According to Gartner’s 2023 Board of Directors Talent Survey, 79% of board members rank executive succession as a top priority. Deloitte reports that 86% of leaders say succession planning is an urgent priority.
Yet the reality is that most business leaders fail to put structured plans in place or invest in their potential successors and future business leaders.
From my discussions with many SME business leaders, most lack clear frameworks for succession planning. Many are self-starters who vastly underestimate how much the business relies on them and are just ‘hoping’ their teams learn on the job like they did. However, the gap between their hard-learned experience and that of their team is often vast and will be costly if it is not bridged effectively.
The high cost of poor succession planning
It is all to easy to fall into the trap of seeing succession as something for the future, but research shows that failing to invest now in the future leaders of a business creates significant risks even in the immediate horizon:
Loss of Critical Knowledge: Without structured succession, valuable expertise walks out the door with outgoing leaders.
Slower growth: A leadership capability and capacity gaps slow decision-making, mean there is little margin to expand and impact business growth.
Increased Financial Risk: Businesses without leadership continuity often struggle with investor confidence and lower business valuations.
Good intent is not enough
Unlike large corporations with formal talent pipelines, SMEs are often working with a smaller pool of people and struggle to find learning programmes that offer practical, real-world leadership development relevant to SME business.
I regularly ask SME business leaders the question “What are you doing to develop your successors?” It leads to a number of responses such as:
“I have no idea and am just too hand-to-mouth to think about the future!”
“I’m clear who the people are, but in reality I’m not doing much for them”
“I’ve sent them on some courses, but I don’t have a structured plan”
Very occasionally I meet someone who has a pretty comprehensive plan and is executing on it, but it is rare.
Succession planning can feel difficult
Succession planning doesn’t have to be complex or resource-heavy. But it can be a headache! Gartner’s research suggests four key success factors for effective leadership transitions:
Assess the readiness of internal talent.
Use mentorships, cross-functional roles, and interim leadership assignments.
Identify capability gaps and create risk mitigation plans.
Regularly track progress using leadership assessments and reporting.
Some of these things are straight forward, but without a corporate infrastructure to back you up, the reality for many SME organisations is that these things will be done ad-hoc at best.
Build Stronger Leadership Pipelines for SME business
In the SME world, pragmatism is vital. In my view, beginning early is key. Business leaders often forget how many years it took them to develop the rounded set of experience or to build the confidence they have today. Succession planning is not a quick fix, short journey.
Most SME business leaders I have spoken to have a reasonably clear view on who might be their successor(s) and who in their team might step into a wider business leadership roles on the board. I’m not saying we shouldn’t use assessment tools and try to be data driven, but start somewhere, with the lowest hanging fruit, the most obvious candidates.
But don’t put your eggs in one basket. Invest in several people.
Clearly, as time allows, do make sure you are not missing hidden talent, ensure you are casting the net widely and in particular, considering diversity in the team you are developing. In many ways you have nothing to lose from involving a wider team which gives you opportunity to see who emerges as leaders over the coming months and years.
Throughout the process It is important not to over promise, but at the same time, showing some aspiration for people in the team can often lead to people stepping up more than you could imagine.
Get on with it. Identify your people and start investing in them.
Structured and workplace development
Work with each person and make an assessment of them. Is it skills they need, wider experience, or just a confidence boost to step up?
Within the workplace it should not be difficult to give people exposure to areas in which they lack experience. Through cross-company projects, client work, or simply inviting them to attend meetings as observers – people can learn quickly.
Equally, setting up informal mentoring can provide a route to enable people to ask questions, and learn from those who are more experienced. It never fails to surprise me how generous people will be with their time to help more junior people.
From a structure learning perspective, you could consider an MBA programme, but most are hugely expensive and may lack relevance to the SME world. Unfortunately many leadership programmes focus on management skills, but don’t build the business skills needed to actually lead a business.
These are the main reasons we have launched mySMEleader
At mySMEleader we’ve utilised the MBA format which covers a broad range of business subjects over an extended period of time. But this programme is designed by SME leaders for future SME business leaders. And the workshop sessions are delivered exclusively by business leaders who have SME experience.
The 2 – 3 year programme is run with a cohort of other learners so that you get to learn from SME peers across a wide range of industry sectors. We’ve also taken into account just how busy SME leaders are and so the programme only requires 3-6 hours commitment each month. The learning is highly practical, with a huge focus on tangible workplace impact every month.
Our goal is to provide SME business leaders with a turnkey learning solution for learning investment in successors and future SME business leaders. And our monthly subscription model is designed to make this affordable and accessible for as many people as possible.
Written by
Ben Pike
