In last week’s blog we talked about a business owner having a succession plan to ensure the continuation of the business in the owner’s absence. In this blog, we want to give some tips for developing succession plans for your key employees. Has any of these scenarios ever happened to you?
SCENARIO 1: You arrive on a Monday morning to find your highest producing salesperson waiting to talk with you. She tells you that she has accepted a position at another company and gives you two weeks’ notice.
SCENARIO 2: In the midst of a significant project, a key player who has been on the project from the start falls ill and must take a leave of absence.
SCENARIO 3: A long-term manager who you saw as the one to succeed you and run the business tells you he has decided to relocate to another state and has a new position that starts in 2 months. He is relocating due to the aging of his parents and needs to live closer to them.
I would venture to guess that if you have been in business long enough, you have encountered a version of at least one of these scenarios. The key question for you is, “Is your business ready for the loss of a key employee at any moment?” Our experience shows that most businesses are not ready, but the impact on the company can be minimized if you take these steps.
1. Assess where you might be vulnerable if one of your key employees left.
In the first scenario, the loss of sales while trying to hire and ramp up a new salesperson could be catastrophic. The impact is not only on the company’s revenue, but client relationships could be impacted as well. If you don’t have multiple relationships within your client accounts or you don’t have a database that captures the history of interactions with clients, your salesperson will leave the company with all that information in her/his head and that valuable asset will be lost. Have a plan in place to minimizes these impacts.
2. Insist that every employee has a position manual that details their responsibilities and how to accomplish those responsibilities.
Most managers do not understand the full details of each position that they manage. Having a written manual for each position and ensuring that every position has one other person (a back-up) who can fill in if the employee is absent or leaves is a proactive practice we encourage. One of the best ways to get a position manual written is to have a new hire write it as you train him/her.
I find that many companies have some version of a position manual for front-line and client-facing employees, but rarely do I find them in place for management-level positions, including the CEO. Don’t forget about these positions. The time invested will be well worth it!
3. Have a defined strategy and process in place to retain your key employees.
Once a year, sit down with your managers and review every team member to discuss their growth potential and career path. Also identify what positions are vulnerable to a loss and have a defined strategy to minimize the impact, such as assigning a back-up for the position, increasing the manager’s face time with an employee or working to build greater relational depth in key client accounts.
Hold one-on-one conversations with each employee, at least annually, about their future with the company and the next year’s growth and development plan. Employee engagement studies show that highly engaged employees are those whose companies align their words, “We invest in our employee’s growth and development” with actions that supports those words. There is an abundance of creative and inexpensive ways to integrate employee development into day-to-day routines, conversations and practices.
What do you do if your company doesn’t have many growth opportunities for employees? Studies show that desired growth is not always upward, rather, increasing one’s skills, expanding one’s areas of responsibilities, and/or enhancing visibility or interface with clients are as desirable as long as the compensation matches the growth and responsibilities assumed.
There will always be a circumstance like the third scenario and there may be nothing you can do to keep the employee. When that happens, if you have done #1 and #2, the loss will be great, but the impact won’t be catastrophic.
4. Capture institutional knowledge sooner rather than later.
Key employees and managers, especially long-tenured ones, have institutional knowledge, developed expertise and skills, and on-the-job experience that is an asset of value to the continued success of the company. When one of these employees leaves the company, they take with them this asset. A company that creates a way to capture and document this information will lessen the impact of the loss of the employee. Key employees/managers may be hesitant to share this information for fear if they give it away, they will be replaceable. This line of thinking is not in the best interest of the company, and leadership needs to place value on sharing and capturing this information regularly.
5. Encourage managers to identify and develop and their successor.
The best managers aren’t afraid to replace themselves, rather, they see it as a sign of their success to have someone lined up and ready to replace them one day. When doing the exercise in #3, talk about what your managers are doing to develop a successor. Whether it is capturing institutional knowledge, training an employee on one aspect of the manager’s position, or creating a full succession plan for an employee who has been identified as the successor, every proactive step you take will minimize the impact of a sudden loss of any key manager.
Your challenge today and this week is to ask yourself the question, “Is your business ready for the loss of a key employee?” Honestly assess if you and your organization have taken the necessary steps to minimize the impact of the loss of a key employee. If you aren’t 100% ready and want to be, let us use our years of experience to help you sort it out!
By Theresa Gale
PRINCIPAL, TRANSFORM, INC.
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