An Insight from Gary Sheader…
On 20th January 2022 I sat in on a webinar delivered by one of our team, Sim Goldblum. It was brilliant. Very thought-provoking and full of nuggets of insight to help our manufacturing customers with their future plans. It felt a lot of the insights shared by Sim were strategic and needed senior leadership buy-in. But there were no MD’s or owners of manufacturing businesses in the virtual room. Where were you?
So, I thought I would help to distil down a few key points and clarify the importance of succession planning in your future strategy for the business.
The top 5 benefits of succession planning for owners and Managing Directors of manufacturing businesses that jumped out to me were:
- Business resilience – as an owner or Managing Director you have a duty to protect the future of the business and mitigate the risk against the potential loss of anyone in key roles. Nobody is irreplaceable, but you should not have high-risk failure points that have very little contingency. I believe having the appropriate cover and succession plan for key roles makes your business more resilient, and generally good business practice.
- Spotlight on underperformance – to plan well for succession you will need to clearly define roles, including the responsibilities, knowledge and skills required to carry out the roles effectively, in line with the needs of the business and your business plan. In my experience people underperforming will work on making the role into something of a dark art and keep things as ambiguous as possible. Usually, to avoid being found out. That’s not always the case but you can avoid the risk. The succession planning process and the gathering of the facts can highlight performance gaps in your team. Best to know this and invest in the person that needs help rather than ignore it.
- Increase business value – a business that is overly reliant on its owner or any key roles within the business will reduce the overall value. To someone looking to acquire the business, it presents a high risk when the business doesn’t function without its owner or MD. Having a clear succession plan will help you to remove yourself from the business and remove the hub and spoke scenario for a prospective buyer. Your succession planning documentation and evidence also provides a prospective buyer with confidence during the due diligence process that your people strategy is not a huge risk.
- Strategy deployment – it’s good business practice to have a clear vision and know where you are headed. And very timely coming out of the other side of covid. Your vision of the future should include the future organogram. What does your future team look like and what differentiating skills are you developing? Are you even thinking about the skills your business will need in 5 years’ time? To effectively plan and deploy your strategy you will need to include succession planning and the future role needs of the business.
- Talent retention – I see so many young talented people leave businesses because they don’t see any opportunities for progression in the business. Often there are but nobody has indicated to this person that they are on the radar for development and have a future in the senior management team. Have the chat and let them know you see them, and work on a development plan of how you can support their growth over the coming years. Don’t lose your best people.
It’s not an exhaustive list and I’m sure there are many other benefits, but these are the ones that stood out to me when Sim presented an overview of what good succession planning looks like. Hopefully some food for thought, and not to be ignored or delegated to HR to sort out for you. This should be a team effort that includes everyone.
If you would like some help with your succession planning, do reach out. We are flexible and can work in different ways to provide you with the support you need. Contact us via here for help.
This article has been written by Founder and Managing Director of the Manufacturers Alliance, Gary Sheader. Gary has supported a wide range of manufacturing businesses in creating and deploying successful growth/improvement plans throughout the UK and Europe. He has built a team around him with a core strength in strategic facilitation and winning the hearts and minds of people. Get in touch if you would like to discuss transforming your manufacturing business.