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In a recent episode of my podcast, the topic of succession came up in the interview. Succession planning is nothing new to privately held businesses. I was the second generation in my family business, and we started this process very early on. This is not always the case in family businesses, and I have seen a few horror stories that punctuate the need for better planning.
During our discussion, I had one of those 2x4-to-the-head moments. Privately held entities tend to focus on succession for the owner or president of the organization, but what about those key management positions throughout the company? Do we go through the same level of strategic planning normally reserved for the C-suite? I think we should.
One of the great things about privately held distribution is the longevity of the associates in our companies. In my family business alone, I can list off several employees who have been there for more than 35 years. Most of the clients I work with take pride in the multi-decade team members who choose to stay loyal to the organization. This is rarely the case in corporate America, but this phenomenon permeates the distribution landscape.
This can be a blessing and a curse. On the one hand, we have this amazing continuity of structure and leadership. On the other, their knowledge and experience can often be trapped between their ears with little chance of successful transition to the next generation. The transfer of knowledge is one of the keys to the long-term viability of any tight-knit organization. We need to do a better job of managing this transition.
The first step to developing a program is to do an assessment of the key positions in the organization. Obviously, we can’t perfectly predict when someone is going to leave the organization. However, as some of our executives hit the last 10 yards of their working careers, we need to develop a strategic succession plan for them.
Talking about retirement and succession isn’t always comfortable. These discussions need to be loaded with respect and dignity. If the company has developed a culture of trust and mutual respect, these conversations can be a very positive experience.
Be careful about having newly anointed next-gen leaders start these discussions. You might be better off inviting the previous generation to sit in on the initial discussions to alleviate any fears or wrong intent. Sometimes, deferring to the wisdom of your elders is the best way to ensure the longevity of the company.
Providing Career Paths
If you have followed my rambling opinions for any length of time, you will recall that I am a big fan of formalizing a career progression in the company. There may be an unwritten one trapped between the ears, but I urge you to get it down on paper. What is the logical career path for an associate entering the organization? How do we help them move through the logical positions to where they can branch out into their specialty?
Not everyone is suited for field sales. So why do we believe that the only way to the executive team is through this position? Don’t fall into this trap. Many of your best associates are better suited to operations and management; they need to have a strong career path offering.
Truth be told, some of your most successful salespeople lack the ability to lead people. Yet, we have all made the classic mistake of promoting an amazing salesperson to a sales manager. Create a logical progression that focuses on the individual’s unique talents, and avoids the painful frustration of tradition.
Another way to think about creating a formal progression is that it allows us to build bench strength. For those of you who don’t enjoy sports analogies, I am talking about creating an associate structure that fills key positions when someone moves on to another role, either inside or outside the company.
Building a bench is a form of strategic succession planning. As associates ascend through the positions, preparation and training will help them be better equipped to take on key roles. While this is a solid first step, I would like to see this program be augmented by a formal mentoring program.
Mentoring is where a senior associate agrees to spend time helping a newer associate navigate this progression and understand the culture of the organization. This can be critical for making new associates feel part of the mission. Younger generations grew up with consistent feedback and guidance. When this isn’t present in their first working experiences, they can often feel disconnected and more susceptible to the greener grass of another company.
Developing a mentoring program doesn’t happen overnight. Not all senior associates are cut out to be mentors. Mentors are other-centered individuals who gain personal satisfaction in the success of those they mentor. They need to give their mentee time, and must be able to listen to the fears and frustrations of their charge.
As you will discover, putting people together is an art unto itself. This is where personality profiles can assist in this process. Detail-oriented people will probably be more comfortable with other people of the same mindset. Extroverted salespeople may be better suited to those who share the need to be around customers. Again, not a perfect science, but the more time you take in the matchmaking process, the better chance for a successful connection.
In the case of planned retirement, we need several months to put together a successful transition. This is where some of that honest dialogue mentioned earlier will give us the best opportunity for an effective transition.
I have worked with individuals on transition plans in the past. In one organization, I was brought in when the retiring general manager was leaving in eight months. This isn’t a bad runway to work with. The retiring executive had no problem sharing information with his successor. Moreover, the challenge was to extract this 40-year body of knowledge in an organized fashion.
With a little guidance, we were able to break the remaining months down into themes. Some of these themes included supplier relations, delivery logistics, pricing, inventory management, sales management and finance. The rule was that we would only focus on the designated theme during the month.
What this did for the relationship is it didn’t allow the knowledge transfer to be random or situational. The program was intentional, and I am pleased to report that the successor felt very confident when the general manager finally hung up the cleats.
Take a critical look at your company. Do you have senior associates who might be close to retirement? Do you have a plan in place to fill those shoes? Identify successors early so that you have the time required to facilitate a transfer of knowledge. Develop a culture that champions progression and the desire to foster success in others.
Strategic succession planning isn’t something to fear. It comes down to recognizing a need and inviting the whole team into the process. Good luck, and know that I am always here to help.