Tag Archives: Projects

How Do You Plan for Retirement? Three Strategies

Situation: The CEO of a family business is anticipating retirement in the next two years. Currently, there is no succession plan. Other family members do not seem interested in running the company. What steps should the CEO be taking? How do you plan for retirement?

Advice from the CEOs:

  • To set the stage for your successor, make sure that you are being paid adequately for your job. If you are being paid less than some of your key employees, nobody else will want your job. Raise your salary to a point where it is appropriate for a CEO, and so it is attractive enough to entice a qualified successor. This will also help attract a buyer should you decide to sell or merge the business. Raising your salary will also help your bottom line if your company is an S Corporation.
  • Once you identify a potential successor, bring this individual into the business as soon as possible so they have an opportunity to understand the business fully and can receive on-the-job training from you. 
    • Understand the numbers and red flags that give you the information and authority to run the company and the respect of your employees. Teach these to your successor so that this person has the same overview of the company that you command.
    • Look at what skills your successor needs to be CEO and start mentoring that person on those as soon as possible.
    • You may need to delay your planned retirement so that you have time to select a successor and prepare that individual to take on your responsibilities. Your current 2-year plan may not work, at least without compromises.
  • Without a management succession plan, the company may not bring in as much in a sale or merger as you expect. It is important that you improve the numbers to maximize the value of the firm if you choose to sell or merge the business.
    • Look at your current range of projects. Focus on those which are most profitable to you and emphasize these. You may be able to reduce staff and expenses by being more focused.

What are Best Practices in Succession Planning? Four Ideas

Situation: A company wants to create a succession plan for key roles. Historically they haven’t had succession plans, but they are actively looking at candidates, skill sets, and so forth. The CEO wants to be able to make a recommendation to the Board. What are best practices in succession planning?

Advice from the CEOs:

  • Start with job and role descriptions. Select internal candidates for the positions and offer trial opportunities to assess their capabilities.
    • Test potential successors with projects to see if they can rise to the level of the higher responsibility. It may take more than one try to assess this.
    • Along the way you may discover hidden talents possessed by some of your employees.
  • Start with your incumbents. One of their responsibilities should be to identify possible inside candidates as successors for their positions, and to create a profile of qualifications for outside candidates. This should also be part of their job descriptions.
  • Succession candidates must desire the responsibility of the higher position. Don’t assume that everyone will want this. Some will be very good in their current role. Trying to force them to advance in responsibility can be counterproductive.
  • Do not assume that an outsider with a good resume and industry connections can fill the role of an insider who knows the company and its products and services.