Planning for Succession
Business succession planning is an often-overlooked discipline where firms prepare for a future scenario when its founders retire, or unexpected situations arise where the leadership of the company are unable to continue in their function. The process of succession planning is especially relevant for smaller, family-owned businesses.
There are some solid business reasons for planning for a generational takeover of leadership at any organisation. They include:
- Easing and smoothing transitions by laying appointments, roles and processes for handover of power and management in advance.
- Inspiring investor, partner, employee and customer confidence by preparing them ahead of time, rather than creating uncertainty.
- Introduce potential leaders to employees and other stakeholders to help them ease into their roles.
What to plan for?
- Protecting and growing assets: experts advise using trusts, coupled with insurance solutions to hold the firm’s assets, and ensure that the outgoing leadership is able to specify the terms and structures under which the firm’s assets should be used.
- Identifying potential successors: the question who should lead the next generation of the firm needs to be addressed.
- Communicating change: Some thought must also be given to communicating succession plans at the appropriate juncture to customers, shareholders and employees, as well as the timeline to do so.
Finally, succession planning is often seen as long-term contingencies, rather than a one-off event, because of the unpredictability of business conditions and life events. Experts counsel that any business succession plan should be re-evaluated and updated at regular intervals.
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