Posted by Kathy Downs on Monday, April 13, 2015 - 07:30
If you don’t have a strong succession plan in place, now’s the time to act. Over the next several years, baby boomers will reach retirement age at a rate of about 8,000 a day, according to an American Association of Retired Persons (AARP) report. However, a Robert Half survey shows that many CFOs don’t find this a concern.
It’s true — the recession years didn’t leave much time for grooming team members to take on the role of controller or CFO. But with the economy now stronger, there’s no time like the present to start formulating a succession plan.
The importance of succession planning
When the baby boomers in your company retire, they take their leadership experience and knowledge with them, which can seriously affect your daily operations. Some CFOs fall into this age group, and so do their controllers, the most likely candidates to fill an open CFO position.
You also need to be prepared for the unexpected, in addition to retirements. No one enjoys talking about potential accidents or health problems, but they’re a fact of life and can’t be ignored. As a CFO or manager, you need to make sure your financial operations can proceed smoothly under any circumstances.
Without a clear succession plan, your staff may feel uncertain about how things will proceed in the future. They might worry about the stability of the firm, their jobs or whether current processes will remain intact. Having a solid course of action in place shows your team they can trust their leaders to be prepared for any scenario.
External relationships with vendors and banks can also be affected if a transition is unclear. These relationships are typically built on trust and the reputation of the current CFO. Once that person is no longer in the picture, it takes time to rebuild a similar level of confidence with lenders and vendors. In addition, the CFO is often the signatory on corporate accounts. If there’s no succession plan in place, who will sign and approve checks when an emergency takes the CFO out of the office? To maintain your organization’s success, it’s important to consider these factors before they’re really needed.
The silver lining
Naturally, some level of uncertainty and worry will accompany any major transition in your firm. On the other hand, you may discover that some of your finance and accounting employees are willing to step in and play bigger roles. Ask employees whether they’re comfortable taking on new tasks. It’s possible you could identify your future leaders during this process.
Succession planning is critical whatever size your organization may be. Whether a key leader retires or there’s an unexpected absence, you need to have a clear plan laid out to maintain employee morale, along with efficient operations. If succession planning isn’t near the top of your to-do list, consider moving it up today.
What concerns are you facing throughout your succession planning? Let us know in the comments.
Kathleen Downs is a recruiting manager with Robert Half Finance & Accounting in Orlando, Fla. She started with the company in 2000. Prior to joining Robert Half, she was CEO of a recreation/retail/education organization in Bonn, Germany. Kathleen is actively involved with a number of professional organizations within the finance and accounting field and sits on several not-for-profit boards.