Case Study

Plan Now, Be Prepared Later

Early succession planning is an integral part of the business advisory process, and essential to the future success of an organization. The following case study shows how a consulting firm with 100 employees used a succession planning model to proactively plan for a founder’s retirement.

Background

At the time of transition the three founders of the company were the CEO, Director of Consulting, and Director of Sales and Marketing. Once a three-person organization, the company today has 15 employees in sales and marketing, 70 consultants, and approximately 15 employees in accounting, IT and sales support.

Sally is Director of Sales and Marketing. With 14 direct reports and 20 years of experience in this role, her knowledge of the consulting business and gift for developing and executing solid marketing plans are her strengths. Sally, gregarious and possessing top-notch interpersonal skills, expertly communicates the value of her firm’s services to clients and skillfully manages her team.

Ongoing Employee Development

Leadership transition can be planned or abruptly forced upon a company. Sally and her partners have deliberately groomed, mentored and developed potential successors in the event of a leadership or management transition. This is an ongoing effort. So, when Sally announces her retirement, it is not a difficult conversation: they already have a succession plan in place. The executives have witnessed succession planning gone wrong in larger corporations, and they know it is critical to get it right.

Groom for Growth

Thinking about who could take her place after retirement, Sally notices that one candidate stands out. John, a Regional Sales Manager and long-term employee, has leadership experience and a certain finesse.

Sally begins to include John in meetings with other top executives; this allows them to assess his interpersonal skills along with his leadership and management abilities. Sally takes the time to groom her successor and have candid conversations with him about her expectations for his professional growth.

Successful Succession

Preparation through ongoing financial planning was reflected in the budget, and when the time came for Sally’s retirement, the founders were able to buy her out. In the same way, a compensation plan had been designed for the new Director of Sales and Marketing, complete with incentive bonuses tied to company objectives.

Sally knew she had chosen the right successor because employees viewed him as a leader even before she officially departed. When she retired, the firm and John were prepared. John accepted the salary package and became the new Director of Sales and Marketing. This seamless transition was a result of active planning and ongoing development.

Contributors: Alan Arcadipane is a Business Analyst of the Business Advisory Group at Riverview Capital Advisers. Melysa Latham is a member of the Business Advisory Group at Riverview Capital Advisers.