Succession Planning

Many companies face the challenge to find a suitable successor

August 24, 2018
By Daniel Müller Hansjörg Mierke

In the upcoming years, over 45,000 companies in Germany will have to look for a successor, a process that in many cases has not yet started. This does not only threaten the companies themselves but also the existence of approximately 1.5 million jobs. Due to the low birth-rate generations, the pool of suitable candidates is shrinking. Founders are to forward their life-time achievement along with stepping down from the company management, a scenario where an unsuitable successor of the position can be connected to high-financial consequences, or even worse, threaten the existence of the company, leaving the founder's life work in danger.

The German demographic pyramid is similar to a fir tree. The so-called baby boomer generations who were born in the 1960s, the years of the German economic miracle, will retire in foreseeable future. This also refers to many founders and chairmen of family-lead companies. After decades of supporting and living for their company, many of these baby boomers decide when turning 60 to take a step back and enjoy other beautiful sides of life to a higher extent. In order to maintain the company and work which has been built up for so long, many founders are looking for a smooth transition instead of a sudden change, a wise approach since it takes time to introduce a suitable internal successor or to recruit someone from outside and prepare him/her for the transfer.

Hence, the concern of deciding for the wrong person in time of change is justified. The rate of failed recruitment is alarming, as much as 40% within the first 18 months. Appointing the wrong candidate could cost about three annual salaries. The average costs during the process, such as for advertising, lost working time, application management as well as cost during the initial training add up to 140.000 Euro - each time. With professional support during the selection process and on boarding, this risk can be significantly reduced.

Consequently, companies are well-advised to start the process and initial training of a suitable successor as early as possible. A professional personnel consulting agency can support entrepreneurs in all phases of this process – starting with the analysis of relevant skills needed to be successful, ending with a recommendation of internal or external candidates.

A professional succession process consists of 8 steps:

  1. The need for succession is identified through an age structure analysis
  2. The succession process is defined and designed by mile stones
  3. The competency model is determined with the founder or owner in regard to the company strategy
  4. The search process is initiated - internally and externally
  5. The successor is chosen through a selection process including interviews and assessments
  6. The transfer and introduction process is organised by clear definition of roles and tasks between the successor and predecessor
  7. The succession is transmitted step by step and communicated internally and externally
  8. Feedback interviews is conducted with involved parties in order to follow development and adjust actions as needed.

The assessment plays a vital role when choosing a suitable successor. During an assessment a candidate's cognitive and psychological skills, personal norms, values, interests and motivations can be identified. These characteristics predicts how a person learns and uses his/her competencies, such as knowledge, skills and experience in a certain role. The result of the assessment provides consultants with an overview of the candidate's capabilities, potential and expected behaviour, thus being able to predict success and future results.

In conclusion:

  • A structured step-by-step transfer process is the Alpha and Omega when finding a suitable successor
  • Long-term planning is of the essence For this process, commencing at least 1.5 to 2 years before the founder retires
  • Include the support of a professional consulting agency to support you in this vital process

Do you want to discuss the topic further?
Please reach out to Daniel Müller Group Director Mercuri Urval´s office in Zürich or Hans-Jörg Mierke, Group Director Mercuri Urval´s office in Düsseldorf


  • Succession Planning