A succession plan is vital to the continuation of the legacy of your insurance firm. However, a lot of insurance providers fail to give succession planning a second thought, as they are too busy worrying about outrunning the competition, hiring and retaining motivated members of staff, and gaining a market share. Of course, these are all important factors, but, without a succession plan in place, this can all be irrelevant because you could halt the future of your business.
There are many benefits associated with succession planning. We all like to think that we will exit our business at retirement age, but things don’t often go to plan. If you do not have a succession plan in place, things can turn sour very quickly. Succession planning offers a sustainable and stable platform that will guide the business forward, especially when Lifestyle Financial Services can help to ensure stability for employers with their products added in too. In addition to this, a succession plan provides stability to the customers, vendors, suppliers, investors, and lenders.
Now you know why a succession plan is important, but what should it contain? Let’s take a look at the key components of a succession plan. Your plan needs to communicate a number of decisions that will detail how management and ownership is going to transition when a number of specific events happen. These plans need to be communicated in a clear manner. It is important to make sure you do not blur ownership and management. While the concepts are usually synonymous, they are not necessarily linked. There needs to be distinct and separate considerations.
You also need to ensure you have a successful evaluation process in place. This means an evaluation process for the personnel you have identified, as well as the plan itself. If you don’t test something beforehand, you will have no idea regarding whether it is going to work. Nevertheless, this is one of the main things that people tend to overlook. Another key element of succession planning involves the generation of equity-based incentives or equity for important employees. It is also worth adding independent or outside directors, if you do not already have them.
But, before you can put together your succession plan, you need to go through all of the necessary steps to get there. This includes considering the ability of all those in management roles and you should see if there are any future leaders within your business. You then need to determine what key characteristics the successor should have, and how you are going to locate those who are most likely to have these characteristics. There should be an inclusive and rigorous selection process, after which you will make your decision. This decision should be communicated to the entire company. Once that is done, the components on the plan should be reviewed periodically and the final succession decision should be made.
If you take note of the steps that have been mentioned above, and make sure that your plan has all of the critical components in place, you can’t go too wrong.