Whether your leadership transition is months or years away, there are crucial steps you can take now to prepare for a successful outcome. But successful transitions don’t just happen overnight. They take planning, preparation and foresight.
In this blog, Pinion advisors share common succession pitfalls and strategies to help you prepare for leadership transitions more effectively. In doing so you can protect your organization’s legacy and pave the way for future generations of leaders.
Why Do Some Business Transitions Fail? Common Pitfalls to Avoid.
Leadership transitions are critical for the future and longevity of any company. Despite their importance, it’s reported that more than half of executive transitions fail. What causes these failures? Typically, organizations encounter two common pitfalls:
Lack of planning and accountability. Remarkably, only 35% of organizations have a formalized process for succession planning in critical roles. The lack of structured planning leads to unclear expectations and objectives, making it hard to measure progress and hold individuals accountable. Without a clear plan, businesses struggle to align their current practices with their long-term goals, often resulting in missteps during transitions.
Derek Wagoner, a seasoned business advisor from Pinion, notes, “Transitions are not urgent until suddenly they are. And oftentimes, the most challenging discussions involve money, succession or death — topics people tend to kick down the road.”
Failure to prepare the next generation for leadership. Over 74% of new leaders feel unprepared, citing a lack of training for the challenges they face in their roles. This number doesn’t seem so surprising when you remember that only 35% of organizations have a formal transition plan in place. When an event like retirement or resignation happens, they are on a time crunch to select and train someone new, setting that person up for a rough ride.
“Business transitions can feel like a natural next step – a seamless, almost unnoticed shift,” shares Donna Funk, biofuels advisor with Pinion.
7 Ways to Build a Successful Transition Plan
Develop a succession plan. Start by identifying key roles and potential successors early. Outline the necessary skills and training required for these roles, considering that many management positions might be occupied by individuals nearing retirement.
2. Start the conversation EARLY. When the responsibilities are highly specialized, it can take 12-24 months (or even longer) to properly train and transition someone. Don’t leave plans to the final three months – aim to start around two years before an anticipated transition.
3. Consider using a third party to help . A non-biased, third-party consultant is a good idea for any business but is especially important when you’re navigating family relationships.
4. Gather feedback from all directions throughout the process. Every few months, take a pulse check with everyone involved. Are expectations being met? Are things moving in the right direction? Honest, regular feedback can help you correct your course along the way.
5. Create a realistic timeline. Break the process down to a granular level and develop a timeline for each stage of the succession process – from training and development to the gradual handover of responsibilities.
6. Progress > perfection. Transitions are never going to be perfect. There will be learning curves and minor setbacks, which are natural parts of personal and professional growth. Aim for progress rather than perfection.
7. Celebrate small wins along the way. When it takes months and even years to fully see the fruit of your efforts, it’s critical to celebrate milestones along the way. Whether it’s a successful training or a newly developed skill, acknowledge the small wins to maintain momentum throughout the journey.
