SME succession planning is beyond “conferring them on younger strengths, while we undburthen’d crawl toward death.”
The story of succession planning as played out in King Lear in Year 1606 which is more than 400 centuries ago is as relevant as any modern management theory. The succession of the kingdom of King Lear onto his 2 daughters and dukes based on “love you more then words can wield the matter” on flattery and not on merit or leadership.
So what can we learn for this and avoids the pitfalls of succession planning ?
SME plays a significant role in the Singapore’s economy. Out of 490,911 live entities in Singapore (figures as at 31 March 2019 per ACRA annual report FY2017/2018, 65.3% are companies, 31.2% sole proprietorship/partnership and 3.5% LLP/LP), SME constitutes more than 99% of the total entities and employs more than 70% of the Singapore labour workforce with an average of 9 employees per SME. Therefore, if you as a SME owner do not realise the significant impact that your business has on the Singapore economy, the number of talents that your business is working with, it is about time that you start to give serious thought on building that business of yours to survive and be sustainable beyond a single person (you !).
For a SME, being able to be sustainable is a constant challenge, given the competitive nature of the Singapore market, the limited talent pool and the current emerging disruptive landscape. It is therefore, even more pertinent that as an leader in your business, you should endeavour to mitigate any disruption, uncertainty, conflict or competitiveness that could arise if you were no longer there with your business – What happens if your business does not have a succession plan ? Will the business flourishes, retain its competitiveness, languishes or disappears after you ?
It is never an easy task. Stating the intention is much easier when“we shall express our darker purpose… ’tis our fast intent to shake all cares and business from our age” but the execution is what most would consider it to be a herculean task. Succession planning is a deeply emotional and personal task which deals with human.
Many privately held or family owned SME display great professionalism, fantastic financials and sustainable business models now but do not have any proper succession plans in place or have started any transition to the next generation of leaders.
It is still not too late to start thinking of what to consider in your succession plan. Some of the factors to consider to set the right tone for your “darker purpose”:
- Get the right fit !
You can never fit a square peg into a round hole. The right fit is not just a fit on the right talent with the right experience, qualification, business acumen and leadership. It extends beyond the technical, IQ and EQ. There must be an alignment of that next leader (or team) to the SME mission and values. The person must live and breathe with your business values, it has to be emotive and personal to him/her to lead and drive the business. That brings us to the next point.
- “Money buys lands, and wives are sold by fate.”
It is never about just money. There is a limit to how much you can continue to match the market pay, given more so for most SME, it is always a scarce resource.
The millennials are no longer working just for money, power and prestige. They want to have a meaningful working relationship, a working life that is an extension of their social and personal lives, aligning with their values, culture and community.
It is not to say that money is not important and you can underpay your next leader but more importantly, the question that you should ask yourself is, if you need to use money to constantly sustain the motivation of an individual, this may not be the best fit. People leave. People die. People forget. Only values endure the test of time.
3. Do NOT leave it to fate
Do not leave your search for your next leader to fate or emotions. As it is inherent in all succession planning it is already a process susceptible to substantial personal emotions, biases, perceptions etc which one may not be able to consciously control. Therefore, it is wise to not relegate this to a game of chance.
Having a systematic, consistent and verifiable KPIs on what constitutes your right fit helps to focus the selection on concrete merit and leadership and keep the devils of emotions at bay. The leaders should be selected on KPIs not because that person is part of the family or like what King Lear has erred, by “all manner of so much I love you”.
4. Greatness is beyond a single man
In this fast moving, instantaneous, multi-connected and disruptive world, one has to acknowledge that continuity or status quo is never a given, even if one were to dedicate all his life or resources to try to preserve it. It is working with fluidity, change, constant innovation and adaptability that will give your business a better chance to be around for the long-term. As much as you want a disruptive leader to provide a new perspective to take your business to leapfrog over your current performance, you should consider the internal talent and assess the possibility of grooming them to the next level. The value of relationship and loyalty is priceless and that journey that your existing talents have stayed true to your business values is not to be overlooked.
Successful succession planning is never about getting that one leader, it is also about getting the right people for the team. An average management team that moves as one beats a great leader with a lousy team hands-down. Getting that team also helps to start that next stage of succession planning, the subsequent succession. Succession planning is not a task, it is a continuous process. It does not end with a new leader successful in place, it goes on and on, continuing as long as the business is around.
According to the Global Family Business Survey 2018 released on 14/11/2018 by PwC, only 8% of family businesses in Singapore has a robust, formalised and communicated succession plan in place compared with 12% in the Asia-Pacific region and 15% globally. Are you one of the SME owner that forms part of the 8% ? If you are not, it is never too late to start thinking of taking the early first step for succession planning before your competitor does. It is not with certainty that without a succession planning, all 92% of family businesses will not survive. But surely, those without a succession planning is more likely not to be around for long-term compared to those with a succession planning in place. That market opportunity for those who could not make it, is just there for you to grab provided you are around.
So will you be around for that ?