The COVID-19 Pandemic taught businesses many things. How to adapt (and quickly), how to navigate unchartered territories, and most of all, how to be as prepared as you can for the unexpected. Those businesses that had business disruption plans in place were naturally given a head start, while others arguably had their fingers burnt when the world turned upside down.

One factor that all businesses face at some point in their future, is the potential disruption that comes with a key individual leaving – be that for another role, or as they head towards retirement.

And it will undoubtedly be small and medium-sized businesses that are the most at risk from disruption as the required skill set and knowledge will be concentrated amongst a few key individuals.

Put simply, companies without a succession plan risk losing revenue, reputation, and relationships, and whilst it’s hard to find the time to plan for the future when you are busy running the day-to-day, putting a clear strategy in place will only help to protect the business when the time comes to put it into action further down the line.

Here we look at the 9 steps to take to start a succession plan for your business:

1. First things first: look for signs your key people are thinking of leaving

Individuals can choose to leave your company for a variety of reasons. They may be looking for a new opportunity or challenge in their career, want to move into another specialism or sector perhaps, or simply have become dissatisfied in their current role.

The first step to planning for the future is to be ever aware of the warning signs your top talent is thinking of leaving.

This might include:

• Avoidance of long-term projects and growth
• Visible signs of the stress connected to the role
• Signs that the individual is not as creative or intuitive as usual
• Performance is beginning to suffer

In today’s changing employment landscape, issues like disengagement, burnout, and even “quiet quitting” are becoming increasingly common. Fortunately, if you can recognise these signs ahead of time, there are still things you can do to re-ignite your staff’s passion for your company and prevent them from seeking other employment options.

If that is not an option, or all avenues have been exhausted and the individual has progressed to handing their notice in, you might want to consider step two…

2. Consider whether a counteroffer is the way forward

When you are faced with the prospect of losing a key individual from your business it can be tempting to enter straight into negotiations to counteroffer. Not only can it be expensive to replace key people, it can also damage morale and affect client relationships. If there is a glimmer of light that the decision can be reversed, it is no surprise that many employers go down this route to mitigate any collateral damage.

However, business leaders should think twice before making a counteroffer as there are both pros and cons that should be considered.

There are times when negotiations are worth entering into, especially if that individual can still see a future at the company, still finds the culture and working environment a ‘fit’, and any identified obstacles can be overcome.

However, if the counteroffer is based around salary expectations, take heed. Will offering an increase lead to an imbalance across the rest of the team? Will it start a snowball effect with other individuals? Can you actually afford the increase?

Finally, it is also worth noting at this point that any negotiations around encouraging a key individual to stay will not be relevant if the reason for leaving is retirement. However, with a presumed notice period that will be required in this instance, following the next steps are still key as that person works through those final months (or years).

3. Review your current team in depth

As a business leader the structure of your company should always be reviewed periodically. Of course, you may have an ongoing hiring plan in place to fill certain ‘gaps’ or around a growth strategy as you increase headcount. But consideration should always be made around highlighting key individuals across the business that are likely to cause some element of disruption if they were to leave suddenly (either enforced by the business or due to extenuating circumstances).

A good starting point would be to look at ‘vulnerable’ vs. ‘critical’ positions

• Vulnerable = There is no identifiable successor. Risk is loss of functionality and knowledge as there is no obvious replacement.
• Critical = A leaver in this category would significantly impact a company’s operations. All leadership positions are critical by this definition – in particular CEO, CFO type roles.

Assuming you prioritise planning for the departure of these roles first, ask yourself if there is someone else in the business that can take on those responsibilities for example. What would happen to that individual’s clients or project work? What clients are a flight risk and would potentially follow that individual to an alternative company – one of your competitors perhaps?

These are the initial key questions when putting a succession plan in place: understanding the risks and ensuring that business continuity is key.

4. Develop your future leadership team

At any given point, having a pipeline of future leaders in the business is incredibly important – whatever the size and structure. Having clear progression paths in place is a good starting point so individuals can envisage their future at the business, supported with robust training and upskilling where needed as part of the wider package of benefits and employee support.

When it comes to creating a succession plan, however, more careful consideration needs to be taken when assessing the exact skills and experience needed  – applicable whether you are planning to move people into that role from within or recruit externally.

You need to consider for example:

Key skills that may be lost  – If the individual leaving is a business leader or managing director, there are a certain set of skills that come with, and are expected from that seniority. Business acumen, entrepreneurship, strong financial control, and managing a team are all essential skills that you would hope their successor would have. Above all, someone who has experience in change management would be ideal to take the business from its current state to a desired future state – executing change, mitigating risk, and minimising resistance.

SPOFs – ‘Single Point Of Failure’ – an acronym that originates in the world of IT, it refers to a component or part of a system that, upon failure, would cause the entire system to fail or significantly impact its operation. In business terms, therefore, you need to consider if any individuals have sole knowledge of a particular process or system or hold a set of critical skills that no one else in the business currently has. To see these, quite literally walk out of the door, may significantly impact your business, so ensuring that knowledge is shared is good practice.

Using notice periods to your advantage – if a successor has been identified, and there is a notice period for the leaving individual to serve, it may be worth considering if there is an opportunity for the two to work side-by-side for a period. Obviously, you will need to consider internal costs here and the impact on the incumbent role and responsibilities if you have an individual mirroring a new role, but the time spent shadowing or preparing for the shift of responsibilities could be a sensible move in the long run.

5. Active management of client transitions

Unless the individual is leaving your business is because of retirement or to cease employment altogether for other reasons, there is always the risk of your own customers following that individual to one of your competitors.

So what can you do to mitigate the risk (and impact on your bottom line)?

Once again, the starting point is taking time to analyse your book of clients, particularly those who you would class as ‘high-value’. Do these have a team of people that you deal with regularly, or is it just one individual? Understanding these relationships is key, as is ensuring that all leads and client data is shared internally through your database or CRM.

If it is appropriate, ensure that the client has contact with a number of people within your business, not just a single person. Regardless, open and transparent communication with your key clients is vital to uphold those valued relationships, maintaining service quality, and contribute to client satisfaction with the proposed changes ahead.

From an internal point of view, and if there is a formal transition in place between leaver and successor, make time to transfer knowledge about that client. This should be on a deeper level than the information found on a CRM. Ongoing projects, key individuals, processes, and how they like to do business are all vital nuggets of information that will equip the person taking over the relationship with the inside track over and above facts and figures on a much more personal level.

6. Creating an external comms plan that maintains stability

By now it is evident that clear communication to all stakeholders is a key part of continuity and succession planning. Creating a plan that also addresses ‘the market’ is also key here – particularly if the individual leaving is senior, a managing director, or a CEO for example.

The objective of general external communications is to mitigate any potential damage to the company’s brand and to reassure clients and potential clients about the continuity of service.

And, whilst a smooth and well-managed transition can have a positive impact on a business’ brand, a poorly executed or mishandled succession process can actually tarnish its reputation.

Communicating future plans here is key – when people observe a well-prepared and seamless transition of key personnel, it instills confidence in the company’s ability to maintain consistent service quality, fostering trust in the brand and reinforcing its reputation for reliability.

What’s more, succession planning allows a business to strategically position itself by identifying and developing talent in specific sectors or industries. By aligning succession plans with the company’s strategic objectives, it can communicate its expertise and wider value proposition to clients and stakeholders. This further strengthens the business’ brand reputation as a trusted authority in those areas in which is operates.

7. Focus on internal communications and vision

Having a clear roadmap for the future; setting a vision and the steps in place to get there is crucial for any professional business, whatever its size or sector. Engaging team members, ensuring efforts are aligned, and facilitating personal growth and development are key elements of successful internal communications.

When a key individual has given their notice to leave, it may very well lead to discontent and worry – albeit temporary – on the supposed disruption ahead. It’s therefore vital to be completely transparent with the remaining team about what plans are in place, and how they will affect the business in the short, medium, and long term.

Some key areas to focus on in your communications include:

Providing a clear roadmap ahead –  outline the future strategic direction particularly if this will change as the individual departs.

Engage in 2-way communication – encourage team members to share any concerns, thoughts, and ideas openly about what the future will look like.

Promote personal growth opportunities – ensuring the remaining team members can still see opportunities for their own growth, progression, and personal development is crucial.

Visualise the vision – where you can, make your company’s vision tangible and relatable.  Use visual aids, and real-life examples to help team members connect on an emotional level.

Managing change communications is a critical aspect of successfully navigating organisational transitions and ensuring the smooth adoption of new initiatives and significant changes, including the departure of key individuals. Done well, this can help your remaining team transition with clarity, understanding, and engagement for the road ahead.

8. Consider hiring strategy as structure changes

Depending on the role in question, you may not want to hire someone external – rather, promote from within. This has clear benefits – these individuals are already a good fit for your business, understand your tech stack and processes, and may already have fostered good relationships with key clients.

However, external hiring may be needed to back-fill the role of the successor for example. A shift around of roles and responsibilities internally inevitably leaves gaps somewhere – so consideration of what a revised or likely business structure should be taken to feed into a plan around hiring.

If you are responsible for hiring within your business – either wholly, or as part of your role in HR for example, one of the choices you have as part of your hiring strategy is whether you go it alone, or enlist the services of a recruitment specialist.

This decision may be based on a number of variables including £budget, speed (the need to get the position filled quickly), and the potential scarcity in the market of the hire(s) in question – but there are clear advantages to engaging early with a sector-specialist to give you a head start as you continue to focus on handovers and the transfer of knowledge of your departing employee.

9. Keep internal admin up to date

Job descriptions and the roles and responsibilities of individuals are likely to change over time – particularly if they progress along a defined career path, or the business changes and roles have to flex to accommodate those.

It is therefore prudent to keep documentation up to date to make it easier to recruit into that role when the time comes – be that from your internal talent pool or externally.

Even if the ‘new’ role may change with the departing individual, it at least allows you to benchmark and assess areas of the role that may need to pass to the successor.

And, ensuring that key processes are documented and shared internally is crucial if you don’t want to end up with SPOFs in the business who take that knowledge with them as they depart.

Conclusion

Whilst it’s not always the case that business leaders get a heads up on when the key individuals of their team are leaving, it is still worth having succession planning as part of the annual strategic review – particularly if a SWOT analysis is conducted where this could be classified as a very real threat to business-as-usual.

Where reasons for leaving are around retirement or taking a more permanent step back from current responsibilities, as much time to plan ahead should be taken. Using notice periods strategically to help document processes and pass the baton over to a suitable successor is time well spent.

And, if there is no one in the wings that look like they have the right skills and mindset to take on additional or alternative responsibilities, engaging with a trusted and reputable  recruitment specialist as soon as you can is key to ensure you kick start the process and find a suitable candidate that is the right ‘fit’ from the outset.

Successful succession planning is about putting solid plans in place before key individuals leave – not scrambling to fill gaps and manage ripples of worry or discontent as they walk out of the door. And, as Vijay Parikh, Owner of Harold Benjamin Solicitors wrote recently for The Law Gazette whilst succession planning may not be something on many senior leader’s agenda, it is an absolute necessity, like any other future planning for a successful business.

In short, it’s never too early to start thinking about putting a strategy in place  – even if it only comes into force sometime in the future.

About Clayton Recruitment

Clayton Recruitment has been partnering with organisations across the country since 1989 and during that time has built up an excellent reputation for trust and reliability.

With specialist divisions covering Commercial, Financial, and Engineering appointments, on a permanent basis.

If you are building your existing team or looking for your next career move, we can help. And, if you are currently employed, you can be assured of complete confidentiality, professionalism, and honesty throughout the process – as standard.

Click here to speak to one of our experienced specialists or call 01772 259121 for more information on how our exceptional recruitment experience can help your career aspirations.