Mark Schwei’s three-part succession planning series will examine why a succession plan is important, questions business owners must ask themselves before planning, and elements of a succession plan.
For as much discussion taking place on issues facing each generation in our current workplace – Baby Boomers, Gen Xers, Millennials and now Gen Z Post-Millennials – rarely does the topic of succession planning receive much attention beyond Baby Boomers. At least, so we thought.
A June, 2016 online Harris Poll survey among 502 U.S. business owners with fewer than 300 employees revealed that young business owners actually have a better grasp on the importance of succession planning than their elder counterparts. According to the survey, Millennial business owners are more likely to have a business succession plan in place (61 percent) in comparison with Baby Boomer (32 percent) and GenX (32 percent) leaders. Analysts theorize that the discrepancy is philosophical: Baby Boomers believing they’ll work in their current position until retirement, then hand the company over to a deserving family member or subordinate; Millennials hoping to run multiple companies and gauging success by how each is positioned before they leave.
Millennials get it. We may not all be on a straight line to retirement, and life happens unexpectedly. Succession planning ensures a healthy transfer of the business under a variety of circumstances and makes financial security a priority. Succession planning also:
- Aligns the leader’s personal financial and retirement expectations with the business enterprise.
- Unites and creates clarity for first- and second-tier leaders.
- Motivates employees. Within the succession plan, a performance-based profit sharing plan can attract and cultivate up and coming leaders.
- Elevates confidence in the company from its trusted business partners: bank, legal counsel, accounting firm. Including these partners in the process from the start only improves that confidence further.
- Provides a course of action for successors in the event of a leader’s untimely disability or death.
- Preserves a family legacy through careful planning and design.
Like your financial planner says about retirement savings, “Start early.” Millennials who have already started succession planning in the prime of their careers reap benefits that compound over time: more clarity, more motivated staff, higher confidence from trade partners. Although it’s never too late to start, those who start early have the most leverage and long-term security.
 The Small Business Owner Study was conducted online by Harris Poll on behalf of Nationwide from June 10-23, 2016. Respondents comprised 502 U.S. small-business owners of companies with less than 300 employees, and included 190 Millennials (ages 18-35), 152 Gen Xers (ages 36-50) and 106 Baby Boomers (ages 51-65). Results are weighted to be representative of small-business owners in the U.S. Research participants were drawn from the Harris Poll Online (HPOL) research panel and partner sample.
Mark Schwei is an equity partner and member of Consolidated Construction’s executive team, which designed and implemented its own succession plan strategy. He is an engineering graduate of Marquette University and imparts his love of details, practicality and ingenuity on matters related to company leadership. Mark continued his executive education through the University of Wisconsin on the subjects of business planning, mergers and acquisitions, and sales and marketing management, and received specific training in the area of succession planning from national experts. Mark is a leadership mentor and business coach to fifteen chief executives as current Chairperson at The Executive Connection (TEC).