The Steps to Successful Leadership Legacy & Transition
As a founder or CEO, have you ever considered how, after your departure through retirement or for other reasons, your company will thrive? Who will be taking over and leading the business forward and how will people inside and outside of your organisation react? These are all important questions you need to address and start planning for, yet in our experience founders and CEOs across many sectors, often remain wholly unprepared for such an occasion.
We help business leaders with their succession and legacy planning by asking the critical questions and having the difficult conversations people often shy away from. This ensures the remaining leadership team has a clear vision for a sustainable future and employees are informed and engaged about the next chapter.
Here, we share some practical steps for succession and legacy planning to help business leaders achieve a successful and sustainable outcome for everyone involved.
Time to let go
This may sound obvious, but you will be surprised how many founders and CEOs have trouble letting go. With so much time, energy and often money invested into the business, it can be a tough realisation and decision to accept it is time to leave.
This is a completely natural reaction as a decision to leave frequently comes with concerns and unanswered questions both professionally and personally for the leader. These can range from ‘what will happen to the company when I leave?’, ‘how will I be remembered within the business and the industry?’ to perhaps most scary of all, ‘what’s next for me in my life?’.
Procrastination around leaving not only comes from having to answer these questions, but also a lack of confidence and understanding about how to plan for leadership departure and legacy. It is no wonder that it’s a sensitive and little talked about topic despite its importance.
For the best outcomes, we recommend you start succession planning at least two, but preferably five years before you intend to leave. The earlier the better – especially when business ownership and shares need to be considered.
So, start as you mean to go on by working in close collaboration with your senior leadership team to create a plan of action. By setting clear expectations and defining an achievable exit strategy as early as you can, you will avoid the challenging conversations and misinterpretations that can happen further down the line.
Plan, plan, plan
Succession planning requires a 360 approach – that is, to consider the impact of the founder or senior figurehead leaving the business from all angles and the perspectives of everyone involved.
Having a robust and thought through plan that everyone can buy into is key not only for a smooth transition but also for ownership and accountability during the transition. We help businesses work through the tough questions that need to be discussed and resolved so a plan can be created.
Engaging your management team
It is always good to be upfront and honest with your senior team about your plan and timescale to leave the business. Your departure is as much about them as it is about you. Put yourself in their shoes, so you can consider and proactively address any concerns that are likely to arise along the way.
It is crucial that all the senior members of your team are on-board and feel part of the future vision for the business. Clear and frank conversations and ongoing, open communication are key to this.
You will inevitably have to discuss potentially contentious topics such as the future financial model of the business and individuals’ roles in its future leadership. However, by engaging and including your leadership team in the succession processes from the outset and establishing defined, measurable and timed objectives, they are more likely to feel confident in their future and empowered to drive the organisation forward in a way that benefits all.
Having a clear vision
A new era of leadership also offers the opportunity to reassess the business and see how it can be adapted and managed for future growth and prosperity. At its most extreme, it can trigger a completely fresh approach, but in order for any shift in direction to succeed, it is vital that a clear vision for the future is in place.
This vision should be created collaboratively and endorsed by the outgoing as well as the new leadership. It must build on the organisation’s history and legacy while setting a bright new path for the future that the entire workforce can engage with and support.
It often helps to seek external expertise to guide and direct this process to its best conclusion – outsider advisors can ask the challenging questions, mediate over any sticking points and offer a fresh perspective to those who may be too close to see the wood from the trees.
As part of your succession planning an important element for all parties will be the financial considerations and, where necessary the reallocation of shares or options for people to ‘buy-in’. With a variety of exit options from a management buy-out to an EOT (Employee Ownership Trust), choosing the right one for you as a departing founder or CEO, and the ongoing health of the business is vital.
Once the leaver, their successor and leadership team have all defined their individual and collective objectives, it is best to consult with a specialist advisor (legal and/or financial) to ensure everyone understands the options available and a collective decision can be reached.
Internal communication and getting buy-in
Succession and legacy planning goes far beyond just the person who’s leaving and the senior team that will take over; you must also consider, plan and prepare for how your employees will react.
We can’t emphasise enough the importance of timely and clear internal communications about the leadership changes taking place to mitigate any concerns or uncertainty among employees. This is especially important if the person leaving is the original founder or their name is above the door. The impact of their departure could have a profound effect on employees’ morale which needs to be understood and mitigated.
It is about winning the hearts and minds of your employees by giving them the time to buy into the vision for the future and build trust and confidence in the new leadership. Careful planning and roll-out needs to take place for your employees to feel included and part of this journey.
Clear and timely external communication
A risk assessment on the impact on the business from an external perspective must also be done. This means accounting for how clients, customers, stakeholders, shareholders and the wider market will react and whether it could have a knock-on effect on the perception of the business and its future success.
Consideration must be given to how relationships can be handed over, and the timelines involved for a smooth and consistent transition.
External communications must also be handled competently by your PR team to ensure those with a vested interest in your business are informed in an appropriate and timely manner. When managed well, your clients, stakeholders, and wider industry influencers will feel confident in the future leadership and as excited about the future of the business as you are.
Fit for the future
Through careful, collaborative planning and visioning, and timely, considered communications, a smooth leadership transition and legacy can be achieved within any organisation.
While it is a time of change and upheaval, it can also be chance for real growth and opportunity. With the right guidance and independent support, which external experts such as Grey Lemon can provide, it can be a valuable time of reassessment and realignment.
If you are a CEO or founder thinking about retirement or change, we recommend that you start planning now – it is never too early. In doing so, when you leave the business, you can be confident that the right leaders and vision are in place, and the business can thrive in the future.
For more information, go to www.grey-lemon.com or email firstname.lastname@example.org