Training your successor allows you to transfer your legacy of experience, one of the most valuable assets in the company.
When I’m asked by business leaders about the ROI on training a successor, I respond with a quote attributed to Benjamin Franklin: “If you fail to plan, you plan to fail.” Whether it’s someone within your organization or an external selection, the decision is just the start of the process.
There are certain characteristics inherent in a leader, but the rest is all about building skills. There is no one better than you to play the role of trainer. The company’s future success may depend on how you approach this role. The return on investment — at least initially — is something you control.
Beyond the announcement
Succession planning goes beyond preparation for your departure. It’s an investment in your people. Your leadership may span decades. It could be argued that your legacy of experience is one of the most valuable assets in the company.
Transferring this asset isn’t as simple as a data dump. Crucial information must be accessible, but your leadership experience can’t be digitized. Besides, you didn’t learn it all at once. That’s why an incremental approach to training your successor offers the most beneficial results.
Work with members of your leadership team to create a program timetable that will expose your successor to all areas of the organization. The objective is to observe how they merge accessible information with their own decision-making process. This will help you ascertain where you — or an outside professional, such as a business coach — should focus on skills training. Prioritize communication and emotional intelligence abilities; they’re key to leadership.
It takes a village
We usually read or hear that leaders are born, not made. I would argue that leaders are formed — and by that, I mean they have the ability to transform information into perspective. It can’t be done in a vacuum. It’s why your management team is an important ally in the incremental training of your successor.
Communicate your intentions to them. Ask for their help to prepare measurable milestones that will demonstrate an increasing level of readiness in your successor. Business owners I’ve worked with in the past often tell me they’re surprised and highly encouraged by the buy-in they get from their management teams when asked to participate in this way. You’re allowing them to help you invest in their success.
The ROI of successor training
According to The Hartford Insurance business insurance can be as much as 20 to 30 percent of gross sales as a general rule of thumb. That is, for comprehensive coverage that includes primary business coverages, worker’s compensation and employee health and life insurance benefits. Personally, I rarely see it go more than 10%, and some of this required by law. But, you’ve got your company’s future to think about. Whether it’s insurance or successor training. Succession planning is an investment. It’s another step in your strategy as a business owner to protect its assets and resources — physical and human — to ensure long-term success. Training your successor is a potent form of business continuity insurance. Even if you’re selling it to your successor, you still may have financial ties. Your disaster prevention planning also includes expenses for security and data security. In all of these cases, you’re not planning for the disaster. You’re investing in protective solutions that come into play if a disaster happens.
If it’s good for you as the business owner, why wouldn’t the concept of succession training also be good for other leadership positions within your company? A written succession program identifies employees who are interested in and capable of moving into senior positions. It helps you uncover competency gaps so you can efficiently train employees for growth.
The optimal employee is keenly interested in continuing professional development, and it’s a valuable return on investment when you help them with the process. Early identification of potential successors is a way to future-proof your company. It’s also cost-efficient, with current estimates coming in at more than $4,100 to hire a new employee. Meanwhile, an average company can lose up to 2.5% of total revenue during the time it takes to bring a new hire up to speed.
Get an outside opinion
The concept of training can mean many things. When it comes to basic operational procedures, even your successor needs training. What’s more valuable — and where you will see the return on investment — is the attention you personally give in sharing your perspective and experience. It’s a form of training.
If you’re a business owner, you’re busy, and you keep your focus on the present with an eye on the near future. The concept of finding, training, and even selling the idea to your successor may not fall into that footprint. That’s why experts advise seeking outside advice when it’s time to pass the business on to the next generation of leadership, especially if it’s a family-owned business.