(This post originally was published in the Portland Press Herald)
Most employers have no plan in place if they suddenly lost their CEO or any other key employee – that according to a recent Society for Human Resource Management survey of HR professionals. Only 31% of companies have a plan, while 69% have none and 42% have no intention of ever developing one. No contingency at all. That’s a recipe for disaster.
Imagine operating your business with no plan if your computer system crashed and all your data disappeared, or not knowing what you’d do in the event of a fire. Yet some companies continue to operate hoping nothing bad ever happens to their owner, CEO or any other key employee.
As you look at your workforce, there are three realities that must be acknowledged: people quit, people retire, and people die. As cold as this may be, it always happens. We may be able to plan for retirements, but resignations and death are rarely planned events, never happen when we want them, and always happen regardless of how much we hope they won’t. So having a plan to address this only makes good business sense.
As a state, we are getting older.Mainehas the oldest population in the nation at 43.4 years of age. The number of workers age 45-54 increased 4.6% in the last decade and workers 55-64 increased by a whopping 55.8% according to the 2010 Maine Labor Market Trends and Issues study. While our workers are graying, the number of younger workers continues to decline.
As workers get older and our youth population declines, our workforce is being significantly impacted. Think about what your workforce will look like in 5 years? 10 years?
Maine employers are now faced with three significant challenges:
- As employees retire, how will you replace them?
- Before retirees leave, how do you capture their vast knowledge?
- As workers age, the risk of disability and death becomes more likely, so how do you prepare for this emergency loss?
As unfeeling as this seems, employers must put plans in place. Yet, so many business owners and executives find every excuse to avoid addressing the issue. In interviews I conducted, most provided the following reasons to not move forward with a plan:
- Many are dealing with the crisis in front of them and had no sense of urgency about addressing a future problem. As I warned, those that do not plan for the future, often have no future.
- The issue of planning for succession often hits too close to home. The thought of someone stepping into their shoes is very painful.
- Others simply did not know how to begin to develop a plan—so they did nothing.
- Some did not have any time for people issues as “they had more important things to deal with.”
- Finally, a very small number saw no reason to consider it. As one jaded executive told me: “why should I care—I’ll be gone.” Obviously this organization does not have a promising future.
So what is succession planning? It is a process of identifying and developing existing talent to ensure key organizational positions can be filled with qualified internal candidates in advance of their actual need. It is a dynamic process focused on creating pools of talent available to meet the immediate and long-term needs of the company. Put simply, it is building bench strength. In sports, when a player goes down, someone has to be ready to run out onto the field. So too in business.
Organizations, large and small, that put in place contingency plans for the future also obtain immediate benefits. By preparing their key staff to assume large and broader roles, they realize increased productivity and higher degrees of employee engagement. Through investing in the development of their staff, they better position the organization while growing the careers of their staff—a classic win – win.
Today we are at a critical juncture. We know that, left unchecked, the flow of talent out of the workforce will steadily increase. Succession plans can begin to refill the pipeline.
Many executives and business owners spend a lifetime building a business. The thought of one day leaving it in the hands of others can be frightening and emotional. In discussing this with one business owner, I watched him tear up as he grappled with his business future, and possibly his own mortality. Yet only after a plan was put in place did he begin to accept this reality. Succession planning ensured that his legacy and business would continue. What a fitting way to succeed.