When we talk about succession planning the focus is always on family and shareholder succession. This tends to lead onto tax planning and ensuring that the correct documentation is in place.
But in some industries – manufacturing is a good example – there is the question of experience succession.
Any workforce is varied and includes experienced people who have worked at the company for many years. They will have technical knowhow and a wealth of specific knowledge and understanding that they have built up over many years.
Losing someone with decades of experience of your company, your products and services and your culture, can leave a hole that is both costly and time consuming to fill.
How can you replace that instinctive understanding of how the business works and what is important to its success?
The answer is that you need to plan for it.
The first step involves identifying young managers coming up through the ranks and mentoring and fostering them.
Unfortunately, we have a skills issue across the UK, and it can be difficult to attract graduates and school leavers into manufacturing. There is a big push on apprenticeships at the moment, and we are at the start of a government initiative involving the new T Levels.
The manufacturing sector in particular is struggling to find key staff because of the skills shortage and an ageing workforce.
Manufacturing is not the only industry that has issues related to an ageing workforce, though it does have a particularly high number of workers in the 35-55 age range.
Larger companies may be able to attract new blood into their business, but across the board there is not enough of these talented youngsters to replace the experience that some members have staff have.
Staff can leave or retire at any stage in the business cycle, which can put the employer in a difficult position if they haven’t planned for it.
The ongoing skills drive will eventually see more and more people coming into the manufacturing industry, but this will take time.
These issues are rarely considered on a day-to-day basis, or discussed in any detail at management or board meetings.
Plans need to be put in place, which takes thought and time.
At Crowe, we have been working with business leaders to identify key individuals within their organisations and help them plan for succession issues that could become an urgent matter with little notice.
Do you know which roles carry the most risk for your organisation, if you had to find a replacement at short notice?
You need to understand the experience employees hold and how this can be shared. Working with specialist advisors can help business owners look at the business from a unique perspective.
It is also important to have a continuing dialogue with your emerging talent to understand their career aspirations.
Do some individuals have the potential to move into roles that hold the highest value to the business? Who are they and what support and training do they need to make an orderly transition?
Working through succession planning allows you to react quickly when the inevitable call comes that an experienced, valuable and valued member of your team is set to leave the business.