Putting Your House in Order: How Succession Planning is Related to Real Estate

Written by Posted On Monday, 27 March 2017 09:21

HousepicAs much as we may want it to be otherwise, no leadership position is truly permanent. According to research, 16.6 percent of global companies had to replace their CEOs in 2015, more the highest CEO turnover had been in 15 years. Leaders eventually leave for other positions, retire, or even die, and organizations need to be prepared for the inevitable event when they need to replace their leadership. To achieve this goal, many companies will begin grooming internal workers to fill those openings and expedite things.

The process of finding and preparing a candidate to fill an open position may seem familiar to landlords, because it’s not that different from finding a satisfactory tenant for a rental property. Both circumstances, require candidates to be vetted to ensure that they are the proper fit. In either circumstance, the decision involves much more than salary or rent, because bringing on the wrong person can have disastrous consequences. Whether you are signing a contract with a new renter or grooming the next executive at your company, it’s important that you put in the work to make sure everything is in order.

1. Comb Through Your List for Potential Candidates

Just as many home rentals involve an initial application process, the first step of succession planning involves going through your business to come up with a shortlist of possible replacements. Look closely at candidates who have proven themselves to be good leaders. Find the most obvious candidates at your office to replace senior employees.

Remember, you are planning for the future here, so you should also be looking at which roles in your company may need to be filled in the next few years. Preparing an effective replacement for current leadership isn’t a quick process, often taking years rather than months in order to achieve the best results.

2. Do a Background Check

A home is a valuable investment, and careful landlords will generally perform a background check on potential renters to make sure that they can be trusted with the property. As you begin to sift through your list of potential candidates to fill future leadership openings, pay attention to each candidate’s history. Have they shown a strong track record of work behavior? How well do they work within their teams? Have they shown strong indicators of leadership potential? Follow the candidate’s history at the company to determine whether they have proven to have the necessary skills for the role.

3. Check Their Credit

Before renting a home, many landlords will perform a credit check on the applicant. They want to be sure that the renter will be able to fulfill their end of the rental contract and pay the bills. When filling a leadership position, businesses need to have an assurance that the team member they are preparing will be able to fulfill their end of the work contract and serve well as an executive. Just as a long history of paying bills on time and having a secure job can improve a renter’s credit score, having a long history of business success and experience in the industry can improve a candidate’s suitability for a position. Meanwhile, just as a rental candidate with a low credit score can work to improve that score and apply to rent a home later, a future candidate for leadership may be more suitable down the line after accruing more experience on the job.

4. Consult Their References

Much like in real estate, when you are deciding whether an employee is a potential replacement for an outgoing leader, you want to check in with people who know the candidate. In the case of succession planning, those people are their managers and other work supervisors. They can give you a clear picture of a candidate’s work performance and leadership abilities.

Management from all levels of your company are also a good resource for initially spotting potential candidates. Particularly when you are working within a large organization, it’s possible for some of the best candidates to be overlooked. Your managers and leaders are the ones who directly interact with your employees, though, and they may know of talented individuals who are suited to leadership but have gotten lost within the bigger workforce.

5. Decide On a Candidate

In real estate rentals, this is the point where landlords will accept an applicant’s offer and sign a rental contract. While the business arrangement is ongoing, the hardest part is over. When preparing a candidate to replace current leadership, however, the hard work is just beginning. Once they have decided upon a candidate, companies must commit to developing the candidate’s ability to fill a new leadership role by offering additional training and monitoring the candidate’s progress over time.

Choosing the wrong leaders at your company can have disastrous results. If, for example, a CEO turns out to be the wrong fit and needs to be fired and replaced quickly, it can lead to a loss of $1.8 billion in shareholder value compared to a company that has properly prepared. It’s much better for organizations to have succession plans in place rather than be forced to scramble.

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Carol Evenson

Carol is a home renovation specialist with a background in organization and sales. She assists realtors with business management and growth.

https://twitter.com/cmill_com

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