No one ever wants to think about worst-case scenarios. Yet Benjamin Franklin had a valid point when he said, “By failing to plan, you are preparing to fail.” Years later, Winston Churchill agreed, saying, “He who fails to plan is planning to fail.” It’s hard to ignore the words of two sage men.
But when business is great, the economy’s chugging along, and your financial future looks bright, it’s far too easy to kick that strategic plan down the road. We don’t want to think about what might happen to our business if we suddenly weren’t there to run it. And yet, if the worst occurs without a succession plan, can your company survive? What about your family and loved ones? Your employees? Your customers or clients? You owe it to them and yourself to create a plan. We’ll show you why — and how.
Benefits of Succession Planning
Succession planning is a crucial process involving identifying and preparing individuals within an organization to step into leadership roles if a sudden change occurs. Be it an accident or severe illness, disaster or pandemic — or the retirement or resignation of employees in top leadership roles — an orderly plan for succession ensures a smooth transition of power and responsibilities.
Succession planning plays a vital role in your business’s long-term sustainability and success in several ways, ensuring:
- Continuity of leadership and elimination of a leadership vacuum. It identifies potential successors and prepares them to step into key roles, minimizing disruptions and maintaining business operations during transitions. This approach prevents the loss of institutional knowledge and helps reduce the impact of unexpected departures.
- Talent development by allowing you to identify and cultivate high-potential employees via targeted training, mentoring, and development opportunities. Grooming them for future leadership positions helps build a talent pipeline of skilled individuals ready to assume greater responsibilities.
Pinpointing skills and competencies required for future leadership roles also helps organizations create targeted leadership development programs and initiatives to equip successors with the right skills, knowledge, and experiences to drive the organization forward and execute its strategic plans effectively.
- Employee retention and motivation since employees are more likely to stay with an organization committed to investing in their growth and providing opportunities for career advancement and will also be more proactive, productive, and loyal.
- Strategic alignment by aligning an organization’s talent strategy with its long-term business objectives.
- Risk mitigation, especially those associated with unexpected or unplanned leadership vacancies. A pool of potential leaders allows you to fill critical positions quickly with people familiar with your company’s culture, goals, and operations — an approach to minimize disruption, reduce reliance on external hires, and save time and resources typically devoted to recruitment and onboarding.
- Preservation of organizational culture, values, and leadership philosophies. When you cultivate your leadership pool, you can ensure any new leaders align with your business’s core principles and maintain its unique identity. This strategy helps maintain consistency in decision-making, strategic direction, and employee engagement while fostering stability and trust organization-wide.
- Competitive advantage by proactively developing and retaining top talent able to pivot and respond quickly to market changes, innovate more effectively, and maintain a strong leadership bench driving continuous improvement and growth.
Where to start
Strategizing succession planning in the CRE industry requires a thoughtful, comprehensive approach. We recommend the following steps:
Establish a governance structure for the succession planning process.
Succession planning governance may involve creating a committee or task force comprised of senior leaders and HR professionals overseeing your program’s implementation. The committee should regularly review and update succession plans, track the progress of potential successors, and ensure alignment with organizational goals. They should also identify gaps in the talent pool and implement strategies to address them.
Communicate and involve stakeholders.
Succession planning requires transparent communication. Clearly communicate the importance and purpose of the succession planning program to employees at all levels. Involve stakeholders, including current leaders, potential successors, HR, and employees, in the process. Seek input, address concerns, and provide opportunities for feedback. This inclusive approach fosters engagement, buy-in, and a sense of ownership organization-wide.
Assess organizational needs and goals.
Evaluate your organization’s current and future needs. Consider strategic objectives, growth plans, and market dynamics. Identify key leadership positions critical for achieving those goals. This assessment will help you understand the skills, competencies, and qualities required for a smooth succession.
Identify potential successors.
Look internally to identify potential successors for key leadership roles. Consider employees who have demonstrated high performance, leadership potential, and a strong understanding of the industry. Look for individuals with the necessary technical expertise, business acumen, and interpersonal skills. Engage in talent assessment and utilize performance reviews, employee feedback, and skill assessments to identify top talent.
Create development plans.
Once you and your succession team (if you have one) identify potential successors, create individual development plans for each candidate outlining what they need to prepare for future leadership roles. Development plans may include mentorship programs, leadership training, stretch assignments, cross-functional projects, and educational opportunities such as industry certifications or executive education programs. Tailor plans to meet each candidate’s unique needs and aspirations.
Provide mentoring and coaching.
Pair potential successors with experienced mentors or coaches who can provide guidance, support, and industry insights while helping successors navigate challenges, expand their networks, and develop critical leadership skills. Coaching can focus on individual development areas and provide feedback to enhance performance.
Encourage job rotation and exposure.
Offer opportunities for potential successors to gain exposure to different aspects of the commercial real estate industry. Encourage job rotations, cross-functional projects, and temporary assignments in various departments. This exposure will broaden their knowledge, enhance their skills, and provide a well-rounded understanding of the organization’s operations. It will also help successors develop a broader perspective and adaptability, making them more effective leaders in the future.
Monitor diversity and inclusion.
The pool of potential successors should represent diverse backgrounds, perspectives, and experiences. Actively seek out and support underrepresented groups within the organization. Promote an inclusive culture that values diversity and cultivates an environment where everyone can thrive and contribute their best.
Continuously monitor, evaluate, and refine the plan.
Because succession planning is an ongoing process, check in regularly to evaluate the effectiveness of your strategy. Review and update your plan regularly to reflect any transformations in your organization’s strategy, new industry trends, or changing goals of individuals involved. Assess the performance and development of identified successors by requesting feedback from coaches, mentors, and other stakeholders. Tweak development plans and identify new potential successors as your organization evolves.
Don’t play Russian roulette by taking a chance and trusting fate that everything will be alright. If you’ve not yet created a succession plan, a shrinking talent pool and an aging workforce should increase your urgency to put one in place sooner — not some nebulous future time.
Are you a commercial real estate investor or looking for a specific property to meet your company’s needs? We invite you to talk to the professionals at CREA United: an organization of CRE professionals from 92 firms representing all disciplines within the CRE industry, from brokers to subcontractors, financial services to security systems, interior designers to architects, movers to IT, and more.
