It's human nature to be wary of the unknown. A recruit who is employed elsewhere and unfamiliar with your firm, faces the prospect of leaping from what may be a comfortable situation into a mysterious setting that, worst case, could be a monumental career mistake.

There are plenty of issues that make a job change risky. For many recruits, uncertainty around the future of the firm, including succession planning, are deal-breakers. Prolonged uncertainty about who will be the next-generation of leadership and about the firm's future direction is likely to cause employee retention problems, too.

While top managers always hope for a predictable, orderly changing of the guard, key leadership transitions can happen at any time. Many firms have struggled badly when a top manager passed away unexpectedly or resigned to join another company. Months of chaos in the wake of such an event can mean the loss of more key personnel, and ultimately even of clients.


Leadership contingencies
The best defense against a sudden leadership shakeup is to have a detailed succession plan in place. Every firm should be prepared to cope with the departure of not only ownership-level managers, but also of other key leadership positions, even down to the branch-manager level.

For any manager whose departure would cause major disruptions, there should be another designated to take the reins, at least on an interim basis. Ideally, the manager who would fill in is familiar with the people he or she would be managing and is well versed about the group's goals. By creating a structure in which employees are able to work with more than one manager, firms can make it easier for a new or an interim manager to be accepted by a group that has lost its leader.

With the exception of top ownership, it isn't necessary for the whole firm to know who is in line to cover for whom, but upper management should have an agreed-upon designee for several key positions. This will prevent political battles that could delay an orderly transition.

Be open about ownership transition
When it comes to ownership, however, openness about a succession strategy is critical. High-level candidates are interested in their own prospects for becoming an owner in the future. If the hiring manager can't provide an answer to the candidate's ownership transition questions, the candidate may lose interest.

A murky ownership situation can prompt anxiety in long-time staffers, too. If the current owner or owners are known to be contemplating retirement, employees will be anxious about the future. Does the owner want to pass ownership to people in the firm? Does he want to bring in an outsider to take over? Is he interested in selling the firm to a competitor?

Any of those options will impact employees' job security and careers. The longer these questions go unresolved, the more likely workers will find a move to another firm to be an attractive option. Owners should have a succession strategy in place and make it known to the entire firm at least five years before their anticipated retirement. In addition, if, God forbid, the owner passes away suddenly, there should be a written document spelling out how the owner's stake in the firm would be divided and who would take over firm leadership.

Clarify strategic vision
Minimizing uncertainty surrounding ownership transitions requires more than simply naming successors. When a firm's founders, who have defined the firm's direction for decades, plan to step aside, it's important for the heir-apparents to clarify the company's core values and strategic direction. With first-generation firms, in particular, which often depend on the personalities and leadership of the founders to set strategy, the second generation should reveal early whether they will continue in the same direction or chart a new course.

Cultivate next-generation leaders
When owners plan to retire a decade or more down the road, it's easy to ignore ownership succession plans. But it's not too early to begin considering candidates for next-generation leadership. Current-generation leaders can identify the skills and attributes that will be needed in leaders who will take over from them. Recruits can be evaluated with these skills in mind, and current employees can be offered training and mentoring to develop the necessary skills.

Succession planning has a huge impact on recruiting, retention, and the overall health of a firm. Make sure your firm gives it the attention it deserves.


What do you think? Let us know.

Justin Roy is a SullivanKreiss market sector leader focused on engineering, environmental, and construction clients. He can be reached at jroy@sullivankreiss.com.