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AcctTwo Blog

Business Succession Planning in a Post-COVID World

We were living in early COVID days when we wrote our eBook, Faith-Based Nonprofit Succession Planning for the Back-Office. We had no idea what was going to happen, or how long it was going to last. We were just starting to talk about how COVID was impacting leaders and succession planning when we spoke to Todd Clark, Senior Associate in Senior Leadership at Slingshot Group, a leading nonprofit staffing and coaching agency. He told us, “In a post-COVID world I see significant changes in succession planning. I think that there will be unexpected resignations resulting in swiftly planned successions. The stress of the pandemic has been unprecedented. I predict that we’ll start to see leaders resigning in their 40s and early 50s to lead outside the church. Leading through 2020 has had the stress of 10 normal years. They aren’t going to have gas in the tank.”

Empty OfficeThis sentiment goes beyond faith-based organizations and churches. For-profit companies are also feeling the stress of COVID. Many companies are rebuilding and restructuring to survive and hopefully thrive post-COVID. According to Gallup, “While it might be important to activate emergency succession planning for vital C-suite roles, companies must also devote equal attention to ensuring there is a focus on identifying future leaders -- specifically in mission- and operation-critical roles. These leaders will undoubtedly be a significant competitive advantage as you return to regular business. Solely focusing on emergency executive succession planning is shortsighted and not very different than ‘replacement planning.’ But retaining, developing and leveraging future talent is even more important than it was a quarter ago -- this is the time to redraft your succession planning process for maximal results.” You have risk management processes in place for vital processes within your organization – you should also have risk management processes in place for top talent.

Succession Planning After a Reduction in Force

To cut or not to cut, that’s the distressing question on the minds of CEOs and CFOs leading during COVID. “Not all finance leaders responded the same. Some businesses chose to take on substantial debt, while others adopted rigid austerity measures combined with substantial cost-cutting to stay in business. Those who chose to make reductions did so in different ways. Some suffered from a death by a thousand (business) cuts, meaning that instead of cutting once and cutting deep, they did a series of cuts over time,” says Marcus Wagner, AcctTwo’s CEO in his article for FEI.

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However, a reduction in force (RIF) is sometimes essential to surviving economic downturns like COVID-19, but it sends waves through your organization. RIF survivors often feel a range of emotions that can include guilt, anxiety, sadness, stress, and anger. After a RIF, surviving employees use their negative emotions and fear to update their resumes and reach out to their extended networks. According to Impact Group, an HR consulting firm specializing in relocation support, talent development and outplacement services, “Turnover is costly. In fact, it’s projected to cost businesses $680 billion by 2020. Compound this with the institutional knowledge you’ll lose right after a layoff or downsizing.” Sometimes a RIF is necessary, and in those cases, how you handle it can make or break your brand. “Turnover rates are 28% lower if a company has a reputable brand,” says Impact. Regardless of how well you communicated the RIF and the vision for where your organization is headed, these stats and harsh realities need to be taken into consideration when succession planning.

Even if you haven’t done a RIF, COVID has created significant challenges for leaders across the world. Add the stress of isolation, never-ending quarantine, home life bleeding into work life – and vice versa, constant death toll and pandemic updates, and living in an unstable economy can cause anyone to crack. Even when you think that you’re moving forward, you can be caught off-guard by an unexpected resignation that perhaps that you should have seen coming when considering the constant state of stress your team is under. So, how do you plan for the unexpected?

Here are a few tips:
  1. Plan for multiple back-up successors
  2. Provide transparency around short-term succession plans
  3. Don’t hire people with just passion, heart, and vision. You need the complete package.
  4. When considering a succession strategy, you must look beyond just the technical competencies required to do a job – soft skills are just as important as hard skills
  5. Encourage knowledge-sharing – think through what the current person does that will be challenging to replace and look how that gap will be bridged
  6. Consider outsourcing – departments that are commonly filled by third parties are Accounting, Human Resources, IT, and Marketing

According to Work Institute, almost 3.4 million workers left their job for something else during the pandemic. Before the pandemic they predicted that number to be closer to 3.5 million, so it wasn’t too far off considering what was happening in the world. “Employees expect more from their employers. Perhaps they want career development opportunities, a manager who knows how to treat people properly, or just some understanding from their employer,” says Danny Nelms, Work Institute’s President. This reinforces how critical it is for leaders to stay on top of their company’s succession plans – even in times of crisis and substantial unrest.

Topics: Faith-Based General