Making a success of succession

How do you ensure a succession plan works? When should you start considering succession planning? Penny de Valk, Equiteq specialist in leadership development and human capital, addressed these and other front-of-mind questions of business owners in the Q&A of our recent succession webinar.

The main issues raised included:

  • Recruiting new leaders: internal versus external
  • Sharing equity to attract and engage
  • Handling founders’ syndrome and the exit transition

What do you see as the pros and cons of appointing a CEO from within the firm compared with recruiting from outside?

There’s no right or wrong here. With an internal candidate you get someone who is steeped in the values and the market, someone who really understands the organization. That can have huge advantages, but if you are looking for exponential growth, or a shift in thinking, it may be best to recruit externally. It is important to begin with what you need, really spend time on ‘what good looks like’ then assess your existing people against this. You can spot the potential inside and develop it. You find people from within the business who are just as ambitious and are just as visionary about what the organization could be, not just what the organization was.

The rule of thumb would be: for organizations that are not in true start-up mode, but are half way through their maturity, it is probably half and half. The important thing is there is a good mix of capability, experience and potential.

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Six steps to successful leadership succession

By Penny de Valk, Associate Director, Equiteq

Leadership succession involving a transition from the founders has its own specific challenges. Founders leave a huge legacy in the business, which in one sense is extremely valuable but can also result in a level of dependency that introduces risk.

Governance roles will change at exit, when an owner/founder will typically move from an executive position. The challenge here is that the owner/founder will need to be conscious of their change in role and step back sufficiently to allow successors to create their own leadership identity, while still continuing to offer their unique skills and experience in a broader governance role.

If you’re a founder preparing for a transition, getting it right involves ensuring you set up the new CEO for success, while simultaneously moving away from the operational side of the business and continuing to add value.

The difficulty for founders is they are used to being in control and making decisions independently, which means trusting the new leader can be difficult.

If they do achieve this, it ensures value is not diluted. In fact, it can result in value being enhanced.

Read our six steps to help founders achieve a successful leadership transition and listen to our webinar on the topic too!

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