Large corporations have established succession planning frameworks as a cornerstone of their organizational strategy.
However, in the case of startups, there is a need for more succession planning. The priority for startups is centered around immediate challenges, leaving succession planning on the back burner.
We’re firm believers in succession planning at RFS and have seen it pay off for startups who take the time to invest in their leadership searches. Below, we’re sharing benefits of succession planning, what the role of the CEO should be, and how to start thinking about succession planning if you’re a startup.
1. Continuity and stability. Succession planning identifies and develops talent within an organization, ensuring a pool of competent individuals ready to assume key positions in case of departures, retirements, or sudden leadership vacancies, minimizing disruptions and maintaining stability.
2. Reduced risk and uncertainty. When organizations take the time to find successors beforehand, they minimize large gaps in talent. In return, this alleviates some of the negative impacts on productivity and performance that happen when a key hire is absent from the organization.
3. Development and engagement. Succession planning is a great retention tool. When leaders talk openly about succession and promotion planning, this shows employees that they’re committed to growth. In return, this boosts morale, motivation, and job satisfaction – making employees less likely to leave.
4. Cost-effectiveness. Let’s face it: turnover can be expensive! Not only because of the amount of time it takes leaders to hire and find a successor, but because of the lost time and productivity that can come from not having someone in a key role for several months. Searches for leadership roles often take longer than searches for more junior ones – there may be more interviews, or more negotiations than the typical role. As a result, businesses often productivity from not having someone in place in a particular role.
The role of the CEO or Founder is paramount when it comes to succession planning. Some of the responsibilities of the CEO for succession planning include:
1. Communication. CEOs need to communicate the importance of succession planning to the entire organization and make it a priority. By setting an example and prioritizing succession planning, a CEO can encourage other leaders to do the same.
2. Spending time identifying successors. In addition to leading by example, a CEO can play an active role in identifying and developing potential successors. They have a unique perspective on the organization and can identify individuals with the right skills, experience, and potential to lead the organization.
3. Getting potential successors excited about the company. As a CEO, you are the figurehead of your company – and you generate the excitement for your business! Just like you sell your product to investors or clients, you have to get comfortable selling remarkable hires on the opportunity to work for your company too. Even though the candidate market may have had some dips and waves over the last few years, top candidates are still in demand - and have options. In order to find the best successors, you need to constantly share about the great work your employees are doing, how happy you are to have them, and what you're looking forward to in the years to come.
Thinking about succession planning can be intimidating, especially when it seems like there are a lot of pressing tasks that require your attention. However, there are several steps we recommend startups consider when developing a succession plan that works for their business, including:
1. Identifying key positions. Start by identifying critical roles within your startup that require succession planning. This typically includes executive and leadership positions, but it can also encompass other roles that are essential to your business's operations – like roles that interface with customers and clients daily, for example.
2. Set clear objectives. Write out the roles you need succession planning for, and what skills are needed to be successful in these roles. Perhaps these are skills that are also in your present hires, but maybe you think of some additional skills that would benefit your business as well. For example, do you plan on moving into anew industry or market next year? Consider that when you're searching for new talent.
3. Do your research. Meet with other founders or business leaders whenever possible and share stories about what you’re seeing on the candidate market. What are top candidates asking for right now in terms of salary or equity? Are some areas of expertise being more heavily recruited right now? Knowing what to expect can help you set expectations on time to fill and cost.
4. Make sure you’re documenting what you learn. Keep comprehensive records of your succession plan, including development plans, performance evaluations of existing employees, and any notes on compensation. This will help you stay organized and remember conversations that you may have had months ago. For example, at RFS, we use Coda to keep track of notes, which we can easily transform into tables or other formats and share across our team.
5. Carve out time weekly or monthly to chat with potential successors. Here’s the sneaky truth – you may be doing this already without realizing it! Whenever you accept a networking call, an email from an old friend or colleague wanting to get in touch or go to an event when you’re meeting people in your industry – you’re likely meeting with potential successors. The next time you’re in one of these scenarios and are impressedwith someone – even if you don’t know of a role for them right now – take the time to connect with the person after and keep them in your network. Even if they’re not the right fit for a role, they may know someone who is when it’s time for you to start looking, which can greatly expedite your process.
Interested in learning more about leadership searches for your startup? Check out the services RFS offers and connect with our team.
Learn more about hiring leaders in our blog post here, or some of our interview tips here.
Let our team help you get where you need to be.
