. A properly constructed succession plan acts like a will for your business, ensuring the best interests of the business are carried out.

When to Create a Succession Plan

Business owners wondering when to use this succession planning template to create a plan might wonder when they should get started. Much like a personal will, the answer depends on a variety of factors, but generally comes down to as soon as possible.

Creating a succession plan takes time and effort, and answering the questions accurately is not easy. For this reason, many business owners start planning for succession at least five to six years before a transition. Creating a succession plan should be considered as a contingency in case of death, illness, or other circumstance that creates an unexpected need for transition.

Succession Planning Resources

Finding help with succession planning may mean working with your current accounting firm (provided they have experience with helping to develop succession plans). The amount of help you need will likely scale up with the urgency of your succession planning needs, as well as the size and complexity of the business. Consider whether to bring in a temporary accounting and finance professional, or hire an accounting firm to assist you.

Some resources you can tap to help you with succession planning are:

As one of the accounting industry’s “Big Four,” PricewaterhouseCoopers (now doing business as PwC) is a firm with extensive experience in succession planning. The company’s self-described focus on small, privately held businesses minimizes the risk of becoming just another number and means it commonly deals with the sort of obstacles that you’ll encounter.

SCORE , the nation’s largest network providing small business mentoring, has developed a quick guide to succession planning. The real value is that small business owners can apply to be matched with mentors who offer their assistance on a volunteer basis. For business owners in need of simple succession planning help, this option is worth consideration.

Local Accountant

Small business owners may wish to consider working with a local accountant (provided that accountant is well versed in succession planning). Entrepreneurs who choose this route can ask around in their personal network, tap in to their local Chamber of Commerce or other local business support groups, or search for a certified public accountant in the directory provided by the American Institute of Certified Public Accountants.

The Five Steps to Writing a Succession Plan

Writing a succession plan can be a daunting task. Indeed, many business owners put it off because they’re not ready to tackle the complexities. We’ve narrowed the process down to five simple steps to direct you along the way, including choosing your successor and determining whether to sell your business using life insurance, an acquisition loan, or other methods.

The five common steps to preparing a business succession plan template are:

1. Timeline of Succession

There are two key types of succession plans: an exit succession plan and a death-or-accident succession plan. You may wish to write a death-or-accident succession plan well in advance of when you think you’ll need it to protect your business and successors in the event of unanticipated events. An exit succession plan should be written when you have a specific plan to transfer ownership of your small business.

The two most common types of succession plans are:

• Exit succession plan: A plan to transfer ownership on a specific date, e.g., at retirement.
• Death-or-accident succession plan: A plan for one’s business in the event of their death or disability.

While an accident plan should be considered at any age, an exit succession plan should be written when you are within several years of retirement or wish to otherwise exit the business. When writing an exit succession plan, you should have a specific date that you would like to transfer the business, and indicate whether you will remain involved in the business post-succession or prefer a clean separation.

Template Tip

On the succession planning template, answer all the questions in section one. If you’re writing this succession plan to exit your business on a known date, fill out any remaining details, including how long you expect the transition to last.

2. Determining Your Successor

A highly important aspect of writing a succession plan is choosing who will take over the business. Many business owners plan to have a family member, such as a child, take over the business. Other common choices include a business partner or key employee in the business. And of course, an outside buyer is always a possibility.

Common successors business owners choose are:

• Family members
• Key employees
• Outside buyers

Choosing a successor may be difficult, and requires considering what is in everyone’s—including the business’—best interest. While keeping the business in the family may seem like a clear choice, keep in mind that second generation businesses have a high failure rate. For this reason, many business owners choose instead to sell the business and provide a cash inheritance for their family.

Consider filling out profiles for at least three potential candidates. This will give you a good preliminary comparison of everybody’s skill and experience. Even if you’re already set on a candidate, you may wish to have a backup plan in the event the person leaves your business or doesn’t want to become an owner.

3. Formalize Your Standard Operating Procedures (SOPs)

As a small business owner, you should understand the importance of recording and formalizing day-to-day functions. Standard operating procedures should be documented for your managers and employees to reference, as well as any future owners of the business. Important items to document may include a daily checklist of opening and closing procedures, training for new employees, and a performance management system .

SOPs vary from business to business, but often include the following items:

Common Standard Operating Procedures

In our succession plan template, we’ve provided a checklist for these items—feel free to add or remove any, if necessary. Once you have completed an up-to-date document, attach it to your succession plan and check it off the list.

4. Value Your Business

Figuring out the value of your business should happen early—and regularly. It’s an unfortunate fact that many business owners tend to overvalue their enterprise, and these misjudgments can snowball into financial errors when planning for retirement.

There are several ways you can determine the value of your business, from using a simple business valuation calculator to provide a rough estimate, to following more advanced methods for how to value a business , as well as hiring a professional appraiser. You may also consider working with a company that offers business valuation services, such as BizEquity or Guidant Financial .

A good practice is to consider the lowest price the business should sell for. When the business is eventually listed for sale, it may take a long time to find a buyer who is willing to pay your asking price. The succession plan should provide stipulations regarding how long to wait before dropping the price, how much to lower the price, and the lowest acceptable offer.

5. Fund Your Succession Plan

Few buyers out there have enough liquid cash to pay for your business upfront. This is why every succession plan needs a specific plan for how the buyer will make the purchase, whether it’s a loan, installment payments, or other option. The last thing you want is to reach your retirement date, or triggering event, and find that your chosen successor has no way to afford your business.

This is also why your funding plan will often need a buy-sell agreement. This is a legal document in which your buyer agrees to a specific course of action (like taking out a loan or life insurance policy) in order to afford the purchase. Once you’ve settled on a specific method of funding, make sure you meet with a legal professional to draft your buy-sell contract.

Common Succession Plan Funding Options

Life insurance.

Most commonly used when a family member or co-owner is taking over the business, a life insurance policy can help your successor purchase the business from you or your heirs. Contrary to how it sounds, life insurance isn’t only used in the event of one’s untimely death. Permanent life insurance builds cash value that can be taken out at any time, so it can also be used in the event of retirement, disability, or any other triggering event.

Life insurance arrangements are common in family successions, especially when you may have multiple children, but only one is taking over the business. With your chosen successor as the beneficiary, a life insurance payout can enable them to purchase shares from your other children, thus leaving everyone with some compensation and financial security.

Acquisition Loan

An acquisition loan is money borrowed by the buyer in order to purchase the business. This is common when a key employee or outside party is taking over and they need some funding to afford the purchase. Buyers can typically get 70% to 80% of the purchase price financed from a bank or the Small Business Administration (SBA) —which is great news for sellers who want to be paid in full upfront.

Acquisition loans are secured against future profits of the business. While this makes them a generally reliable option, it also means a bit of work for the seller. Prior to the purchase, you’ll need to provide a lot of details about your business for the bank’s due diligence. Even then, however, the loan is not guaranteed. Pre-approval can provide some security, but it would need to be undergone regularly (every six to 12 months) up until the transfer date or triggering event.

Seller Financing

Seller financing is when the buyer pays you back gradually over time. This is one of the easiest and most flexible arrangements, as the business owner and buyer can set whatever terms they like. Most agreements involve a down payment of 10% or higher, followed by monthly or quarterly payments with interest until the purchase is paid for in full. Again, however, the exact terms can vary widely.

The key downside to seller financing is the time it takes to get paid back. Especially if you’re relying on the sale to fund your retirement, a 20-year term may be less than ideal. However, given the flexibility of seller financing, it can be possible to find an arrangement that works for everyone.

Business Succession Planning Tips From the Pros

We asked industry experts in succession planning to provide some tips for business owners thinking about creating a succession plan. Choosing the right successor is a critical step, as is ensuring that you have realistic expectations throughout the process. Many business owners also ask themselves whether they should consider creating a succession plan.

Some tips when creating a business succession plan are:

Groom Your Successor Ahead of Time

Ray mckenzie, founder & managing director at red beach advisors.

“A majority of businesses do not have a formal business succession plan and never anticipate it being needed.

“The most common mistake business owners make is they retain and keep information only for themselves. This can be signatory rights, passwords, access, or key phrases.

“Review your company succession plan every six months and every time a critical employee leaves the business.”

Keep Your Expectations Realistic

Ed alexander, esq., founder at alexander abramson pllc.

“The biggest mistake small business owners make in their succession plans (aside from not having one) is having unrealistic expectations.

“First, business owners regularly have an unrealistic conception of what their business is worth. It’s their baby, and they have an emotional connection to it, but this connection can’t be laid out in a profit and loss statement.

“Second, Family Business Institute data has shown that 88% of small business owners believe that transferring the business to their children is a viable succession option. The reality is that only 30% of small businesses will pass to a second generation, and only 12% to a third generation.”

Consider the Risk of No Succession Planning

Patrick hicks, head of legal for trust & will.

“Having a business succession plan becomes more important if your business has valuable assets or has employees. If you operate your own business with just yourself and no business assets, the downsides of having no plan may be smaller.

“If you have employees, consider who will be able to make payments to those employees and who will carry on operations after your death.

“Machinery, equipment, materials, intellectual property, and customer lists can all be valuable assets—the brand and reputation associated with your business—that can all disappear if you don’t have a plan in place to deal with those assets.”

One of the most common mistakes business owners make in succession planning is failing to review their plan regularly. Time changes many things, and in order for your succession plan to be effective, it needs to be reviewed regularly and updated to reflect any changes. These could be company changes, tax law updates, changes in valuation, or new industry developments, among other things.

For family-owned businesses, you’ll also need to consider aspects such as changing family dynamics—do all members have the same desire regarding what to do in the future, or are all key players still with the business? It’s essential that business owners update and adjust their business plan to reflect changes such as these.

Bottom Line

Often, the most difficult part of succession planning is answering difficult questions. What unexpected events should you prepare for? Who will take over your business? How will you compensate yourself, your spouse, or your children? You can answer these questions with the help of our succession planning template. You may also wish to engage legal or financial experts with experience in succession planning.

About the Author

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Robert Newcomer-Dyer

Robert has over 15 years of experience in sales leadership, finance, and business development. He recently spent six years leading a team of small business financing professionals, facilitating the deployment of critical capital to over 9,000 small businesses across the US.

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Management Succession Planning

Leadership transitions can bring substantial disruption to an organization, so it’s crucial to proactively develop a plan for succession. Transition planning is a complex process that should begin long before a planned departure date to avoid organizational disorder, loss of employee and stakeholder confidence, and difficult exits.

Support operational stability, strengthen business continuity, and build the bench of available talent among your existing employees—whether you’re planning an owner exit, anticipating a leadership shift, or experiencing the departure of key technical staff member—with guidance from our professionals.

Developing tailored plans for key positions or creating enterprise-wide succession processes and toolkits, we can help you increase organizational resilience and emerge from leadership transitions stronger and more prepared for future challenges.

Succession Planning for Long-Term Success

A dynamic, well-managed, and clearly communicated succession plan can help your organization:

• Address needs and concerns of stakeholders, partners, and clients
• Retain and keep employees engaged
• Create organization value
• Preserve legacies
• Develop successors and prepare the organization to thrive moving forward

Key Focus Areas

Succession planning incorporate the following focus areas.

Management Succession Plans

We customize succession strategies to your organization’s needs by providing a framework for you to assess leadership needs and succession options.

We collaborate with your leadership to identify:

• Ideal timelines for leadership transition
• Key qualifications and skillsets for future leaders
• Potential successor candidates
• Processes or criteria to evaluate candidate strengths and weaknesses
• Gaps or opportunities in current employee development processes
• Actionable steps—such as training, mentoring, personnel changes, and new compensation strategies—to build the succession planning team

Succession Planning Assessments and Toolkits

Succession planning can address the comprehensive needs of your entire organization.

Instead of narrowly focusing on options to replace a single leadership position, we can assess your full management succession ecosystem, including:

• Future strategic needs of your organization
• Current talent
• Leadership pipeline and development
• Organizational culture and relationships
• General recruitment environment

We then develop succession planning templates, toolkits, and processes that can be institutionalized to address both the immediate and long-term needs of your organization.

How the Process Works

Succession planning initiatives often include the following collaborative efforts with your leadership team:

• Project initiation . Confirm expectations and review overall project scope, logistics, deliverables, timing, and progress reporting requirements.
• Fact-finding. Conduct a comprehensive review of relevant documents, perform interviews, host focus groups, or administer surveys to understand organizational needs, assess current leadership skills and gaps, and determine position requirements critical to the organization’s future.
• Collaborative work sessions. Surface key goals, activities, and success indicators for leadership.
• Plan or toolkit development . Develop specific succession plans, tools, or templates to support the organization.

Expansive Succession Planning Expertise

Deeply immersed in more than 30 industries, our professionals provide proactive succession planning solutions specific to the nuances, challenges, and operations of the sector in which you work—with plans customized to meet your unique needs.

We support a range of organization types—from small family-owned businesses to large public sector agencies, not-for-profit and tax-exempt organizations, and more.

We don’t simply provide routine templates; we determine appropriate solutions that will help build up your organization and provide foundations for long-term success—so you’re prepared to stay ahead of change and thrive under your new leadership.

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The Key to Successful Succession Planning for Family Businesses

• James Vardaman

Don’t exclude non-family members from the discussion.

Successfully passing the baton to the next generation is a goal for many family business leaders. It can also be a sound business move if the right steps are taken. By clearly communicating family succession intentions, developing strong relational bonds, and proving the fitness of next generation leaders, family firms can achieve buy-in from their nonfamily employees. Not only will this make for a smooth leadership transition, but it can also increase nonfamily identification with both the family and the firm, creating a more productive and satisfied workforce that propels the firm for years to come.

The succession process is one of the biggest challenges facing family firms, as most fail to remain a family business past the second generation. Among those that do succeed, a key concern is how nonfamily personnel will receive a successor. Perceptions of nepotism in succession can undermine nonfamily employee commitment to the business and their continued participation in the firm. Addressing this common issue can be difficult because the ability to choose a family successor and provide employment opportunities for family members is often a primary aim of family business owners. Thus, a key challenge for family businesses is gaining buy-in from nonfamily employees for the next generation of family leadership .

• WT Will Tabor is an Assistant Professor of Business Administration at Mississippi College. His research focuses on family businesses and organizational ethics. His work has been published in Family Business Review and The Journal of Business Ethics .
• JV James Vardaman holds the Chair of Excellence in Free Enterprise at the University of Memphis and is the author of Global Talent Retention: Understanding Employee Turnover Around the World .

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Your Company's Legacy is at Stake Without Succession Planning — Do These 8 Things to Secure Your Future.

S o much entrepreneurial effort goes into starting and growing a business, yet one of the most overlooked issues is keeping it going beyond the founder . There are so many reasons it's not the top thing on a founder's priority list, and yet the saddest thing they'd never want to see is for all their years and decades of work to one day go down the drain.

Business succession planning is a process that ensures continuity beyond the founder's work life. This is part of a strategic plan for any forward-thinking leader who wants their clients, customers and team members to continue to thrive beyond their working life.

Business succession planning (BSP) differs from business to business depending on their size and their goals. Small businesses often have limited resources and are family-owned, which often entails changing the ownership and not just the leadership. With family-owned businesses, you face more than simple financial and business decisions because of the close relationships at home. For larger organizations with more complex structures and diversified workforces , the approach is usually very formal, involving a board of directors to identify the right fit for future leadership teams.

BSP may be a complex topic and endeavor, with a long list of considerations to ensure the vision and long-term goals of the business remain forward-driven. Regardless, here are eight tips you should consider.

Related: How Successful Entrepreneurs Use Doubt to Drive Growth

1. Align your succession plan with your goals

Knowing where you want to be 10 or 20 years from now is just as crucial as planning how to achieve it now. This is to ensure your business is headed in the right direction, with or without you in the picture. Think about whether you want to retire easily, knowing you've passed on the responsibilities to a trusted family member or a long-term executive. Or maybe you want to look into a merger with someone already succeeding in your industry. These decisions don't develop overnight, more so that they don't ripen in the next couple of years. Hence, gradual planning and assessments along the way are essential. Your goals may change, and so will your succession plan.

2. Define clear ownership roles

A common hurdle in succession planning is answering the question, "Who gets the keys?" Only this time, it's your business that's at stake. You have to identify key people who have the potential to take over or be a part of the leadership once you decide to exit or, worse, pass away. Create a clear roadmap of how you want to develop the skills of these people to hit the ground running and how decisions could be made in your absence. However, ensure that you keep everyone on the same page about ownership roles to avoid internal conflicts so the transition — before and after — is smooth. This is especially critical in a family-owned business; the clearer your ownership plan, the more likely there will be peace in your family once the transition begins.

Related: The 4 Roles of Accountability Within Your Company

3. Value your business, protect your assets

One of the most crucial aspects of BSP is getting a crystal clear picture of your business's value. This will guide you in strategizing the areas of estate planning or tax implications, as well as setting up potential buy-sell agreements. However, valuation is just the tip of the iceberg. You have to protect your assets and safeguard your intellectual property, which is the lifeblood of your business.

Additionally, make sure there's enough financial backing during the transition to support you and your successor. Your successor likely doesn't have the same level of financial resources as you do, and this is an issue to consider. Lastly, protecting your business relationships can greatly contribute to your success when future leaders take responsibility.

Related: 1 in 10 Leaders Say Succession Planning Is Not Worth the Time and Money It Costs — Here's Why They're Wrong.

4. Develop a comprehensive transition plan

Your company's game plan for a successful leadership transition lies in a detailed ownership and management handover. This should cover operational, legal, and financial changes and should have much of the plan in writing. This documentation should also include a comprehensive guide on how to overcome potential roadblocks, how to make decisions, who has votes, and what the transition process looks like. This will ensure that your business remains stable and your legacy intact.

5. Encourage open communication

Everyone involved should be in the loop. Create a space for open dialogue talking about their aspirations, concerns, and reservations. Share your vision and your goals for the future of your company. This initiative should establish a sense of ownership and buy-in for the plan.

This way, you can reduce resistance and cultivate a more collaborative environment that will make the transition easier and smoother. This strategy doesn't simply pass on information, but it helps create some engagement and helps them remain invested in your company's future.

Related: How to Communicate More Authentically and Effectively

6. Seek expert advice

Naturally, you may want to do everything alone in this succession planning journey. After all, you started the company, and nobody knows it better than you. But remember that you can only do so much on your own. It's tempting to do it all by yourself because you are more comfortable navigating and sharing confidential information. Still, you don't want to go rogue dangling on monkey bars without safety nets. Consult BSP pros or build your A-team experts. These advisors can help you navigate financial intricacies and legal frameworks more efficiently, with greater attention to identifying relevant regulations and potential hurdles.

7. Execute with a clear plan

A blueprint — your comprehensive transition plan — is not yet everything. Think of a "launch countdown" where milestones are clearly articulated within a specific timeline. Having a clear plan with timelines encourages accountability and progress toward your end goal. Assign ownership of specific steps and ensure you thoroughly review them regularly as a leadership team until you're confident that the transition will go smoothly.

8. Learn from successful examples

Many transitions and successions have succeeded in both small and large companies. Strive to learn by benchmarking your BSP with companies that have successfully executed theirs. For example, Microsoft transitioned from Gates to Ballmer . Ballmer has been with Microsoft for over two 20 years, which gives him an upper hand on the intricacies of the company's processes and day-to-day operations. He was an internal talent who the company supported and helped grow, which made the transition less risky and successful. Talk with other entrepreneurial peers and discuss what they're planning for their succession.

Effective business succession planning is not like writing your final chapter in the business book and closing the book, but more like preparing it for a sequel. While your approach will depend on the size and complexity of your business, proactive planning remains the core principle to ensure your vision doesn't fade with your exit. This may be 20 years away for you or only a couple of years in the future. Either way, keep your approach light and flexible while taking the process seriously, and don't hesitate to reach out to experts for additional guidance to ensure that your transition is smooth. By planning your exit as strategically as you led your entrance, you solidify your legacy and your business's future.

Clients Have All the Leverage in Law Firm Succession Planning

Decades ago, most corporate clients were considered law firm property rather than the portable asset of any partner. Inheriting client revenue streams, and therefore succession from older owners to younger ones, happened automatically with little client involvement.

This started changing in the 1970s when general counsels began making firms control legal spending to be more cost-effective. The pricey practice of assigning all company legal work to a single firm was scrutinized, and general counsels began giving work to the best lawyers in their fields, who often were at different firms.

For the first time, partners had books of business they could call their own. When better opportunities at other firms became available, they jumped ship. Today, institutional clients that hire one law firm for all things are a relative rarity, recruiting laterals is ubiquitous, and succession is no longer automatic.

Younger partners must replace the revenue once generated by retiring partners. To do so, retiring partners must transition their practices to the next generation, which then has to develop new business to make up for client attrition and generate new growth.

Putting in Time

Transitioning a large practice to others takes work. Senior partners must do more than train their successors to be good lawyers—they must integrate them into client relationships at the summit level. This means hundreds of non-billable hours spent preparing and coaching younger lawyers to take leadership roles.

The extent to which a firm retains a retiring partner’s clients often is directly proportional to the time and effort the retiring partner devotes to this all-important work.

Clients almost never shift allegiance to the next generation because the retiring senior partner makes a cursory introduction and fades into the sunset. Clients can afford to be picky. If the lawyers poised to inherit a client relationship are unsatisfactory, corporate clients aren’t shy about rejecting them.

If the retiring partner devotes little time and effort to socializing a client to successors, the client will assume the firm doesn’t care about retaining the relationship. In a tossup between a qualified in-firm successor and a competitor from another firm, the incumbent usually wins. But while the process favors incumbency, it can be easily derailed if a client’s needs are ignored.

If a client isn’t happy with the new team, succession fails. In this way, clients control the succession process. If they don’t get capable, fully integrated replacements for retiring partners, they will go elsewhere.

Incredibly, law firms often let this happen. Some have divisive internal logjams over retirement issues. Others simply don’t want to deal with the problem. Either way, it can feel easier to go out and get new clients than work to retain a retiring partner’s existing ones.

In-house lawyers and other client representatives are intensely frustrated by this. They hate waking up to find that their relationship partner has retired without designating successors. They dislike the indifference to their needs this reflects. But until recently, many clients have felt powerless to change this dynamic.

Flexing Their Muscles

Clients are asking firms and practice groups to disclose who is next in line to lead their service teams when the current leader leaves for any reason, not just retirement. They’re amending their outside counsel guidelines to require these disclosures as a condition of engagement, and adding succession-related questions to RFPs and the onboarding process for new firms.

Across the industry, clients are demanding that firms plan for succession and give them a window into this planning. This is a boon for managing partners who have tried to plan for succession but hit internal roadblocks at their firms.

These leaders now have new leverage: If the firm doesn’t plan for succession, it will lose business. Smart law firms are getting out ahead of this trend, using partner retirements as an opportunity to strengthen and broaden client relationships within a conversation about future team leadership. Clients like this—and they reward these firms with new matters.

A tipping point is coming. If firms continue to ignore client requests to know and be part of their succession plans, profits at some point will suffer. Eventually, it will become less painful to tackle succession head on than to disregard it and live with the business loss.

Holdout firms must ask themselves how long they can afford to be careless of their clients’ concerns. This push-pull between client demands for succession transparency and law firm apathy isn’t going away. But firms that embrace the trend, showing their clients they’re listening, are sure to prosper.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

David Wood is a retired senior partner of Barnes & Thornburg who advises law firms about retirement succession for law firms.

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To contact the editors responsible for this story: Rebecca Baker at [email protected] ; Melanie Cohen at [email protected]

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8 ways to invest in next-gen advisors — and your firm's future

One of the industry's largest and fastest-growing aggregators of registered investment advisory firms has created a "university" to train its next generation of financial advisors.

Carolinas region . 

to solve the industry's succession dilemma . 

investment bank and consulting firm Echelon Partners . Wealth Enhancement CEO Jeff Dekko tapped Carroll, a second-generation advisor who's an adjunct financial planning professor at Winthrop University, to lead the firm's training program after acquiring Carroll's advisory practice in 2022.

number of advisors expected to retire in the next decade and the steep failure rate among rookie planners. 

"We've got a lot of senior advisors who are going to retire," he added. "You need to invest in it. You need to take it seriously, and you need to have multiple approaches."

In an effort to identify solutions to the ongoing succession challenge facing the advisor profession and the wealth management industry, Financial Planning spoke with Carroll as well as the following planners and other experts:

For firms like Wealth Enhancement, managing the talent pipeline amid an advisor shortage looms as a key strategic issue, Carroll said. In that environment, some firms may be "trying to throw equity" stakes at early-career professionals without ensuring they're the right successor to the retiring advisor or that there is infrastructure in place for easy continuity of the firm, he noted.  For eight ways firms can proactively address the problems of finding new advisors, supporting them and smoothly incorporating them into succession plans, scroll down the slideshow. 

visit this page to nominate yourself or another planning professional for Financial Planning's 2024 Rising Star Award.

The hard work is done

Accessible program, embrace career changers, mentors are good luck, ensure successors gain credibility with clients, pressure-free experience, shift in perspective, be optimistic about the future.

With RIAs increasingly identifying succession planning as a business imperative, here's how financial advisors and firms are investing in the future.

A professional brings objectivity to dicey conversations between relatives as well as experience navigating the substantial work involved with transferring assets, experts say.

Brokerages and industry lawyers say the conduct standard's key provision is its requirement that advisors consider alternatives to risky and expensive investments.

AI has become a crucial part of the conversation for wealth managers, as firms such as Goldman Sachs, Morgan Stanley and Citigroup consider how to deploy the technology.

Proposals to crack down on private placement insurance contracts aren't close to becoming law. Here's how advisors and their clients can use them for the time being.

At least 17 Republicans and one Democrat, Sen. Joe Manchin of West Virginia, have signed onto a joint resolution under the Congressional Review Act.

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How does a family office prepare for the next gen.

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Is your Family Office ready for succession?

Preparing for the next generation has long been a prime concern for Family Offices. This is especially the case currently during the largest intergenerational wealth transfer in history where it is predicted an estimated US$84.4 trillion will be transferred to heirs over the next 20 years. With so much wealth at stake, it is therefore essential to ensure the next generation of family members are adequately prepared to inherit it and assume leadership roles within their families.

How can a Family Office prepare the next generation? By staying ahead of the curve and adopting the right strategies, Family Offices can navigate the complexities of succession planning and wealth management with confidence.

Who are the next generation?

The next gen are the successors within affluent families who will inherit and manage substantial wealth, and most likely, the Family Office too. Understanding their unique characteristics, aspirations and challenges is vital for Family Offices looking to maintain sustainability across generations.

Unlike their predecessors, who are mostly Baby Boomers and Generation X, the new generation tends to be Millennials and Generation Z. They come of age during a time of rapid technological advancements, globalisation, and evolving societal values.

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You can read our previous article discussing the unique characteristics of their demographic here . In it we discussed how distinct their expectations and aspirations regarding family wealth and governance are compared with their predecessors. They are concerned not only with their families’ financial prosperity, but also purpose-driven investment strategies aligned with social and environmental causes.

Preparing for this next generation poses multiple challenges for ultra-high-net-worth families and Family Offices.

It is understandable that talking about succession is not the easiest or most comfortable topic for Family Offices to raise. It can be a tough, emotional, and sometimes awkward conversation to have.

On top of that, there are often generational differences in their contrasting attitudes towards risk, investment preferences, and communication styles, which only adds further complexity.

Preparing the next gen

The entire process requires proactive action from Family Offices. It begins with defining the family values and agenda, followed by initiating open communication with their future leaders. Despite their relative lack of experience, it is very important to make sure they feel heard and to address their concerns and needs. Building trust between generations is essential, as is ensuring clarity regarding accountability and responsibility, and both can be achieved through a deep intentional conversation.

On the other hand, education plays a vital role in empowering them with financial literacy, strategic decision-making skills, and a deep understanding of family values. Offering educational opportunities, such as inviting them to family meetings, can effectively equip them with the knowledge and skills necessary to contribute meaningfully to the Family Office.

The next generation members will have oversight of the Family Office and the wealth (in some capacity) but are not actively involved in strategic leadership. In such situations, it is crucial to bring in external experts who can support these members and lead the Family Office effectively. Agreus understands the critical importance of choosing the right leader for your Family Office. To assist you, we have published a comprehensive white paper report:

Engaging the future leaders

Engaging with the next generation properly ensures a smooth transition from their predecessors when the time comes. By involving them early on, Family Offices can instil a sense of stewardship and commitment to the family's legacy, preserving its sustainability for future generations.

Giving them meaningful responsibilities within the Family Office that allow them to make decisions and take ownership of projects or initiatives is extremely useful. Families can also consider allowing them to explore different aspects of the Family Office's operations and find areas where they can contribute based on their interests and strengths.

The process is not merely a matter of succession planning, but a strategic move for long-term sustainability. By understanding the unique characteristics and aspirations of the next generation, Family Offices can navigate challenges effectively and seize growth opportunities. By being proactive, they can effectively engage the next generation and prepare them for future leadership roles while encouraging a sense of ownership, purpose, and commitment within the family.

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