HR Professional
Pin It

By Lisa Gordon


HR should play an integral role in succession planning

Succession planning is often compared to a game of chess – the outcome will be determined by your ability to plan the next several moves in advance.


In the entrepreneurial environment, succession planning is likened to the elephant in the room. In fact, according to a September 2014 article in Canadian Business, a recent Deloitte family business survey found that just 17 per cent of companies surveyed have a formal leadership succession strategy in place.

That doesn’t surprise Jerry Cukier, managing partner of Chartered Professional Accounting firm Crowe Soberman LLP. He specializes in assisting clients with leadership transition planning. It’s a process that needs to be tackled head on, rather than avoided.


“This is not done over a week, a month or even over a year – it’s actually done over several years,” he said. “It takes a lot of thinking and honest self-examination. Most people look at succession when someone dies or there is an emergency, but it’s an issue that needs to be dealt with much sooner rather than later.”

HR professionals play a key role in helping management develop a successful exit strategy while ensuring the continued success of their business. In fact, says Cukier, HR’s role in succession planning starts from the day an employee is hired.


“You have to look at them to see if that person could be a leader,” he said. “Assessing someone early on is very important. Leadership comes in many different forms, but everyone who is hired must be evaluated for their leadership potential.”


Since HR builds company policies from hiring to retiring, the department must work closely with management to clarify the succession vision, and to ensure a plan is in place to meet those objectives. In the case of a family-owned business, the next step is tricky because it involves an honest assessment of each family member’s skills.


“In a family business, there is an overlay of emotions,” said Susan Hodkinson, Crowe Soberman’s chief operating officer. “It’s a difficult position for entrepreneurs to be in. They need to think about what the future of the business looks like, and also about staff competencies and how they have evolved. Are their children really ready to take over?” She added that it can often be hard to keep the next generation engaged while they await their turn at the helm.


“That is very challenging, particularly if it’s a family member who has been involved for a very long time,” she said. One of the factors complicating this situation is Ontario’s removal of the mandatory retirement age.


“We’ve always had a runway with age 65,” she said. “Now, this interrupts the natural flow of promotion, and we don’t have the predicted turnover any more. How do you deal with someone in their 40s who is ready to step up, but there is someone else who is showing no signs of retirement?”


Managing the transition
HR professionals need to be “at the table” when it comes to succession planning. “HR needs to remind leaders that they need to be thinking several moves ahead in the chess game that is leadership transition,” said Hodkinson. “Succession takes time. You can’t always find someone who is ready to take over a business. You must invest in having those successors in place before you need them.”


Human resources can help outgoing leaders establish a timeframe for the succession, and work to define a plan for knowledge transfer. Often, this involves the simple but effective process of job shadowing.


“In most businesses, there is a yearly business cycle, so it may make sense to start the shadowing process one year before the formal succession date,” said Hodkinson.


Keeping the former leader involved with the company can be beneficial, but it’s also tricky. “You use the outgoing leader for wisdom and as a sounding board early on,” said Cukier. “You have customer relations to maintain, and you have a lot of skills there. But, they must realize there is a time to step in and a time to stay back. They key is to ensure the outgoing leader knows his or her place. It’s not easy – it’s one of the toughest areas.” As for managing the expectations of a family business’s “next gen,” Cukier recommends having an open family meeting about the succession plan.


“As the owner, you can’t leave your kids to take care of it after you’re gone; that’s where conflicts happen. Plan it out, and then there’s no question about what mom or dad would have wanted.”


Hodkinson also emphasizes advance preparation as critical to succession planning.


“Be sure to plan early, allow enough time for shadowing and make certain that communication is handled properly within the company,” she said. “There needs to be enough time to pass the baton; but once it’s been passed, the outgoing leader needs to step aside relatively quickly.”


As for HR professionals who find themselves challenged with the thorny issue of succession planning, there is a silver lining. If they do it right, there is a real opportunity to ensure the company’s legacy will live on – in effect, they will be building a bridge between the generations.


Common Pitfalls of Succession Planning
HR professionals have an important role to play in succession planning. Open discussion with outgoing leaders will clarify their expectations for the future, while helping to avoid uncomfortable situations like these:


  • The leader hasn’t accepted the fact that it’s time to make the transition.
    In the case of a family business, the leader believes all his children are equal, including those in and out of the company.
    There’s nothing in writing – with no written game plan, no one really understands their roles.
    Owners fail to realize their children may not be the best managers, and that outside talent may be required.
    There’s no formal communication about the forthcoming leadership change – staff are left to fill in the blanks, and they’re often wrong.
Pin It