10/10/2022
Succession Planning
What is the #1 factor that will determine whether independent LBM dealers survive?
Continuous talent and leadership development
Identify successors at every leadership level
Build your bench – where is your talent coming from? Internal? External?
It is easy for a company to be mired down in tactical operations. The ability to build and develop your teams is the #1 factor that will ensure not only viable and profitable operations today but will ensure your future success.
What is the business case for succession planning?
Longevity
Culture, mission, vision, values will stay intact
Ensures operational stability
Identifies future leaders
Talent retention
Career pathing
Provides organizational clarity
Crisis aversion
Minimize transition costs
Clearly defining a business case for succession planning is foundational. There are many reasons to have a working succession plan in place, but primarily, having a solid succession plan ensures a sustainable future and survival for your company.
What are the critical first steps in succession planning?
Define the why – commitment to why this is necessary
Evaluate current organizational structure – SWOT
Start with the most important roles first
Define expectations as to what, how, when
Communicate openly
Plan realistically, review often
Succession planning is often seen as an overwhelming task, and many companies fail to develop a strategic plan. If the process is broken down into small, manageable steps, it becomes a less daunting task. Defining your “why” is a great first step to putting your feet on the path.
What prevents companies from succession planning?
Fear of massive change
Narrow mindset, we have always done it this way. There is more than one solution
Does not always need to be family or internal talent – look externally
Tax concerns
Fear of immediate negative impact of salary and wage lines on P&L’s
Psychological impact/ego
Fear of change is the #1 reason that companies do not develop a succession plan. Running status quo, especially if the business is successful, makes it easy for a company to focus on the present, rather than forward planning.
What is the best way to measure how effective a company is with succession planning?
How many people your company has trained, developed, and promoted
Depth of organizational positions
Hiring and turnover
Performance based culture, not tenure based
It is important to keep a full “bench” of associates from which to develop your succession plan. How many people has your company developed and promoted into senior leadership roles? Ensuring that you have at least one individual identified as a successor for each leadership position in the company is a wonderful place to start.
What are the best practices for training and developing presidents and senior leaders?
Cross training
Provide support
Accountability with needed responsibility
Clear job description to articulate what you are/are not responsible for
No micromanagement
Clear direction/career guidance
Take a “we not I” approach
Egocentric – vs humility – find the balance
Leadership education
Creating opportunities to develop leaders in your organization is multi-dimensional. A broad exposure to all facets of business is necessary; but providing additional opportunities to the candidate is paramount. They should be regularly participating in processes that will be required at the next level of leadership.
Best Practices – Attracting and Developing Talent
How do you define a great culture?
A group of people who are aligned and holding each other accountable to a set of values, and the mission, vision and values are clearly communicated
Defines the company “personality”
Clear mission, vision, and values
The industry has a branding issue (not cool) – make sure your company does not fall into that “not cool” category
Successful businesses have learned the importance of culture. Attitudes and values of senior leadership defines that culture and can serve to build a culture that is attractive, positive, and productive.
How do you measure a great culture?
Tenure
Turnover
Applications and/or referrals
Staff/leadership lives/articulates mission, vision, values
Customer retention
Number of people professionally trained, developed, and promoted
Provide opportunities for T&D, investments are allocated for that
Celebrate the wins
Performance goals/review on regular basis
Expectations clearly defined
Feeling valued
Culture is more than a feeling; culture is business in action. There are clear metrics that can help leadership evaluate their cultural strong points and can also demonstrate where there may be gaps.
What competitive advantage do companies that develop and retain more people than needed have?
Positive impact on the communities they serve
Insurance that the culture retains its uniqueness
Legacy for future generations
Survival of the business
Continuity of operations – no disruptions
Continuity of customer service/relationships
Profitability
It is no secret that companies with great cultures function as a magnet to employees. People are drawn to positive, engaging cultures that have a clear mission. Companies that invest in creating and maintaining their cultures have a clear edge on attracting employees to their teams.
How much time should a senior leader/president spend training and recruiting people?
40-50% recruitment and development, 10% reporting up, 30-40% with customers/market
Work on the business, not in it
Business is complex and can be demanding, and it is easy for leadership to get bogged down in the minutia of day-to-day business. Keeping a mindset of a people first culture is imperative. People are the lifeblood of any business, and as such, leaders need to devote their time to recruiting and developing their teams.
Strategy
What is the one unique value proposition that your company possesses that your customers can not live without?
Take this question back to your team and define your company’s Unique Value Proposition.
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