The truth about succession planning
By Neil Parton, Elumatec’s managing director.
Many in business are familiar with the concept of succession planning. It’s often associated with family concerns, such as agriculture, but it’s also used by smaller businesses originally established by one individual but now employing several generations of a single family.
But succession planning isn’t just for family businesses. Every venture, large or small, needs to have a sound plan for its future. Investing in the development of people who will go on to become leaders is vital, but it’s also essential that organisations plan their machinery investments.
In manufacturing, both people and machinery are business-critical resources that need consideration; not as a one-off but as an ongoing practice. That’s because, in this world, nothing stays the same. People gain experience. They age. They may get sick. They may retire, and machines follow a similar trajectory: from shiny and new, to purring productivity and eventual obsolescence.
The big changes are obvious, predictable even, but minor changes can also have a significant impact. As ageing humans, we may become change or risk averse. We may be less likely to adopt innovative technologies. We may become more restrained in our ambitions. An ageing machine might have to be carefully managed to keep it operating, requiring more frequent servicing or spares that have become hard to source. We might not use all its features or use the machine only when the one operative who truly understands it is on shift.
Any unplanned-for change in business-critical resources, large or small, human or mechanical, can hold a business back. It’s why succession planning is recognised as a key business process and why investment planning needs the same care and attention. Together, succession and investment planning equip a business to be forward facing and to stay ahead of the competition.
With succession planning, organisations pick out individuals with potential. They chart their performance and seek those who excel. They look for people who fit the culture without being rigid. And when they have found these adaptable, future leaders, they work hard to keep them. Retaining talent can be easier than finding it.
These ideas apply to machinery as well as people. Walk out on the shop floor and ask yourself whether your equipment is reaching its potential? Is it productive? Are its special features in use? Is it idling or performing at the optimal level? Is it a good fit for the organisation you are now? Will it support your goals?
All too often, organisations avoid asking these questions. They know where their next line manager is in the HR department’s development programme. But what’s next for the machining centre?
The first step in any machinery investment plan is to know, precisely, where you are now and where you want to be. Which markets do you want to serve? Are they growing? Where do you want to position yourself? What do you want to achieve? And then, you need to be objective and ask whether your existing plant and equipment is going to help or hinder you.
When you’re starting this kind of appraisal, being objective isn’t easy. You’ve already put a lot of time, money, and effort into what you have. Understandably, you want to believe in it. It can help to distance yourself from the appraisal. Imagine yourself as an independent consultant, free from any bias and capable of giving an open and honest assessment. If necessary, seek outside help. There’s another parallel with succession planning: sometimes there isn’t anyone coming up through the ranks with leadership potential, and organisations recruit from outside. Similarly, if you have an employee – or indeed a machine – draining your energy, you must be prepared to let them – or it – go. If it strengthens the operation, it’s fine.
Expert investment advice can be very valuable. As well as looking into the details of running costs and the financing of an acquisition, projects can impact taxation and capital allowances, meaning that correctly timing a purchase can make a significant difference.
There’s another reason that investment planning is more important than ever before. We’ve seen all sorts of markets affected by supply and demand issues recently. That situation won’t be resolved overnight. It may persist long term. And in these circumstances, having a long-term plan for investment will give you the best possible chance of having the production resources you need, when and where you need them.
Do all your planning. Grow your business.