The time to start planning for
the next company leadership is
now, according to the canadian
financial executives research
foundation in Toronto.
Don’t wait until there is a “trigger”
event, such as a critical illness or
death, the organization advises.
succession planning, it says,
needs to be a continuing process
that is started early and revisited
regularly — ideally yearly.
Here’s what companies developing
that plan need to do:
;Draft clear job descriptions
of key responsibilities and tasks
required to run the company.
;ensure there are appropriate
successors to fill vacancies when
senior managers move up.
;offer opportunities to train and
develop internal candidates now.
;Prepare for post-succession issues.
;Involve senior financial
executives in planning, and
consider retaining outside help.
them, and if it does, their organization
and successors are already prepared.”
The latter, he adds, is not generally true.
A poll conducted last year by TD Waterhouse found that there are two main
reasons why owners don’t currently have
a succession plan for their businesses:
They are still trying to figure out what
their plan will be (45 per cent); or they
simply haven’t gotten around to it ( 31 per
cent). Of the more than 600 small business owners surveyed by TD last October,
76 per cent admitted they don’t have a
succession plan in place.
According to the Canadian Federation
of Independent Business in Toronto, only
one-third of small and medium enterprise
(SME) owners are planning for their future succession, and among those who
have a succession plan, the majority are
informal, unwritten plans, which have
not been shared with the intended successor. Furthermore, 41 per cent of SMEs
indicate their intention to exit their businesses within the next five years, in most
cases to retire.
The lack of a formal, written plan is not
surprising. “Planning for a crisis doesn’t
happen,” Bongard says. “People have
good intentions, but they’re busy.”
Family businesses and smaller compa-
nies are not necessarily the exception
when it comes to succession planning.
Research conducted last year by the Ca-
nadian Financial Executives Research
Foundation in Toronto, the research arm
of Financial Executives International
Canada, found that 40 per cent of Cana-
dian private companies have a clear busi-
ness ownership succession plan in place.