Corporate succession planning is important for survival and longevity for many years. Most of the world’s oldest companies, like its citizens are Japanese. One of the world’s oldest companies is Nishiyama Onsen a that has survived close to 1,300 years and having seen over 50 generations. Kongo Gumi, a Japanese construction company was founded in 578 AD. Both companies are still in existence. The Japanese’s high life expectancy and corporate longevity could be correlated, however I believe the strong cultural and ethical practices of the Japanese are a contributor to corporate longevity.
It is possible today for businesses and institutions to live on for many years if proper succession planning is undertaken. Corporate succession planning is necessitated by sudden exits of top leadership. The exits could be due to resignation or retirement. In some institutions for example government institutions, sudden exits could occur where the leadership term is fixed. Once the term ends it means a new generation takes over the institution.
Corporate succession planning is important as it enables a firm maintain its identity. One of the attractive features of a company is that it is able to maintain a perpetual succession. That is, its life is not affected by exits of its shareholders or directors. The only thing that would threaten a company’s life is if it is legally wound up. A firm, its shareholders and directors are at law, separate entities with separate legal identities and personalities. This therefore means that as much as possible a corporate’s brand and identity should be separated from its owners.
For many businesses, the founder’s identity becomes the corporate one such that the company faces an identity crisis when the founders exit. It is easier for companies with a strong corporate brand which is separate from the leadership, to undertake succession planning. This is because the incoming leadership would have to buy into the corporate identity.
Corporate succession planning ought to begin at the foundation and formation of a new business. It is important for the founders to clearly set down and write their vision and mission. It is also important to have a constitution describing the identity of the corporate, its purpose, its key principles and values. Thes e documents will prove quite handy when it comes to undertaking the actual succession.
Corporate succession planning is also important during recruitment. The process should be such that the recruiters consider candidates who fit in with the identity and purpose of the business. For example, if you have a strong innovative culture, it is important to look out for that value and skill in candidates of all levels.
A mistake that some businesses make is to recruit persons based on academic qualifications alone or work experience. It is important to highly score compatibility. Employee incompatibility with organisational goals can slow down business growth. During succession it is important to nominate compatible employees into leadership. These can be entrusted to maintain the corporate identity faithfully until the next generation.
Staff training is a great opportunity to embed the agenda of corporate identity. Some businesses are so serious about their identity that they demand that their staff dress in a certain way so as to uphold this. I visited a university in the United Kingdom and made an observation that the staff dress code was smart casual and there was background contemporary music playing . The gave me the view that the university was very deliberate on selling its identity as a modern institution.
It is important to build a corporate identity to ease succession.