Nicola Gelormino (00:00):
Do you have a management succession plan in place? If you don't, we've got the reasons why you need to have one in place and the best practices for having one on this edition of the Inside BS Show. Hey, now I'm Nicki G. This is the Inside BS show. I am here with my partner Dave Lorenzo, the godfather of growth, although he's feeling a little under the weather, he is here with us and has a smile on his face. Dave, how are you? I'm

Dave Lorenzo (00:29):
Doing great, Nicki G because I'm here with you today. So the Covid cowboy ready to go, let's get going.

Nicola Gelormino (00:38):
It is still impacting all of us out there folks, especially if you're traveling. So if you too are experiencing Covid 19 right now, we are here to make you laugh and provide you with valuable content today on management succession planning. So why is this so crucial? It is crucial because you need to identify and develop the employees who are going to take over those key roles in your company. When it is time for those holding the roles to move on, either they're going somewhere else or maybe they're retiring, and having the right plan in place ensures that you're going to have a smooth transition for the next group of leaders who are going to take their roles. So let's go ahead and jump into our best practices for having a management succession plan in place. Point number one, start early and be proactive in plying succession planning.

(01:32):
Best practices, succession planning should not be happening at the moment that you now know someone is going to step out of a role or retire. This is something that should be done over a long period of time. Why? Because it's going to help you ensure a smooth transition in the role itself. It's going to minimize disruptions to the company, and it's going to give you time to really identify who are the right employees to take over specific roles in the company. So in working through point number one, you really want to be thinking about this long before it happens, identifying your potential successors who are going to take over and preparing them for their future roles. Are you frozen? No.

Dave Lorenzo (02:14):
Would you like me to speak now?

Nicola Gelormino (02:18):
Okay, let me give you a softball because you are not prepared for me to point at

Dave Lorenzo (02:21):
You.

Nicola Gelormino (02:28):
Dave, what do you think

Dave Lorenzo (02:30):
Nick? G? I think I got Covid brain. Fuck, but I completely,

Nicola Gelormino (02:35):
That is a real thing. That is a real thing,

Dave Lorenzo (02:37):
By the way. I completely agree. So here's the thing. The starting early is the key point in that the businesses that I typically work with, they don't have a management succession plan in place for the most senior levels. They certainly don't have a management succession plan in place for the lower levels. The problem, the biggest problem occurs when somebody's out sick, for example, or they're incapacitated for a period of time and everybody's running around wondering who's going to do that person's job or how to do that person's job. So I'll tell you that you need to think about everybody who's important in your organization, everybody who has a role that has some sort of unique nature to it, and think about who would do that job if that person was going to be out for 2, 3, 4 or five weeks. That's a way to look at management succession planning.

(03:30):
So if you've done everything that we've talked about over the last, I don't know, six months here on the show and you have standard operating procedures and everything, you can go through each role in your company and say, this is what this person's doing day in and day out, and you can identify the tasks, but in terms of the talent and the unique ability of somebody to do that job effectively and efficiently, that's where succession planning comes in. So start early and think about people in current roles and what the future could look like for them in three and five year increments and determine who the next logical successor would be for everyone who's in a leadership role in your company over the course of the next three to five years.

Nicola Gelormino (04:15):
That's great. That really Dave kind of leads us right into point number two. So I'm just going to jump in, which is to identify the key positions and competencies. So Dave just mentioned you're looking at who would be a great fit to step up into that next role and fulfill one of the roles that is critical within your organization. So the next step is to identify what are those key positions that you need to fill for your organization because it's not always the same from company to company. So think about what is critical for our success as a business, and that will lead you to what the critical positions are. And from there you should identify what does it take to really fulfill this role effectively in terms of the skillset, in terms of the knowledge competencies, you should be thinking about what goes into that role itself. Because from there that will help you identify, well, who would we want to put into this role because they would likely have the best fit for the role. And from there we can focus on then developing those core competencies and skills to make sure that person's prepared to take over the role.

Dave Lorenzo (05:16):
If you're developing a succession plan, here's the thing, you can't do every position right at the beginning, so prioritize your top three, your top five positions, and then immediately start thinking about what the key competencies are for each of those positions. Look internally to see if there's somebody who's a good fit, and then determine what training they would need in order to be ready to take over that role. Now, if you're the business owner, you're the CEO, I would recommend that you challenge all of your business leaders to identify a successor and come up with an 18 month to three year plan to have them ready to take over if they need to. If you put that on the people who are in each leadership role, you make your life so much easier. And when you're sitting down doing performance appraisals with those folks, you can base part of their performance appraisal process on whether their successor is ready or not. That's the way I've done it in my businesses.

Nicola Gelormino (06:14):
Yeah, that's great. So let me go ahead and just move right to number three, which is assessing and developing talent internally you should be thinking about growing from within because it's a very effective way to replace those who are in roles who may be transitioning out is to look internally in the company first. Those people are already embedded in the company culture. You initially identified them because they had great skill sets and because they were individuals, you saw long-term potential value in and staying with the organization. So that's a great place to start to look is can we identify people internally who are going to be a great fit for some of these roles? And then you can be thinking about how are you going to help them develop? Because this is part of the long-term plan, which is making sure that you've not only identified those individuals, but you've helped provide training and mentorship and skill development so that by the time it's time to transition, you've really prepared them well for that role. And by providing that value to your employees, they also want to stay with you. Long-term. We've talked about this before, that's a great way to provide long-term value to your employees and for them to remain with your company because you're providing that investment in them and their future with the company.

Dave Lorenzo (07:23):
Thoughts,

Nicola Gelormino (07:23):
Dave? Yeah,

Dave Lorenzo (07:24):
A couple of things to think about there. If you're not developing people internally in order to have them take the next step, you're missing the big opportunity because that's where the people who have the most institutional knowledge are. And if you're telling me now, and I hear this a lot, well, I don't have anybody who in the next three years would be ready, well then you're hiring the wrong people because you should hire people with potential not only to do the current job, but to grow into the next step in their future. So I think focusing on assessing your talent internally starts here's the process. So you assess the talent internally by going to the person that that person currently reports to and having them do an assessment of where they are currently and what their future potential is. If they have current mastery of their role, then you challenge that leader to say, okay, so Nicola works for John, and you say to John, okay, John, so you're telling me that Nicola has completely mastered her role.

(08:28):
How far along is she on mastering the competencies necessary to do your job? Well, she's about 60% of the way there. Great. Your challenge for the next 12 months is to go the distance, go the 40% to get her to a hundred percent ready, and then to expose her to situations where she'll have to make leadership decisions when she's in that role. So you start with the leader of that area who's going to be replaced and have them work on their successor work on them assessing their successor. Now it's really, really important that you also independently assess the successor. So one level of management above John. Then Pete has to go and assess Nicola to determine whether John is spot on or not. And then the best organizations I would tell you do some sort of outside assessment on them, whether it's a psychometric assessment or a core competency assessment to have some sort of independent validation.

(09:26):
So what you're looking for at a bare minimum is for me as the leader to tell my boss that the person below me is ready to go, and what percentage of progress they've made this year and how long it's going to take them to be completely there. My preference would be for it to be independently verified internally and then have some objective measurement of their competence if it was possible. So in terms of assessing and developing talent, if you're in a business and there's only two layers of management, then you're the final layer. You have to be the independent assessment of that talent, but assessing that talent and making sure you know what their gaps are in core competencies is critical, and that's what step number three is all about.

Nicola Gelormino (10:14):
Let me move into step number four, which is creating individual development plans. It's important as you are grooming individuals for these critical roles that you are assessing that development plan individually. Why the different roles that require different skill sets? They require different expertise, and each individual develops differently. So you have to make sure that plan is customized for that individual to be able to maximize the training and the mentorship that you're providing to the individual to best position them to take over that role. This is also going to allow them to make changes and adjustments as may be necessary as they're going through this process. The company can change. You can have circumstances where your customers can change. So as the company is changing, you're going through this development process. This could be over a period of months or period of years. You have to continue to reassess this, come back and make sure that that development plan is in line with developing the particular individual and is taking into consideration factors that may be changing within the organization.

Dave Lorenzo (11:12):
Yes, that's a hundred percent accurate. Nicki g, I think you're spot on there. The development plans need to be tailored to the individual and they need to match the competencies they need to excel at in order to take on the next role. My goal has always been to get people ready early and then expose them as often as possible to some of the situations they would face. I love, I so love the pilot analogy. Pilots understand that when they're becoming a pilot, they need to be a first officer and fly thousands and thousands and thousands of hours before they're ever going to be given the command of the aircraft. And that's what you're doing in all leadership roles. You are developing these people and they may be ready for two years or three years before they assume a leadership role, and then you're simply exposing them to different situations and watching them react to those situations and helping them think through it. So the individual development plans are important because they're customized for that specific person. So if they mastered all the competencies, that's great. Now what do you need to expose them to get them ready to move to the next level?

Nicola Gelormino (12:24):
That's great. Let me move into point number five, implement a mentoring and coaching program. So this is having a structured program in place so that you are helping to make sure this individual is growing to be able to take over this position. You already mentioned, Dave, that having the person who is fulfilling that position currently is a great resource to helping to develop their successor. Other great resources in the company are going to be your experienced leaders. They've been with a company, they have the expertise that is required to help develop some of these new leaders that are up and coming and they've had the institutional knowledge and they're familiar with the company culture. So tap your experienced leaders to help you with your mentorship and development program in grooming these individuals to take over leadership positions. This will help you accelerate their development and also make sure that you keep that continuous learning and development for the individual personally, which again leads to having lasting relationships with your employees because you are investing in their future.

Dave Lorenzo (13:24):
Yeah, I think that's right. I think mentoring and coaching is something that should take place at all levels with all employees at all times. It's not something that's unique to succession planning, but it goes hand in hand with point number three, creating an individual development program. If you're mentoring someone, you need to know what their strengths are and you need to help them leverage their strengths and help them find ways to manage their weaknesses. So it's essential in management succession planning because it's what helps them get to the next level. So as we've talked about, if you've achieved all the core competencies that mentoring process is about talking through specific scenarios that they're going to face, helping them determine how to react to those specific scenarios and then exposing them to those specific scenarios. Man, those two s's together can be really tough exposing them to those specific scenarios over and over again so that they recognize them and they can handle 'em effectively. That's where the mentoring and coaching comes. In addition, there's also some of the emotional intelligence components to being a leader that are essential and that mentoring and coaching can help them prepare for those types of situations. Some of them, they're only going to be able to learn to react to when they're in the moment, but the mentoring and coaching can get them ready so that know what to expect. So it's a critical part. Step number five, implementing mentoring and coaching. Critical part of management succession planning. What's step number six?

Nicola Gelormino (15:01):
Point number six is to encourage cross-training and exposure. So what do we mean by that? We have talked about making sure your leaders are ready to take over their particular role in the company. This is now about exposing them to different roles in the company. So you're broadening their skillset and they are recognizing that there are multiple areas of the company that are interconnected. That way in the event they need to step into a role, even on an interim basis because something happens at the company, they need to jump in, they won't be in the dark about what that role will require, and they're already ready. They at least have some understanding of that role so that they can jump in if necessary. And it allows them to have the holistic view of the company. It's one thing to have them prepared to take over their own role, but they really need to understand how that role fits into the entire company view because it's going to make them more effective as a leader in the organization.

Dave Lorenzo (15:50):
So yes, cross-training is incredibly valuable and it's valuable because it enables people to jump in at a moment's notice in case there's a shortfall in staffing in a particular area, or if there's a shortage of leadership in a specific area. We're living in an age of c Ovid 19, which Nicki g and I are living through right now as we record this. But imagine if you were running a hotel and a wave of c Ovid 19 went through your front desk staff and there was nobody to work the front desk, but you had somebody in housekeeping who was cross-trained to work on the front desk, you'd still be able to run your hotel operations. From a leadership standpoint, the cross-training is critical because you just never know when somebody could become temporarily incapacitated for a significant period of time and you're going to need somebody to jump in and write the ship for you in that specific department.

(16:47):
So I completely agree from a management succession planning standpoint, cross training is essential. We would go so far in the hotel industry as to have a list. So we in big hotels, so one of the first hotels where I started my career was a 444 room hotel and there was a list on file in the general manager's office with the general manager's executive assistant of all the management employees and the different management roles they had held over their entire careers so that if there was an issue in any one particular area people could jump in and cover. For example, when I was a housekeeping manager, the gentleman who was the director of services, my boss had blown out one of the discs in his back and he was out for eight weeks. He had to have back surgery and he was out for eight weeks and it was just myself and him in the organization who knew how to run housekeeping, the laundry and recreation.

(17:49):
So we had 180 employees in the three departments and it was just he and I and one of us was always there. We never had the same days off when he was off, I had to be there when I was off. He had to be there and he was out for like six weeks. So in the first 30 days, I worked 30 days straight until somebody was like, where's the cross-training list? The resident manager said, there's got to be a cross-training list in the hotel. And the executive assistant to the general manager said, of course, it's right here. And he looked on the list and he said, well, these three people, they were either housekeeping manager or director of services at some point, give Lorenzo two consecutive days off and have these people work down there after shadowing him for two days. So I worked 30 consecutive days.

(18:31):
These two people shadowed me for two days and then I got two days off and then I worked another month straight and then they covered me again, but at least there was a cross training list so that there was somebody to cover those couple of days. This is the thing, okay, it's not just important for that purpose, it's also important for the development of the individuals. You want to be able to check off the boxes that you've had exposure to all these different areas. And if you don't spend a year and a half, two years in those roles, if you've been cross-trained, at least you understand what the key performance indicators are for those roles and how those roles contribute to the overall health of the organization.

Nicola Gelormino (19:13):
Very well said, Dave. Point number seven, regularly review and update your plan. Succession planning should never be a one-time activity for the company. This is something that you have got to be developing over time to best position your next group of leaders to take over your critical roles. So as you're going through the plan, you need to pause and reassess to see has anything changed that we need to make adjustments for so that we can ensure the best transition in the long run when it's time for that to happen.

Dave Lorenzo (19:47):
The review of the plan also determines who's progressing and who's not progressing so that you know where you stand at a bare minimum, it shows that you're focusing on this. So we kind of buried the lead here. Why is all of this so important? Well, it adds value to your business. If somebody's going to come and buy your business at some point, they're going to want to know that the people who are there actually know how to run the business. If you don't have a management succession plan in place, your business is worth less than if you do have a management succession plan in place. So doing this, implementing this adds value to your business overall,

Nicola Gelormino (20:27):
Yes, this is critical to increasing your enterprise value. So I'm glad you mentioned that point, Dave. We are providing such a detailed best practices for you because this is really important for your business, not only now and the employees, but certainly when it is time for the eventual exit. With that, provided you our seven best practices for a management succession plan, if you do not have one in place, this is a great starting point for what we've provided today. And if you enjoyed today's show, do us a favor, share it with someone else who you think might benefit from today's show, because as you know, we don't have sponsors yet, so please share this with someone that you think might enjoy it. It helps us increase our audience and we can reach more people and hopefully help them make a great living and live a great life. And until tomorrow, I'm Nicki G, and you are

Dave Lorenzo (21:21):
Dave Lorenzo, the godfather of Growth.

Nicola Gelormino (21:24):
See you tomorrow.