The overall point here is that you really must be intentional about supporting the growth of your employees. In our lean worlds, it is easy to let six months or a year pass with really no focus on an employee’s growth needs — especially if they are doing a good job. It will take discipline on your part to support an employee’s growth through assignments and training.
As we have discussed above, one important aspect of management succession planning involves evaluating the skills of people in your feed and grain business and identifying those employees who have the potential to ascend to top management roles. In this way, succession planning encourages staff development and sends a message to your employees that your company is serious about developing people. This approach may also persuade talented employees to stay with your firm rather than looking elsewhere for growth opportunities. Grooming a successor from within the company can save the time and expense of hiring a new leader from outside. It also aids in continuity, as an insider is more likely to follow through with current plans and strategies.
The key to management succession planning is preparing a written succession plan. This document provides for the continued operation of a business in the event that the owner — or a key member of the management team — leaves the company, is terminated, retires or dies.
According to the online “Encyclopedia of Business” (www.referenceforbusiness.com/encyclopedia), fewer than one-third of family businesses survive the transition from the first generation to the second, and only 13% remain in the family for more than 60 years. Ninety percent of family companies fail to transfer into the third generation. Additionally, only 45% to 50% of business owners establish a formal succession plan. Thus, it would appear that there are definitive opportunities for working on succession for as an old management proverb states, if you “fail to plan, plan to fail.”
Experts claim that management succession planning should ideally begin when the manager or business owner is between the ages of 45 and 50 and if they plan to retire at 65. Since succession can be an emotionally charged issue, sometimes the assistance of an outside consultant or mediator is required. Developing a succession plan can take more than two years, and implementing it can take up to 10 years. The plan should be carefully structured to fit the company’s specific situation and goals. When completed, the plan should be reviewed by your firm’s lawyer, accountant and bank.
In the Small Business Administration publication, Transferring Management in the Family-Owned Business, Nancy Bowman-Upton discusses the fact that succession should be viewed as a process rather than as an event. She outlines four main stages in the management succession planning process: initiation, selection, education and transition. In the initiation phase, possible successors learn about the business. Here it is also important for the manager or owner of the grain and feed business to speak openly about the business, in a positive but realistic manner, in order to transmit information about the company’s values, culture and future direction to the next generation.
The selection phase involves actually designating a successor among the candidates for the job. Rivalry may often develop between possible successors — who, in the case of a family business, are likely to be siblings — and thus, this can be the most difficult stage of the process. Because of this, many business owners either avoid the issue or make the selection on the basis of age, gender, or other factors besides merit. Thus, Bowman-Upton recommends the firm owners develop specific objectives and goals for the next generation of management — including a detailed job description for the successor. Then a candidate can be chosen who best meets the qualifications. This strategy helps remove the emotional aspect from the selection process and may also help the business owner feel more comfortable with their selection. The decision about when to announce the successor and the schedule for succession depends upon the business, but an early announcement can help reassure employees and customers and enable other key employees to make alternative career plans as needed.