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Boost your business value with succession planning

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Succession planningThe time will inevitably arrive when managers of a successful business must pass on the responsibility to new management. It is a critical time, says Stephen Seymour, who explains that careful succession planning can minimise the risk of damage during the change and enhance the value of the business.


Over time, all enterprises evolve and grow around the vision, skill and enthusiasm of the people who lead and manage them. The business gradually becomes an embodiment of their judgement, values and decisions. If they leave, the dynamics of the business will inevitably change. It is vital this is controlled if the value of the business is to be maintained or enhanced.

The first step is to decide precisely the effect their departure will have on the organisation and remaining staff members. There could be critical skill gaps which need seamlessly filled.

Looking inward for future success

The assumption is companies will need to recruit externally to fill operational gaps as they undergo change. This is not always true. Succession planning can be an opportunity to refresh, revitalise or reposition a staid enterprise.

“Employees may not have been invited to take a new work direction or to adopt wider responsibilities but it is definitely more cost efficient to uncover unsung talent in existing staff.”

I strongly believe businesses can move forward by optimising the contribution of their existing management, staff and workforce. Existing personnel may have undiscovered capabilities and talents and these attributes may not have become apparent in their existing roles due to habit and complacency rather than a failure to invest in employee development.

Employees may not have been invited to take a new work direction or to adopt wider responsibilities but it is definitely more cost efficient to uncover unsung talent in existing staff in place of recruiting and introducing new personnel. Job rotations can sometimes reveal hidden abilities. An operative might have innate interpersonal skills which earmark him or her for development into line management.

How to boost existing employees’ skills

In some instances, the skills shortfalls can be filled by job rotation. Skills shortfalls in one department can be overcome by importing them from another where an individual’s ability is being underutilised. There are huge savings to be made by offering coaching, mentoring or further job training to existing staff.

Companies should consider taking positive and structured training action rather than launching a recruitment drive as this can expand the skills of employees and identify and improve areas which require development.

Coaching is not merely structured learning. It is more focused on supporting individuals and teams on their developmental journey. It’s a question of honing their true future potential and turning this into a reality.

Similarly, I see mentoring as the passing on of knowledge by a more experienced person to a less experienced one. Again, it’s not so much about structured learning; more about enabling through providing guidance, support and understanding.

“It is about nurturing people who have the capability to fulfil key roles both now and in the future.”

External or interim HR consultants can provide mentoring and coaching on a stand-alone basis, either to supplement a training course or as part of a larger-scale training and development programme.

The benefits of investing in existing employees

Investing in existing employees and working to improve their skills can prove hugely beneficial to an organisation. Apart from the obvious time and money savings there are numerous other aspects which can impact on the corporate ethos and performance.

Employees’ perceptions of their career progression prospects change. They will obviously be prepared to make a deeper commitment to a company which invests in them. This creates a sense of career scope among the whole workforce.

This should be an ongoing process. Trainers, coaches and mentors must dedicate time to getting to know their client’s business and absorbing its culture as a prerequisite of cultivating teamwork and enhancing productivity.

It is about nurturing people who have the capability to fulfil key roles both now and in the future; knowing who could be an asset to the company in a couple of years time and who is likely to be leading the company forward in the longer term.

Background, qualifications and experience only paint part of the picture. The qualities which make people exceptional managers, leaders, drivers and visionaries are somewhat more elusive. You don’t get certificates in perseverance, determination, emotional intelligence and resourcefulness. Years of service which may be attributed to the individual’s lack of enterprise and ambition might actually be due to unwavering loyalty or the lack of real opportunity to develop.

Assessment

Internal recruitment for senior or critical positions is vital to the future of the organisation and needs to start much ahead of the time of the expected succession so the transfer of responsibility can be a gradual process rather than a sudden dramatic event.

“The future performance of any company is reliant on the thoroughness of today’s succession planning.”

After finding out what competencies a particular company needs to achieve its goals, HR advisors can devise exercises to identify and develop strengths, and remedial programmes to overcome shortcomings where there is need for improvement.

A precise psychometric assessment of an individual’s range of skills and capabilities will define their suitability for bridging the gaps which need filled. The objective is to get the closest possible ‘fit’ between the underutilised potential and operational shortfall.

Failing to prepare is preparing to fail

The key to future success lies in understanding the value of the resources you have and what you are likely to need in the coming years. The future performance of any company is reliant on the thoroughness of today’s succession planning. Those with an interest in acquiring or merging with an existing business must put a finite value on it.

Any investor will agree running a slide rule over the fixed assets, past performance and future profit expectations of a target company is comparatively straightforward. What really interests them is the quality of the next generation of management and its preparedness to propel the enterprise to new heights.

Every management hopes to bring about a smooth transfer of control after an acquisition, merger or other transaction. Having competent and consistent management and an able workforce in place from day one will be a decisive factor in negotiations. It will influence the viability financial institutions place on the deal and the fiscal value placed on the business.

In short, improving the value and saleability of your business for the future is reliant on planning for and building the next generation right now.


Stephen Seymour is from HR consultancy The Urquhart Partnership. You can contact him on 0161 237 3553 or [email protected]

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