Small business plans fail for a number of reasons. Chief among them is the failure to plan for succession at the top and throughout key performance areas. Absent a plan at the smallest business, family takes over, an often fatal business mistake. Absent a plan in the larger organization, politics and self-interest rule. None of this is healthy for the business or for all those who depend on its performance.
Any good business lawyer can prepare a legal transition, but small business owners should plan on issues of talent development, talent management, and cultural implications as well. Once a start-up has reached a stage where business continuity is its mission (not an easy number or dollar figure to fix), it is time to ask some key questions about succession.
1. What is a critical business position?
A critical position is a function of how difficult it would be for the business to survive. It reflects how the position affects the bottom-line, how it contributes to strategy, growth, and innovation. Critical business positions interface with customers and stakeholders, and they manage other key positions. All critical positions have a supply/demand market value for which other companies compete, and price attaches to knowledge, skills, and abilities at a rarefied level. The current market value of a position is a sign of its critical role.
2. What defines a high-potential employee or HiPo?
Employees who demonstrate “the potential, ability, and aspiration for succession leadership positions” are considered high-potential or HiPo in management lingo. Too many businesses confuse potential with performance, rewarding performance with promotion without preparation. High-potential employees may or may not be top performers, but they will share certain strengths:
- These people know the business well because they continue to learn more about their immediate business and how it relates to overall business goals.
- Driven and ambitious, they take ownership of their own futures. They think and aim high, pursuing a strong work ethic, working with little direction, and behaving like owners.
- They like people, and people like them. They move beyond their performance skills to value relationships with those whom they view as collaborators. They network and nurture, provide feedback and appreciate feedback in return. They choose and cultivate relationships that raise their potential.
- HiPos show proactive interest in how the company is doing and know what they contribute to make it happen. Their cockiness proves them to be capable, confident, and decisive about things that matter.
3. How does a business prepare the high-potential for succession?
- Clearly identified HiPos probably fall into talent succession pools. Such succession pools may be generic or specific to position titles.
- Each talent pool has swimming instructions, key qualifications to enter the water. Once identified, candidates can be identified and prepared in specific ways.
- Preparation must include all parties. Managers of the high-potential players have a need, right, and role to play in their development and assignment.
- Any evaluation process must be as objective as possible, using tables and charts to align skills, needs, and potential.
4. What’s the process for developing high-potential employees for leadership?
HiPos seek and treasure accountability. They want to handle big traffic and important tasks. Giving them responsibility makes them feel valued. There will be mistakes and failures, but they need the space and opportunity to run with processes and outcomes.
HiPos want accountability; however they need to understand it broadly and deeply. Assigning mentors will reduce risks, and challenging their mentors with mutual outcomes forges collaboration and success. It also requires structured growth paths and metrics that layout continuous self-development.
Small businesses must age and grow enough for hierarchy and accountability to become established, then the small business must work to implement succession processes that will ensure organizational success.