Business Succession Planning: The Challenges of Large and Small Enterprises

Small and large businesses each have unique challenges when it comes to business succession planning. Leaders at SMEs often think that large corporations have the advantage, because they have a bigger pool of talent to work with. While it is true that the availability of potential leaders is greater at large companies, it doesn’t always mean that the process of succession planning is easier. The environments are different, and there are challenges in organizations of all sizes.

Overcoming the Shallow Talent Pool in Small Enterprise

Just because an organization is small does not mean that the talent bench has to be weak. Through strategic hiring, leaders at small enterprises can help build a deep bench of strong talent that will help sustain the organization into the future.

As an executive coach, I work with leaders of small organizations quite often, and I’ve seen the good, the bad, and the ugly of succession planning at these companies. One of the most common organizational structures that I encounter involves a seasoned CEO who is gearing up to sell their company and retire. Over the years, those CEOs have made an effort to hire young talent, especially in companies with a technology focus. Younger employees are seen as innovators, and they often thrive in a small business environment where they can try new things and wear many hats.

While this age gap in management doesn't affect daily operations, when it comes time for the CEO to plan his or her exit, things can get a little tricky. Younger employees may do their jobs well, but they are rarely experienced enough to step into an executive position. This means that the CEO must look outside the group to find a suitable replacement.

In order to prevent this from happening, CEOs must think about the long-term sustainability of their organization when they are building their teams. As the business grows and the workforce expands, it will be important to bring in experienced managers who can be trained and groomed for executive positions. In order to ensure that sustainability, CEOs of small companies must remember that succession planning begins with the hiring process, not the retirement process.

The Challenges of Business Succession Planning in Large Organizations

Business succession planning at large companies comes with a bigger talent pool, but there are still challenges that can hinder the process. Some of those challenges include:

• Balancing the career goals of high-potential individuals with those of the organization. Do they even want to be considered for development?
• Should efforts be placed on key positions that can be difficult to fill, or on positions that deal with critical business functions, or both?
• How to balance the existing environment in the organization against future needs.
• How to align succession planning with the goals and mission of the organization.
• How far down the management ladder does succession planning need to go? Can you stop at middle management, or do you need to take it further?
• How do leaders ensure that development processes are fair and objective, and that they are perceived that way?
• Balancing the need to cultivate future leaders against the career development and training efforts of the broader workforce.
• Knowing when to inject new blood into the workforce.

Organizations of all sizes face obstacles when it comes to developing, executing, and evaluating business succession plans. Many use these obstacles as a reason to avoid the process until it's too late. With planning and foresight, and a commitment to the idea of succession planning, companies of all sizes can ensure that key positions will be filled even in the event of unforeseen changes.