Family Business Succession Planning Strategies

What used to be a rigid, confidential process of hand-picking executives to be company successors is now becoming a more fluid, transparent practice that identifies high-potential leaders and incorporates development programs preparing them for top positions.

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The CIBC estimated that by 2010, $1.2 trillion in business assets would be poised to change hands.

"Bench strength", as it is commonly called, remains a stubborn problem in many if not most companies.

Professionals in the field, including academics, consultants and corporate practitioners, have many strongly-held views on the topic. There are many thought-pieces on the subject that readers may find valuable, such as "Debunking 10 Top Talent Management Myths", Talent Management Magazine, Doris Sims, December 2009. The Corporate Leadership Council, The Best Practice Institute (BPI) and the Center for Creative Leadership, as well as the Human Resources Planning Society, are sources of some effective research-based materials.

Over the years, organizations have changed their approach to succession planning.

It is clear that leaders who rely on instinct and gut to make promotion decisions are often not effective.

In a future that is increasingly hard to predict leaders will need to see opportunity in volatility, spot patterns in complexity, find creative solutions to problems, keep in mind long-term strategic goals for the organisation and wider society, and hold onto uncertainty until the optimum time to make a decision.Thought should be given to the retention of key employees, and the consequences that the departure of key employees may have on the business.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.Through one's succession-planning process, one recruits superior employees, develops their knowledge, skills, and abilities, and prepares 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.Succession planning is a process for identifying and developing new leaders who can replace old leaders when they leave, retire or die.Succession planning increases the availability of experienced and capable employees that are prepared to assume these roles as they become available.Studies indicate that companies that report the greatest gains from succession planning feature high ownership by the CEO and high degrees of engagement among the larger leadership team.Companies well known for their succession planning and executive-talent development practices include: General Electric, Honeywell, IBM, Marriott, Microsoft, Pepsi and Procter & Gamble.Taken narrowly, "replacement planning" for key roles is the heart of succession planning.In contrast, replacement planning is focused narrowly on identifying specific back-up candidates for given senior management positions.

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