Four Phases of Effective Succession Planning, by CEL & Associates Inc.
“Real estate firms without a formal succession plan for each mission-critical position can be at financial risk,” reports CEL & Associates Inc. President and CEO Christopher Lee in the April edition of the firm’s Strategic Advantage newsletter. Yet, while 82 percent of large real estate firms (those with more than 1,000 employees) have a formal succession plan, only 15 percent of firms with less than 1,000 employees have one. Even more surprisingly, 85 percent of firms with a formal succession plan have one only for the CEO.
As 50 to 65 percent of baby boomers expect to retire or substantially reduce their workloads within the next decade, “we are entering a period (2014-2020) of incredible leadership transition with very few firms ready for that eventuality,” the newsletter warns.
Lee presents four phases of effective succession planning:
- The “Decision & Profiling Phase,” in which an organization identifies and ranks all mission-critical positions requiring a potential successor and a process to identify/develop potential successors.
- The “Diagnostic & Identification Phase,” in which potential successors are identified and initially evaluated.
- The “Development & Mentorship Phase” — perhaps the most critical — in which “testing, training and mentorship” occur.
- The “Designation & Transition Phase,” or “decision time,” in which a selection committee is designated; all information, feedback and evaluative criteria are reviewed; selection decisions are made; and transition plans are put into place.
“Succession planning is not an option, it is a requirement,” Lee concludes. Although it is “often full of surprises, challenges and disappointments,” he adds, it is “the primary tool to ensure long-term continuity, business continuation, sustained performance and the ongoing well-being of an organization.”
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