9 key steps for successful succession planning

9 key steps for successful succession planning

Whether you’re planning for family succession or your own retirement, it’s key to get things lined up well in advance instead of leaving it until it’s too late.

  1. Identify and develop potential successors: find people who show potential for leadership roles and invest in their development through training, mentoring, and providing opportunities to gain experience and exposure to different aspects of the business.
  2. Define succession competencies: What are the skills, knowledge, and competencies required for key positions in the organisation? A good grip of these will help to guide the selection and development of potential successors.
  3. Foster a culture of continuous learning: Encourage a learning culture, where everyone is motivated and rewarded for acquiring new skills, staying updated with industry trends, and embracing new technologies. This way there will always be a stream of qualified individuals ready to step into leadership roles.
  4. Diversify the talent pool: Consider diversity and inclusion; actively seek individuals from different backgrounds, perspectives, and experiences to foster innovation and avoid “we’ve always done it this way” group-think. This will help future-proof for adapting to a changing world.
  5. Succession beyond the top role: While leadership succession is often focused on top positions, it is also crucial to plan throughout the organisation. Identify critical roles at different levels and ensure there are suitable candidates prepared to step in when needed.
  6. Develop a knowledge transfer plan: Create a plan to transfer knowledge and expertise from experienced staff to potential successors. This could involve formal mentoring programs, shadowing opportunities, or documentation of best practices and lessons learned.
  7. Consider external talent acquisition: Consider external candidates when necessary. Keep an eye on the market and build relationships with potential external successors – they can provide fresh perspectives and new skill sets to drive growth.
  8. Communicate the plan effectively: Ensure transparency and open communication about the succession planning process. Everyone should be aware of the opportunities available to them.
  9. Regularly review and update the plan: Succession planning is an ongoing process, not a one-time event. Regularly review and update the plan to reflect changes in goals, market conditions, and successors. Get feedback and learn from both successes and challenges to continuously improve.

A succession plan should detail what role and responsibility each new/current manager or key employee will have once the business is passed over. For family businesses, in particular, it’s vital this information is clearly communicated well in advance.

If they have not communicated their plan to family members and key stakeholders in advance, it may cause conflicts that might be left too late to rectify. As a result both the current business owner and business itself may suffer.”

The person/persons earmarked to take over the business might not have the required skill sets – or want to do so. That could leave you and the business in a tough situation as you might be against the clock to avail of retirement relief. It is vital that advise and preplanning is done before succession.

Plan well in advance with the family and, most importantly, with your accountant and solicitor. Be aware of all the legalities, conditions and reliefs that are in place.

Need help with succession? Consider a professional review.

A professional review provides an objective assessment of your business, determines its value, identifies suitable successors, ensures business continuity, aids in strategic planning, addresses legal and tax considerations, and gives you peace of mind. It is an essential step in successful succession planning, helping you navigate the complex process with confidence and clarity.

Need expert advice on structuring and succession planning in Ireland? We provide objective and specialist advice on retirement and pensions, CGT and tax, succession, exits, mergers and acquisitions. Whatever stage you are at, we can help. Call us at 01 5411446 or email kieran@hthaccountants.com