Succession Planning in Small and Medium-Sized Enterprises

Succession education in small and medium-sized enterprises (SMEs) is critical to ensure the sustainable growth and continuity of the enterprise. Smooth business succession from management to successors is essential to protect the value of the company and pursue new possibilities.

Traditionally, succession within the family has been the norm for small and medium-sized enterprises in Japan, but increasingly talented individuals are taking over as managers through MBOs, third-party succession, and other means. Successor education is time-consuming and is necessary to draw up a long-term growth strategy of five years or more.

Therefore, it is important to establish an appropriate education plan, taking into consideration the period between the decision on the successor and the actual handover. Succession planning in SMEs is important to ensure organizational continuity and growth strategies. Below are five specific methods of succession planning.

1. use of external training organizations:. Identify potential successors early on and involve them in training programs. Provide opportunities for potential candidates to learn management's thinking and culture firsthand.

2. internal on-the-job training Assigning employees to work in the field to gain experience and to multiple departments will help them develop a broad perspective. It is important to enrich their experience by assigning them to new business divisions.

3. tough business experience:. Tough experiences will help them develop their judgment. Consider setting up a subsidiary or sending them to a fast-growing venture company.

4. Work experience at other companies. Have employees acquire knowledge and skills through a combination of in-house work and outside seminars. Provide training in a planned manner to coincide with future business succession.

5. guidance by predecessors:. Guidance by management is effective. It directly conveys management's thinking and judgment, and supports the growth of successors.

By combining these methods, SMEs can achieve succession planning.