A company’s leadership defines the vision, growth, and trajectory of a business. Your leadership team sets the tone for culture, ways of working, and so much more. Plus, the people on your leadership team are critical to your succession plan.
Succession planning is the process of identifying high-potential employees and taking the necessary steps to prepare them for future leadership positions and other key roles in your organization. This process is an important part of family business planning.
It helps your business to continually develop, grow, and retain talent so you can fill roles quickly and with people you trust. Succession plans can be put in place anywhere from 12 months to several years ahead of time, depending on the position you’re looking to fill.
Succession planning is vital for the success of your organization, and the leadership team you build today can have monumental effects on the future of your business. Here’s why leadership matters so much and why it’s worth investing in the right people.
Effective Leadership Helps The Company Grow
An organization is indeed only as successful as its leaders. You should stack your leadership team with passionate, talented, hard workers who think outside the box. Each person should be armed with great ideas and innovative strategies to take the business to the next level.
You want the company to grow and live on once you assume a new role, and a leadership team is an excellent place to start.
To put together a strong and effective team, you will need to define:
The team’s responsibilities and goals. Knowing both will define who you want to hire and what skills they need to succeed.
Team composition and skillset: An effective leadership team comprises people who have complementary skills, goals, and values. The keyword here is complementary, not identical.
When it comes to the ideal size of a team, it varies depending on the organization. You want enough people to spark meaningful conversations, but not too many so that it stalls progress.
When you have strong leaders that are decisive, humble, team players, you’ll foster an environment of innovation, creativity, and growth.
Good Leaders Inspire People and Help Them Succeed
More and more, people are looking for their work to be a place of growth and value outside of just a paycheck. Your leadership team can help inspire that sentiment.
An established author and inspirational speaker, Simon Sinek, defined how great leaders can inspire action with the “golden circle.” This means that each person on your leadership team should know three things:
What: Understand what the company does.
How: Know how the company does it and its value proposition.
Why: Recognize and understand the company’s purpose and why it exists.
People don’t buy what you do; they buy why you do it, so if the leaders in your organization fully understand your company’s purpose, your employees will, also. Your leadership team needs to live out those three elements every day to inspire employees and maintain passionate ones.
They can do that in their daily communications, presentations, ideas, direction, and more.
Good leaders don’t just care about the company but the people within. They focus on career progression to not lose talented people. They understand that success at the individual level is equally crucial as at the company level.
Take The Time To Groom Your New Leaders
Like most things in business, leadership doesn’t happen overnight.
Yes, some people may be born leaders, but it’s critical to take the time to train and mold them to take over their new roles and responsibilities seamlessly.
Always look for ways to provide opportunities for leadership development. Put high-performing employees on a “path” to leadership, like a senior-level employee or partner, and invest in them.
What does it mean to “invest” in your employees?
It’s about dedicating time and money to shape and develop them. Provide training, challenging tasks, coaching, and mentorship to give employees the support and skills to improve.
One of the most important things to remember is to reward your high-performing employees. Being accountable for their performance also means that you should reward them for it. While employees with leadership potential are willing to work above and beyond, that doesn’t mean they shouldn’t be valued and incentivized to do so.
Don’t Be Afraid to Look External.
While it may be tempting to keep all of your leadership “in the family,” you may find some knowledge gaps in the organization that would benefit from a strategic outside hire, and that’s okay!
Often, leaders and business owners are hesitant to hire outside the organization for upper-level roles because it’s expensive.
It takes a significant amount of time and money to bring on and train a new employee, but remember, good leaders understand the what, how, and why of your business. That doesn’t mean that an external hire can’t fulfill those requirements.
Make a Plan, Set a Goal, and Work Toward It.
In the words of Steve Jobs, it doesn’t make sense to hire smart people and tell them what to do; you should hire smart people so they can tell you what to do.
That’s where we come in to help as your family’s investment advisor.
At Toberman Wealth, we focus on helping businesses grow and succeed. If you have questions about creating a succession plan with inspiring leaders, give our team a call.
Craig Toberman is the Founder of Toberman Wealth – a fee-only, fiduciary financial advisor based in St. Louis. He assists families and businesses with strategic financial planning and long-term wealth management. He has over a decade of experience in financial services and has crafted custom financial plans for hundreds of families and businesses.
Craig received a Bachelor of Science (B.S.) degree in Agricultural and Consumer Economics from the University of Illinois and a Master of Business Administration (M.B.A.) degree in Finance from Saint Louis University. He is a Certified Financial Planner (CFP), Chartered Financial Analyst (CFA) charterholder, and Certified Public Accountant (CPA).
Craig is a member of the National Association of Personal Financial Advisors (NAPFA), Fee-Only Network, and XY Planning Network.
Craig lives in the greater St. Louis area with his wife, Ally and son, Hank.