Succession planning in construction
Succession planning is the process of devising a strategy to ensure an organisation and its business will transition smoothly and effectively from one leader or leadership team to another. This is an important consideration in all industries, as leadership positions will change due to retirement, resignation, dismissal, health issues, and so on. It is particularly important in construction in the UK, where more than 90% of all firms are family-owned. Construction is also facing an ageing workforce, with large numbers of ‘baby boomer’ leaders and business owners set to retire in the coming years.
Succession planning can be a complex and time-consuming issue, and one that many feel can be put off to a later date. However, failure to effectively plan can be a critical factor in the future success of a business, particularly where there are no clear candidates currently within the organisation that are considered capable of taking over.
Successful succession planning can prove beneficial for an organisation, as it can provide a renewal of focus and direction, a change in management style, and can maximise company value.
Some key steps in formulating a succession plan include:
- Time schedules.
- Understanding the current state of any succession planning.
- Identifying the leader’s objectives for the plan.
- Identifying the company’s objectives for the plan.
- Identifying actions to move towards those objectives.
- Identifying and training the next generation of leaders.
- Agreeing how the any shares will be managed.
- Agreeing the level of influence and involvement the current leaders will continue to have.
- Agreeing when the plan should be reviewed and revised.
- The personal financial resources and retirement planning of the leader.
- Income tax considerations.
- Sources of funding.
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