Building a Succession Plan

Building a Succession Plan

A succession plan is an effective management tool that assists business owners to define a direction for the eventual transition of ownership of the business. A comprehensive succession plan accounts for planned and unplanned events by making critical decisions today based on the owner’s wishes. Please keep in mind that a succession plan is a living document that should be actively maintained and updated as necessary.

Each succession plan should be tailored to meet the individual needs of the business and its owners. The plan is often tied closely with the overarching estate planning activities of its owners, very frequently necessitating documentation to be structured in an executable and effective manner.

The following highlights the keys for building a succession plan:

  1. Identify critical positions. A critical position is one that would have a significant impact on the organization’s ability to function normally. Factors to consider when reviewing positions include the long-term strategic objectives of the company, requirements for specialized skills, availability of needed skills, and the current retirement expectations of the owners.
  2. Identify the needed skills and skill gaps. All positions have an expected level of knowledge, skills, and abilities given the role. Developing a skills baseline will help to understand the key skill gaps of the organization and provide a mechanism to prioritize the organization’s needs. A skills baseline should include the minimum job success requirements, a range of relevant experience, and a level of education or certification which defines the minimum standards for the role.
  3. Identify potential candidates. Consider both internal and possible external options to fill the need. For internal candidates assess them against the skills baseline, and utilize the assessment to create a learning and development plan. Be sure to be objective and independent of personal bias, be open and transparent in your communications, and evaluate based on true merit.
  4. Create learning and development plans. Once you have found the candidate, either initiate recruiting efforts for external candidates or develop a learning plan to build the necessary skills for an internal candidate. Keys to a learning plan include offering a range of opportunities to build skills (e.g., job assignments, rotational programs, formal & specific training courses), and an active mentorship and coaching program.
  5. Implement and monitor. Develop and execute the required documentation (e.g., living wills, transfer agreements) to crystalize the plan, initiate actions towards reaching the objective, and institute a periodic review process (e.g., annually) to make the succession plan a living document.

Using the services of a professional advisor can greatly improve your chances of establishing a sound succession plan tailored to reach your goals. Knowledgeable advisors can appropriately advise you on the succession planning process.

For more information or to schedule a complimentary consultation please contact BridgeLane Advisors, at