Those manufacturing companies that have a natural path to succession, such as a son or daughter to take over the family business, should consider themselves fortunate. Most small to mid-sized manufacturers don’t have that option.
Did you just spend the last 40 years building a company to hand it over to the highest bidder? That question may seem harsh, but the lack of succession planning threatens manufacturing’s future.
As the last of the baby boomers round their way up to 60, companies are slowly realizing that their retiring leadership is leaving gaps in intelligence and historical knowledge that threaten the future. When you have someone so good at their job, doing it for 30 years and not sharing information to the next person in line, you risk losing everything tied to that one “irreplaceable” person. You risk your business.
Here are some signs that your succession planning needs more attention.
1. You Don’t Delegate Enough
Have you written down your job description recently? Seems silly to think about doing that when you know you aren’t leaving your own company. However, sometimes business leaders don’t realize that they are taking on more than they should. They either have made a habit of “just doing it themselves” —micromanaging—or they honestly don’t have confidence in their employees. Regardless of the reason, you will one, burn out faster that way, and two, have no hands to leave your company in. Jeffrey Pfeffer, Stanford University’s Professor of Organization Behavior says it best in a recent Harvard Business Review Article, “If you asked most managers how they spent their day, they are not going to be able to recall it accurately,” said Pfeffer. “You’re likely to find that a lot of time is spent on low-leverage activities that can be delegated.”
2. You Haven’t Hired the Right People
Part of the above micromanaging extends into having trust in your workforce. With manufacturing companies of all sizes, recruiting employees is a top-level concern; there is a real skills gap issue that contributes to taking in people out of necessity and not being careful with hiring the right people for a long-term fit. If you have not sat in on a recent interview, it might be time to. Making sure that your HR team or hiring manager is asking the right questions can really improve your bottom line and help you avoid future turnover. This will also allow you see the pool of candidates for a future succession plan and allow you to develop a culture that sees your vision.
3. You Are Not Developing Your Successor
A shocking statistic shared by Forbes stated “58% of managers said they didn’t receive any management training. Most managers in the workforce were promoted because they were good at what they did, and not necessarily good at making the people around them better.” There are many problems with information but most notably, our work force is made up of leaders that cannot lead. If you want to have a successful succession, then you need to teach your employees how to lead your business and the people that work for you. Easy things you can do include bringing them to board meetings, having them go to the conferences you attend, and introducing them to the right people to develop their own relationships. Make the people you choose to take over one day build their foundation. This kind of development is not beneficial for just you, but the employees feel valued over time and will take a natural ownership of their job and eventually your company.
4. There is no Clear Company Vision
This might seem like a basic concept for a larger company, but many smaller manufacturers don’t have long-range plans. With technology changes, automation, 3D printing, IIoT and blockchain, your factory floor is having a bit of an identity crisis and your employee profiles are changing. Planning for the future is more than just hiring the right person: it’s making sure your vision is preserved takes real strategy that all levels of your company need to stand behind. You can bring up the right person, but if your actual business plan is not properly put into place, there is no roadmap to keep everyone on track long after you’re gone. If you find yourself stuck here, bring in a consultant—someone less wrapped up in the current structure—and have them help you outline the future.
5. You Are Afraid to Talk About it
Discussing succession planning is just as important has having a plan. Many leaders say that they are the name and face of their business and that their company is one of the most important things in their life, yet they are afraid to ensure the company lives on beyond them. Whether that stems from an ego issue or fear, being transparent in the succession process can help all involved. A XpertHR survey of more than 500 executives said that 40% of organizations have no formal succession planning process and another 20% don’t have adequate talent to back up critical positions. As a manufacturer, can you afford to have down time on the plant floor? No. The same should be said with leadership positions; customers will not wait while you figure out the sustainability of your company. Talking about the plan with your HR department, employees and even your industry peers is a great way to ease the transition for the entire company.
The biggest take-home regarding succession planning is that you need to think about it now, years before you plan on leaving or retiring. If you really care about the business or want to be a steward for the industry, then don’t worry about your legacy but instead, the health of the organization without you.