How do you transfer leadership of an organization to the next generation?
Leadership succession requires workers and managers to struggle with uncertainty and the other emotions that come with change. Sometimes that change is managed so badly that the organization or business fails.
Therefore, many organizations take a "whole business" approach to leadership transfer in which they view the change's impact on the entire business, not just on the current leader and the successor. Usually this is a sustained process that exists over many years and involves all stakeholders, including workers, customers, suppliers, governors (or boards of directors) and other interested parties.
The first step in this process is persuading the leader to prepare for an exit. For many organizations, this is an automatic process instituted by governing boards as part of proper management. However, for many family firms, the founders do not want to consider the possibility. Perhaps they fear the business may not continue without them, or they cannot identify a proper successor, or they do not want to face the future or they are simply too busy.
But succession planning is more important today than ever. Generally it involves a seven-step process:
- The leader identifies and understands his or her personal dream and vision
- Those involved in the organization must identify their own visions
- There must be a strategic plan for leadership transfer
- Designated successors must be identified, prepared and trained
- There should be a gradual transition to new leadership
- Leadership or ownership must be transferred
- The leader or owner must have a well-thought-out estate plan
Content in this section is provided in partnership with the Business Development Bank of Canada. BDC provides entrepreneurs with financing, venture capital and consulting services. To find out more go to BDC.ca.