Succession and Continuity Planning for your Business
Today is the first day of fall, and the changing seasons often bring a reminder that planning for the future is something we often neglect until it becomes absolutely essential.
There is a season for everything, and your business is no exception to the rule. At some point, current leaders will give way to new leaders, and whether you’re trying to keep a family business in the family or putting together a buy-sell strategy, you’ll need to consider preservation, valuation, and a model for the future. of your business.
The importance of a plan
If you don’t already have a business continuity plan, you should write one. This plan will not only benefit the next generation of leaders, but it will also provide a clearer picture of how your business is doing now and how ready you are for growth and change.
When new presidential candidates are about to be elected, many voters fear that the current incumbent will leave a mess for the next incumbent. The same thing can happen when companies change hands.
You don’t want to leave your company in its current state for someone else to inherit or incorporate. They may not be used to letting go of the things they have learned to ignore or fix, and any time someone is adjusting to a new environment, system, and set of responsibilities, the margin for error and the likelihood of mismanagement increases greatly. .
Andrew J. Sherman writes that only 35 percent of family businesses survive past the first generation of ownership, followed by only 20 percent reaching the third generation. Source: Entrepreneurship.org “Understanding the Fundamentals of Succession and Transition Planning.” Preparation can increase your chances of a near-seamless transition, so your plans should be well-structured, well-documented, and reviewed by all key team members.
The succession planning process
To prepare, you’ll need to plan each step of the process and join the people you’ve identified as the next generation of leadership. The following steps will provide the framework for the succession planning process:
- Identify key leaders who will be replaced by new leaders
- Determine the job functions and skills of current leaders.
- Select the most appropriate team members to participate in succession planning
- Discuss the differences between their current roles and likely leadership roles
- Develop plans for their next wave of leadership and help them carry out preparatory activities
- Interview and select your new leadership team and establish an orientation schedule
Putting your ducks in a row: how succession planning relates to your important paperwork
There are many important facets to making sure business essentials are in place so successors aren’t rushing to set parameters and processes around your company’s vital documentation. The following business-critical steps must be addressed now, whether the transition is imminent or a distant possibility:
1) Review important documents and records. A legal audit of your business documentation is a good way to go. The following documentation must be subject to review:
has. Administrative documents: project plans, management reports, RFP, SLA, supplier and maintenance contracts, emails, etc.
b. Plan documents: planning documents for business continuity, disaster recovery, emergency management, incident response, contingency, etc.
against Business continuity reports: business impact analysis reports, risk assessment documents, internal and external audit reports, supply chain reports, etc.
d. Team documents: emergency response team rosters, list of personnel with authorized access to certain sites or systems, and other team assignment and management documents
me. Specialized documents: awareness materials, training program materials, network and data center diagrams, alternate office location details, work area recovery site details, etc. Depending on your industry, specialized documentation may include materials that are subject to custody and retention requirements, especially in regulated industries such as healthcare, pharmaceutical, financial, legal, and educational.
F. Human Resources Documents: Personnel files (active and inactive employee files), applicant documentation, benefits and payroll information, grievance and action records, etc.
gram. AR/AP documents: invoices, purchase orders, balance sheets, cash flow analysis, loan and credit documents, financial information, expenses, accounts payable and accounts receivable, transaction records, utility bills, etc.
H. Historical documents: company formation files, articles of incorporation, control documents, reorganization and restructuring information, blueprints and other early stage planning documents, etc.
2) Make sure you have secure, redundant storage and easy recovery:
has. primary storage
b. backup storage
against desktop systems
d. Laptops and mobile devices
me. Collaboration systems, such as SharePoint
F. cloud storage
gram. remote data centers
3) Access and control of records management systems should be based on permissions for authorized users. You don’t want any files to get damaged or lost.
4) Scan important paper documents such as system contracts, SLAs, warranties and maintenance agreements in PDF format. Make sure originals are stored in secure, environmentally safe, and fire-resistant locations. Notify new leadership of this information and store master copies on-site for easy access (after ensuring they have been backed up in a secure off-site location).
5) Review or create a records management policy, which should specify which files and documents should be stored, how and where they should be stored, how and when they are updated, and when they should be backed up and when they can be backed up. delete (if ever). The policy should also identify rules for document retrieval, version control rules, document approvals, document distribution, archiving deadlines, and secure destruction rules.
6) Document management controls must be part of the audit activities of the BCMS (business control management system), at least once a year, and must be updated regularly.
7) Disaster recovery procedures, simulated scenarios, and team document recovery exercises should be a part of making sure your systems are watertight for the next generation.
8) Make a prioritized list of critical documents (enlist the help of several department heads), emergency contact lists, and other information that may need to be quickly accessed in a crisis situation. Knowing that you can effectively manage response and recovery efforts will go a long way in making sure your business is ready to change hands.
9) Have an emergency toolkit that contains hard copies of relevant documents, as well as digital versions on USB sticks or other convenient external storage devices.
10) Record and date your efforts and the results of your simulated exercises, adapting plans if weak areas are identified. This information will be critical to the next generation of leaders and will help them plan for the seamless continuity of what they have started, ensuring that their security efforts do not go to waste.
*Source: Paul Kirvan, Secretary of the US Chapter of the Institute of Business Continuity. TechTarget search disaster recovery article, Optimization of document management systems for business continuity.
Also be sure to take a look at ARMA’s Generally Accepted Record-Keeping Principles and find a trusted records management partner if you don’t already have one. His experience will span multiple industries and provide invaluable advice to inform you if your business is ready for a transition of ownership.