Succession - An independent trustee view

Not just a tv series, or limited to leaders, succession should be seen throughout an organisation

Good succession planning is a key business differentiator, helping organisations mitigate the risk of disruption when key individuals inevitably move on.

While the sale to an employee ownership trust and a founder's exit are often called succession, they are only part of the picture and relatively near-term.

Trustees, who have a responsibility to protect the interests of both current and future beneficiaries, seek more—ensuring the company is not just managing the transition from owner-led to manager-led, but is also effectively overseeing a broader, strategic approach to succession.

Owner-led to Manager-led:

The process of founder succession is the opportunity to replace reliance on one leader with a broader leadership team, institutionalising diversity of thought and resilience.

It is a shift that can commence long before transition day, whether as natural growth and evolution, or in direct preparation for a founder’s exit.

Conversely, focusing on identifying one individual to take over when the founder steps back may simply transfer dependency from one person to another, and introduces a whole set of new challenges around personal incentives, permanence, connection and delivery for that and each subsequent appointment.

Strategic succession planning:

Hence strategic succession planning should be a continuous, rather than a reactive, process:

• it identifies the competences required in key positions and spots early talent that can be developed and nurtured to create a pipeline of ready internal candidates well in advance of vacancies appearing, whilst also highlighting those likely to adapt quickly if new requirements emerge;
• it requires team leaders and managers at all levels to recognise potential, supported by a culture that readily devotes time and effort into developing people as a matter of strategic investment;
• it depends on a clear understanding of both the competencies and personal attributes needed in key roles, including technical or specialist positions, and how they are evidenced;

and, crucially, it creates choice when positions need to be filled – succession planning without choice is merely contingency planning.

From a trustee perspective, employee-ownership comes with an expectation of effective succession planning that, if not already embedded, is championed early as integral to the long-term stability, adaptability and prosperity of the business, and to its credibility as an employer where aspiration is actively encouraged and enabled to flourish.

When in place, good succession planning represents a significant and reassuring step forwards on the journey from owner to manager-led. It invokes confidence that the company is really looking to its future through a people strategy that demonstrates clear career pathways and a systematic approach to developing successors as a priority rather than discretionary or reactive activity. 

This article was written by Simon Carter an experienced IDT independent trustee with content crafted from his own experiences within and outside Employee Owned companies.