Businesses Need a Broad Succession Strategy

The normal understanding of succession is basically what would happen within the business if something happened to the owner or CEO.

I believe that a “succession strategy” requires a far broader review of what’s happening within a business relative to succession because there should be a succession plan for virtually every position within a business. The concept of a “succession strategy” will become far more important in the near future with the introduction of Early Stage Innovation Companies (ESIC) from 1^st July 2016.

As experienced business people commence evaluating proposals for investment in ESIC, as part of their due diligence process, they will be very keen to look at:

• The management team.
• The ownership of the Intellectual Property (IP).
• Is the IP properly registered?
• Has the IP been properly documented?
• Have assignment of IP agreements been prepared?
• What is the “succession strategy”?

Is everything “locked up” in the CEO’s head or do a number of key management personnel have direct day-to-day involvement in the real management of the business? This becomes very important when investors are investing their hard-earned money into new emerging companies.

The development of a “succession strategy” is a task that accountants, who are committed to offering business advisory services, can supply to their clients. In this review I believe they would start in conducting a “succession strategy”, which would involve a review of the corporate management chart for the organisation, who does what and are there any obvious holes.

The next step would be to review the job descriptions for each of the management team members and then a discussion with them to determine what they actually do. Are they performing in accordance with the job descriptions or has the job description been varied?

The next task would be to review the job description of the CEO, then have a discussion with the CEO to ascertain what exactly the CEO does day by day.

The next phase is to conduct a Corporate Governance “Think Tank Meeting” with the management team members, including the CEO, for a full review of all aspects of the organisation and how it all relates back to the company’s Board of Directors and Board of Advice if the company has one (Management Team Meeting if there’s no Board of Advice).