By Tami Ballis, Senior Vice President, Group Managing Director, Robert Half Executive Search, and Leigh Chaban, Senior Vice President, Robert Half Executive Search
The Great Retirement Boom. The Silver Tsunami. However you want to label the trend, a wave of retirements is sweeping across industries. Each day, about 10,000 baby boomers in the U.S. turn 65. And as more of these seasoned professionals exit the workforce, it is reshaping the business leadership landscape, particularly for small and privately owned firms.
Small and midsize businesses often face numerous challenges when senior executives leave—from maintaining operational continuity to preserving company culture. Unlike large corporations with extensive leadership pipelines and succession planning strategies, small businesses tend to rely more heavily on the institutional knowledge, personal networks and deep industry insights of their leadership teams to succeed. Losing these key individuals can create significant disruption.
It doesn’t have to be that way. In this post, we suggest several steps that small businesses—and their senior executives planning to retire soon—can take to prepare for and transition to a new era of leadership for the company. First, let’s examine in more detail why it is that executive-level retirements can be so problematic for small businesses that aren’t ready to manage the change.
Preparing for the Silver Tsunami: Succession Planning Strategies for Small Businesses
The potential impacts of executive-level retirements on small and midsize businesses
When top executives depart small firms for retirement, it can often lead to:
The loss of institutional knowledge: Unlike large firms, where processes and best practices are often well-documented, small businesses rely more on informal knowledge transfer. As a result, when a long-serving senior executive leaves—especially a company founder—it can lead to the loss of critical insights that are difficult, if not impossible, to replace fully.
A disrupted workforce environment: Leadership transitions in small businesses can significantly impact a company’s culture, especially when a departing senior executive has played a hands-on role for many years in shaping values, customer relationships and internal dynamics. If the business is family-owned, or the team has worked together for so long they feel like family, the corporate culture can suffer even more when leaders move on.
Leadership gaps and succession planning shortfalls: With fewer layers of management, small businesses may struggle to staff critical vacancies at the highest levels, creating operational strain and uncertainty for employees and external partners, clients, customers and possibly investors. The lack of formal succession planning is often a factor here, and it can lead to rushed hiring decisions or even business instability.
Preparing for leadership transitions: key strategies for small companies
To mitigate the risks associated with the Great Retirement Boom, small and midsize businesses must take a proactive and formal approach to leadership continuity. Here are several strategies to consider:
1. Create a robust leadership pipeline
Many small business leaders wait too long to plan for their transition, which can result in unnecessary stress and disruption. Ideally, succession planning should start at least one to two years before an owner or key executive plans to step down. In short, the more time, the better, because it will allow you to:
Identify high-potential employees: Assess your current team members for leadership potential and provide meaningful development opportunities, including mentoring and job shadowing.
Invest in leadership training: Offer executive coaching and cross-functional training to prepare successors to step more seamlessly into leadership roles when the time is right.
Encourage knowledge transfer: Implement a structured process for outgoing leaders to document insights and train successors. You might even consider having the current leader work on a part-time or consulting basis for several months or even longer before they transition fully to retirement and their replacement can confidently take the reins.
All of the above can help promote smoother leadership transitions in a small or midsize firm. It can be a positive experience for employees to see senior executives preparing for retirement guiding their successors. It can also help key clients and other critical stakeholders feel better about a pending change in leadership, especially if they have ample time to be introduced to and get to know the new leader.
Looking for tips on creating effective succession plans for leadership roles? See these seven strategies.
2. Evaluate and invest in future leadership needs
While replacing retiring leaders is critical for business continuity amid the Silver Tsunami, you should determine whether the current leadership structure at your small or midsize business needs to evolve to support growth and success for the long term. Some questions to consider include:
Are there emerging skill sets that will be essential for the business to recruit sooner than later? For example, would it be beneficial to recruit a leader experienced with overseeing digital transformation initiatives or mergers and acquisitions?
Should executive leadership roles be redefined to meet new market demands, changing business models and evolving customer expectations?
Is the leader departing the firm someone who was handling the responsibilities of more than one executive? If so, do we need to hire more than one person to replace them?
Would it be beneficial for the company to bring in a full-time interim executive or a fractional executive (i.e., one who works part-time or on a contract basis) as the company seeks to replace a retiring top executive?
Keeping the company’s long-term business strategy in focus while hiring and installing new senior leaders can help strengthen the organization for the future.
3. Reach out early to a retained executive search firm
You don’t have to wait until your business needs to hire a leader to forge a relationship with a reputable executive search firm. In fact, engaging with executive search consultants early in the succession planning process can be a game-changer for your small business.
Even if you, or another senior executive at the firm, is not yet ready to step aside, working with an executive search firm well in advance of a leadership change provides several advantages, especially if your business has never conducted an executive search before:
Strategic guidance: Executive search firms that understand your industry and your business can offer deep insights on trends in the hiring market, leadership competencies and potential successor profiles. This information can help you refine your leadership transition strategy.
Access to a broader talent pool: Professional recruiters have extensive networks and can identify high-quality candidates nationally or even globally who might not be actively looking for new roles but would be open to the right opportunity. Access to a broad talent pool can also make all the difference when you need to secure professionals with specific skills or experience.
Reduced hiring pressure: By establishing a relationship early with executive search consultants, you can avoid last-minute hiring decisions and take the time needed to find the best executive hires. You’ll also be better positioned to offer compelling compensation packages that can help you recruit and retain in-demand leadership talent. Many executive search firms also offer onboarding assistance, helping new executives integrate more seamlessly into your business.
Learn more about how a retained executive search firm can make hiring leaders easier.
4. Foster a work environment that can attract new leaders
Many small and midsize businesses struggle to attract external leadership talent, particularly when they must compete with larger companies offering extensive benefits and career advancement opportunities. However, keep in mind that smaller firms can also provide many advantages to executive hires, including:
Entrepreneurial work environments: Senior leaders in small businesses typically have a high level of autonomy. And without the hassle of bureaucratic red tape, they can often implement changes more quickly and make a direct impact.
Stronger workplace culture: Tight-knit teams and a focus on the company’s mission and values can be appealing to seasoned professionals seeking a positive work environment—and the opportunity to guide teams dedicated to delivering meaningful work.
Opportunities for innovation and growth: If your firm has invested in the latest technology and encourages all employees to engage in continuous learning and development, you’ll likely find it easier to attract and keep in-demand leadership talent—including high-potential employees.
While the Great Retirement Boom or Silver Tsunami presents many challenges for small and midsize businesses, it also gives firms a chance to rethink their leadership structures and bring in fresh perspectives. Small firms that approach leadership transitions proactively and strategically not only can maintain business continuity but also position themselves for a stronger, more resilient future.
Preparing for leadership transitions at your small or midsize business?
Get help with senior-level hiring from Robert Half’s retained executive search practice. We can help you expedite and streamline your search for the C-suite and senior management professionals your small or midsize business needs to hire now—or soon.
Our Forbes-recognized executive search consultants work with public, private and nonprofit organizations across industries to hire for these and other roles at the director level or above:
CEO, CFO, COO, CMO, CIO, CRO
President, EVP, VP
Executive director
General counsel
General manager
Board member
Contact Robert Half’s executive search practice today to learn more about our services and tell us about your senior-level hiring needs.
