The death of iconic Apple CEO Steve Jobs highlights the benefits of establishing a proactive–not reactive–approach to succession planning.
As his pancreatic cancer progressed, Jobs knew that his time as leader of the dynamic and innovative company would be ending. He wrote this in a resignation letter presented August 24:
“As far as my successor goes, I strongly recommend that we execute our succession plan and name Tim Cook as CEO of Apple.”
By naming his successor, Jobs not only decreased the likelihood of a power struggle, but also publicly selected and expressed confidence in a new leader. Had a successor not been waiting in the wings, it is likely that Apple stock prices would have dipped as news of Jobs’ death spread.
Life is unpredictable, and even young business leaders in perfect health need to plan for unforeseen events.
“Large, publicly-traded companies are typically required by the board to conduct succession planning. It’s more challenging for small to medium-sized businesses,” said Bob Reticker, Director of Performance Improvement at Insperity™.
Many business owners avoid succession planning because it can serve as a vivid reminder of their own mortality, he added. But taking time to establish a succession plan can ensure that a business remains unharmed by either the anticipated or unexpected loss or retirement of a key leader.
“If you want to leave behind a viable business that literally and figuratively outlives you then it’s important to plan,” said Reticker.
Planning provides business owners the “luxury of being systematic” when charting the course for the future so that the best future leader can be identified and prepared to lead the enterprise to the next level, he added.
A formal succession plan also provides a framework that allows companies to institute mentorship and training programs. Such programs offer upcoming business leaders the opportunity to learn about and ideally emulate the traits and habits that have led to their business’ success.
Future leaders will gain far more from on-the-job training than formal, seminar-style experiences. Instead of viewing such acts as “training your replacement”, business owners should consider grooming the emerging leader as the ultimate goal and desired result of successful succession planning.
Though Jobs’ death may highlight the effectiveness of a comprehensive succession plan, Reticker noted that many small- to medium-sized business owners respond well to the concept but don’t actually follow through with the planning process.
“There is a high level of denial. It’s kind of like facing your own death and many people want to avoid it as long as possible,” said Reticker.