Where does succession planning actually begin? I show you 3 ways to start future proofing.
I visited two clients recently who are grappling with succession challenges. The scenarios are worlds apart from each other but both companies are fighting for their survival. In case one, an old and established family business relies on the aging founder of the business who has kept the IP of the business a close guarded secret. In case 2, a business owner is tragically killed in a motor vehicle accident.
The founder in case 1 built the business into a formidable company and has retained the technical and planning knowledge to himself. His systems have been built over many years of trial and error and remain mostly secret to the rest of the organisation. The production planning and routing methods are to a large extent analog and manual. The danger in this case is that the aging founder suddenly falls ill or is unable to work. Most of the knowledge is undocumented and anecdotal and the drawings and operating procedures are old and basic and unreliable.
In the second case, the company has already been plunged into crisis and is now struggling to close the gap left by the deceased owner and deal with the effects of the mourning team who are now far from effective. The owner was charismatic and had been the company's face for decades. He was very operational and had control over drawings, tendering, procurement and production. He also held most of the client and supplier relationships.
Businesses go from being healthy and strong to frail and fragile over night in these scenarios. People are the cornerstone of any business and the knowledge and personalities that they contribute are often what make a business successful. It is also unfortunately what makes them fail.
Succession planning is often only thought of as a 'replacement' strategy for key people but it goes much deeper and in fact is begins way before people need to be replaced. It actually has its origins in the company's culture of systems and processes. When a company invests in building strong and transparent processes, what it is actually doing is investing in its long term sustainability.
It is inevitable that key people will leave your business and depending on the nature of your business, some will be easier to replace than others. Many of these factors are out of your control but the following three things will get you started in the right direction.
1) Conduct a risk analysis for the business and identify areas of concern. This can be done in exactly the same way that a safety risk analysis is done and can be scored against probability and consequence rating scales.
2) Document key processes with flow charts or procedures that can be used for training back-up staff or new recruits in the case of crisis. This can be done informally in small businesses where resources are limited. More advanced businesses may even scenario plan these situations and put if/then procedures in place.
3) Implement software or other tools to automate processes where possible. By removing the personality from repetitive processes, you will already have taken great strides to eliminating succession risks. In an operation this could for example be a spreadsheet to automate quoting or material ordering. It could also be much more sophisticated software that plans production and procurement for you based on the characteristics of the operation.
This not something that should be put off for tomorrow. If you make a start today you will see in a very short time that your business becomes more resilient and insulated against risk.