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The Hand-Off of Transition and Succession

SuccessionPlanningImageIn 1776, our founding fathers had the insight to establish our country with a second-in-command.  They developed an executive branch of government which would provide a backup for the president in case he could not perform his duties.

Business has to think strategically in the same manner. Some companies, however, sit in denial of potential tragedy. Some leaders plan for neither retirement nor catastrophe. How will your organization respond if a catastrophic event takes place?  Are you prepared?  If not, what can and should you be doing?

Dayton Hudson Corporation structured an incentive program whereby 25% of the CEO’s bonus was based on the quality and readiness of a designated individual to take over the position of CEO. They were prepared for the worst.

My Father died at a very early age of 54. Dolgin’s was right in the middle of a major expansion in the Kansas City market. After spending time with my Mother and me, working on the design of the new store, Dad had a heart attack and did not wake up.  We were not prepared.  We had never seen all the financials of the Company.  We had never been introduced to the bankers.  Once we got over the initial shock of Dad’s passing, we faced a huge challenge with the banks and vendors.

Don’t delay those critical steps toward establishing a strategic initiative, developing first a plan for transition.  The CEO/owner, with the respective board of advisors, should discuss the potential threats. What if a health issue arises? What if the CEO decides to leave the company? What if the CEO decides to take it easy and go into retirement mode?

Include a short term and a long term strategy in your plan, with action steps for complete execution of the plan.  For example, let’s say that a company has a major line of credit.  The second-in-command should be introduced to the banker, and should be involved in making presentations to the bank.  In this manner, if the CEO/owner were to have a health issue, retire, or leave the company, the bank would know the Company is in a “rock solid” position and the management of the Company could continue to run efficiently.

No such transition plan was in place when I was brought on at Modern Merchandise-LaBelle’s. The CEO-Owner decided on the spur of the moment that he was going to get married and move to Palm Desert.  The Board of Directors told him he could not proceed with these plans until he found a successor.  As a result, they hurriedly purchased Dolgin’s and brought me to Minnesota to run the company. It’s a good thing I love a challenge!

The right process is to develop a transition plan over time so that a successor can be thoroughly trained and prepared to ultimately move into that key position with complete knowledge and understanding of the company and all of its operating parts.

The Twins and Vikings go through an extensive planning process every year, making sure they have appropriate back-up for almost all positions.  If the quarterback gets hurt, they do not stop the game and go out and recruit a new quarterback. No, they call their designated number two and put him in the game.

You need to have this discussion, whether it is with yourself, your board, and/or your consultant.  Though long and laborious, the transition process is important, as it can lead to your succession.  This all revolves around planning; transition/succession is key to a well-rounded strategic plan.  Élanstrategic can help you with this important process.  Contact us today at or 952-960-6688.