Succession Management and its impact on Family Business

If your CEO has a sudden heart attack, do you know who will take the chief executive's place?What if your top executives are wooed away to another firm?Do you have the next generation of leaders ready to fill those roles?The only way to reduce the effect of lost leadership is through a strong succession planning program that identifies and fosters the next generation of leaders through mentoring, training and stretch assignments, so they are ready to take the helm when the time comes.Research also supports sound succession planning."Every company has a succession planning document," says David Larcker, a professor in the graduate school of business at Stanford University.The question you have to ask is, "Will it be operational?"The Roadmap of this paper offers the importance of succession management, its benefits, process of succession management, succession management and family business issues etc.Jim Skinner, former CEO of McDonald's Corp., was known to tell managers: "Give me the names of two people who could succeed you."It was just one way the CEO continued the culture of succession planning at McDonald's.It was an understandable priority considering Skinner only landed in the role in 2005 after two other CEO's died suddenly over the course of just two years.And when he retired in 2012, Skinner was confident that his successor, Chief Operating Officer Don Thompson, was ready to take over, because he spent much of his seven years mentoring him."Ibasically felt the responsibility to the board of directors to be sure I provided them with someone who could run the company when I'm gone," Skinner told Fortune a year before his retirement."Until I was capable of doing that, I would not have left."Thiskind of leadership level commitment to training and mentoring the next generation is a vital component of succession planning.And while most executives understand the importance of succession planning efforts, few of them believe their organization excels in this category. IntroductionSuccession planning is a process for identifying and developing people from inside the organization with the potential to fill key business leadership positions in the organization.Succession planning increases the availability of experienced and capable employees that are prepared to assume these roles as they become available.Taken narrowly, "replacement planning" for key roles is the heart of succession planning.Effective succession or talent-pool management concerns itself with building a series of feeder groups up and down the entire leadership pipeline or progression (Charan, Drotter, Noel, 2001).In contrast, replacement planning is focused narrowly on identifying specific back-up candidates for given senior management positions.Fundamental to the succession-management process is an underlying philosophy that argues that top talent in the corporation must be managed for the greater good of the enterprise.Merck and other companies argue that a "talent mindset" must be part of the leadership culture for these practices to be effective.Succession planning is not a new phenomenon.Companies have been wrestling with ways to identify, develop, and retain their talent for decades.So, why is succession planning suddenly popping up on every company's radar screen?Today's organizations are facing higher demands in a global market with the retirement of the Baby Boomers and the widening talent gap.The home-grown and paper-based succession planning that some of the companies relied on in the past are no longer meeting the needs of today's workforce.In order to achieve results, companies need to start with the basics, create a strong process and then invest in the tools and technology to instill a talent development mindset in their organization.This report highlights research findings on succession planning efforts in Best in Class organizations across multiple industries.Succession planning is a process whereby an organization ensures that employees are recruited and developed to fill each key role within the company.Through your succession planning process, you recruit superior employees, develop their knowledge, skills, and abilities, and prepare them for advancement or promotion into ever more challenging roles.Actively pursuing succession planning ensures that employees are constantly developed to fill each needed role.As your organization expands, loses key employees, provides promotional opportunities, and increases sales, your succession planning guarantees that you have employees on hand ready and waiting to fill new roles.According to a 2010 Canadian Federation of Independent Business survey, slightly more than one third of independent business owners plan to exit their business within the next 5 years and within the next 10 years two-thirds of owners plan to exit their business.The survey also found that small and medium sized enterprises are not adequately prepared for their business succession: only 10% of owners have a formal, written succession plan; 38% have an informal, unwritten plan; and the remaining 52% do not have any succession plan at all.The

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