Does your company have a solid succession plan in place? If not, the most important point -- that many ignore -- is that in order to preserve what you've built, you must think hard about how your company's past strengths could keep it from being successful in the future. And you should start planning for succession at least two years before you need to make the move
You would certainly not want to make the mistake that A&P's leaders, John and George Hartford, made when they picked a long-time loyalist to succeed the entrepreneurial brothers who propelled A&P to become the Amazon of its age.
Their decision to appoint Ralph Burger to maximize dividends for their foundation kept the company from adapting to the significant changes in the grocery industry -- ultimately resulting in A&P's 2015 bankruptcy.
Simply put, to future-proof your company, your succession plan must envision the kind of leadership your company will need to prosper in the future rather than mummifying its past.
1. Envision The Keys To Your Company's Future Success.
Despite all the pressure to keep it going through the Covid-19 crunch, the first step in succession planning is to think hard about your company's future.
Think about how powerful trends in technology, evolving social norms (including how the pandemic will permanently change the way people live and work), and the changing competitive landscape will threaten the way your company operates now and create new opportunities for future growth.
Do you have in mind a successor who can reinvent your company to succeed in such a future? If you do, just make sure your board is comfortable with that person taking over as your successor and give them access to the essential operating information they will need to step in when you leave. If not, keep reading.
2. List Candidates Who Can Future-Proof Your Company.
To reinvent your company after you depart, you need a successor with a track record of entrepreneurial success.
If you have a trusted executive team that's full of such people, pick two candidates to succeed you: one who has created new revenue streams and another who excels at controlling operations. Both will be needed during the Covid-19 crunch.
If you don't have such candidates inside your company, look outside. Perhaps an entrepreneurial executive who is leaving a job at one of your rivals could be a strong candidate. Make sure this candidate fits your culture and gets along with your board
3. Test Top Two Successors' Ability to Reinvent and Operate.
The next step is to put your successors to the test. If they already work in your company, give them big challenges that test their abilities. If you bring in an outside successor -- possibly as co-CEO, pair the successor with a strong internal operating executive.
Test their abilities by assigning them greater challenges that demonstrate their ability to get results. For example, assign one the challenge of developing a new products that captures emerging growth opportunities and adds significant new revenues. Task another with improving your company's cash flows and exceeding performance targets.
4. Charge Your Successors with Boosting Bench Strength.
While you are challenging your successors to reinvent and operate, also encourage them to ask their direct reports to find their own successors. In addition to lining up successors for those jobs, ask their direct reports to document how decisions are made so that new people can get up to speed quickly as needed.
5. Share Board-Level Information With Successors.
If your successors are performing well and have built up your company's bench strength, there is another key thing you must do: give them regular access to board members and board level information so they will be able to step into your shoes without too much disruption to your company's operations.
Do these five things and your company will keep fulfilling its misson after you leave..