Retirement party
Baby boomers are retiring and younger workers are changing jobs. This turnover in positions means upheaval of small businesses’ ownership and larger companies’ leaders. Planning ahead helps a company survive this turmoil—and possibly even thrive relative to their less-prepared competitors.
Retirements have doubled, comparing the last five years of Social Security data with the long-term average from 1975 through 1995. That’s not just the pandemic, as retirements were rising even before 2020.
Voluntary employee quits hit a low in the Great Recession, then rose pretty steadily until the pandemic lockdowns. They have returned to the growth trendline and now stand more than 25% above early-in-the-century levels.
The high turnover forces business leaders to think about succession of ownership, executive positions, and lower-level managers.
The latest issue of tED Magazine focuses on succession with a series of crackerjack articles. The magazine is published by the National Association of Electrical Distributors (a former client of mine) but the content of this issue will prove valuable to any business.
Small business owners will gain by pondering the title of the leadoff article, “Hope Is Not a Plan.” Carol Katarsky lays out three types of succession plans. The emergency plan sets out what happens if the owner or an executive suddenly becomes unable to continue. As the chairman of the board of directors of a non-profit, I’ve believe this to be my most important task. The second type of succession plan is defined in advance, as when a person announces retirement months or even years in advance. Owners of small or medium businesses thinking about their own exit often have trouble getting started with succession planning, but the first three steps are easy I previously wrote. Finally, ongoing development of managerial and technical talent will help a company cope with future retirements and quits.
Talking to team members about their career plans provides vital information. The question might be, “Where would you like to go in your career?” or “If we have an opening for sales manager, would you want to be considered for the position?” Surprisingly, some people would not want a promotion, a decision that could be motivated by a number of different reasons.
“Growing New Managers” by Phillip Perry emphasizes that workers may not want to stay if experienced managers leave. That’s a twist on the old wisdom that people don’t quit jobs, they quit bosses. And if the new boss has trouble coming up to speed, employee turnover will rise.
Transition plans often end up on the back burner as daily issues press on top leaders, aggravated by the perception that the planning will require a great deal of work. The actual planning task, Perry writes, can be broken into three manageable steps. First, define the duties requiring transition. Some my be easily shifted to other workers, while core duties will be taken over by a new person in the position. Second, identify candidates for the position. Third, assuming the candidates are within the company already, coach them on the skills they need.
Coaching to upgrade current employees’ skills is addressed in “Build Your Bench” by Susan Bloom. Skills to consider are not just technical, but also inter-personal. Does the person listen well, understand other people’s perspectives and communicate clearly? In some cases, skills can be grown by assignments a bit outside the person’s current responsibilities.
People who occupy technical positions, such as accounting or information technology, may need to learn more about the industry writes Jan Niehaus in “Courses of Action.” For example, the former chief economist of Chevron once told me about helping young staff economists “get oily” through postings in the operating divisions of the company.
Letting current issues push aside important but non-urgent issues poses the greatest threat to leaders’ performance in many dimensions. Succession planning across the company constitutes one of the non-urgent areas that must be addressed by successful business leaders.
