A company is most vulnerable when its knowledge base is largely held by one person. As any good business instructor will tell an entrepreneur, “Have a succession plan in place before you open your doors.” Professor Joseph Bower of Harvard Business School conducted research which concluded that many firms have not instituted a process for managing the development of potential leaders or even thought about the process of selecting a successor when the time comes for change. Recent problems at Merrill Lynch and Citigroup confirm that this problem is not limited to small businesses.
But if succession planning is so important to a company’s vitality, why is it ignored? Many CEOs, and especially small business owners, feel as if their entire identity is wrapped up in their jobs…and it can be difficult to give that up.
For me, the highlight of this past year was my oldest son joining the company. While friends cautioned me about the potential strains on our relationship, I cannot imagine how we would have survived the past year’s challenges without him. With his background in business, English and information technology, we were able to meet deadlines and improve the quality of our magazines while implementing much-needed upgrades in technology and production processes to meet the demands of a changing industry, clients and demographics.
He is an enthusiastic student of the publishing industry and of our community, another example of a young professional who, after several years away from the area, returned to central Illinois for the opportunities afforded here. Though I am not about to retire anytime soon, we have discussed the topic of succession planning, and I am eager to mentor him and teach him what I know. The grooming of potential leaders requires a substantial investment of time and resources. Unfortunately, in today’s world, we often move so fast, with an eye on the next quarter, that we don’t take the time to lay a foundation for the future—a fact that has come back to bite some of our biggest companies. Professor Bower estimates that it will take up to a decade—a decade!—to transform these firms away from such a “horse race” mentality.
I’ve watched this scenario take place among nonprofits and other organizations as well. When a key figure leaves, a relationship gap arises, both in terms of historical knowledge and emotional investment. As we’ve seen, such turnover without a plan for succession can be very detrimental to the health of an organization.
Last month, when we honored our 40 Leaders Under Forty, I suggested in my opening speech that these are the people who will take our seats at the table. Preparing these seats, and investing in their talent, is an absolutely critical step to ensure our success in the years to come. IBI