As the labor shortage continues and distributors work to fill critical roles, many are desperately focused on recruitment – and nothing else. There doesn’t seem to be time for anything else. However, this approach doesn’t set a business up for long-term success and stability. While you’re fighting fires on the front lines, you could lose sight of existing talent. That talent could walk away, leaving you worse for wear.
Forbes outlines the five hidden costs of employee attrition in addition to the costs of recruitment and hiring new employees: lost productivity, employee burnout, lost tribal knowledge, wasted time and money hiring replacements, and costs of training new employees and risk of mis-hire.
Worse still, if you don’t have a succession plan in place and another individual ready to step up into that now-empty role, your operations are likely to suffer. In such a state, it will be difficult to continue to compete in today’s changed distribution environment, and even more difficult to pursue growth opportunities for your business.
Employee growth and retention are as important as recruitment, and keeping an employee is typically more cost-efficient and better for your company culture. If you continually lose employees, all of the effort you’re putting into recruitment won’t be fully realized. To maximize efforts, develop a structured succession plan. It will not only help you ensure business continuity but also help you create career paths to help employees grow and motivate them to stay.
Distributors Need Stronger Ranks for the “Never Normal”
The industry has changed, and it will only continue to change. Your capacity to compete and the speed at which your company can grow depends on your people.
- The market looks different as consolidations continue, labor markets tighten, the supply chain remains continually disrupted, transportation costs increase and margin pressures make profitability a challenge.
- Customer expectations have evolved, and it’s difficult to predict how much they will continue to evolve. At this point, customers expect a streamlined hybrid buying experience and value-added services.
- The sales function has been permanently altered by the pandemic. Much of the buying journey now happens without the involvement of a sales rep.
It’s as if the industry is entering the hyperdrive of change, transitioning from this concept of the “New Normal” to the “Never Normal,” which is characterized by dynamic, macro changes at an increased acceleration.
You’re better prepared to thrive in such conditions if you have a strong, supported workforce, clear plans and requirements in place for all roles – from branch managers to Presidents.
What Many Distributors Are Doing About Succession Planning
How are distributors managing their succession plans today? Unfortunately, some only have plans in place for their C-suite. And a great number of companies do not have a plan in place at all.
In many cases, leaders have an idea of who could be a successor in their workforce, but they do not declare it, or only tell top management. They worry that, if they tell the candidate they’re slated to succeed, that candidate will expect a promotion soon or it will send a negative message to other employees.
However, if these potential successors, or high-potential candidates, don’t see growth opportunities for themselves, they may leave.
It’s essential to identify your high-potential candidates and give them the opportunity to learn and train, so they can step into those roles effectively. Without this, you could limit or even hurt your current operations and miss out on opportunities to expand.
Action Plan for Distributors to Elevate Succession Planning
A structured, organized succession plan is a natural employee growth and retention strategy. This not only shows existing employees that you value them and that there is room to grow at your company, but promoting from within helps you maintain a healthy company culture and show potential new employees there are advancement opportunities.
To develop a succession plan, you must:
- Identify critical roles for your current and future business. This isn’t just for C-level roles. Consider how critical branch managers are, and what’s at risk if you don’t have someone to step into this role.
- Build success profiles for roles. What skills, knowledge and competencies do you need for each? Without these defined, you could end up promoting a great salesperson to a mediocre manager because you didn’t set them up for success.
- Identify high-potential candidates who could be successors. High-potential candidates are those with the knowledge, aptitude and willingness to “move up.”
- Create a personalized Development Plan. Develop and implement a learning and development plan with a 70-20-10 approach. 70% experiential learning, 20% mentoring and 10% formal learning.
Having a structured plan in place, with people assigned as responsible, will ensure it’s not an ad-hoc process and you’re constantly growing your employees.
For example, as part of your structured process, if a manager goes on vacation, a high-potential candidate could be acting manager for that time to gain experience of day-to-day managerial responsibilities. You could also have high-potential candidates shadow management and attend management meetings to prepare for those roles. Or you could start them off as managers in training for a set number of years.
Succession Planning Goes Beyond Business Continuity
Succession planning does more than secure your business operations: it strengthens your company culture and makes your business more attractive to new hires, who want to see opportunities to grow. Without an objective process in place, employees may feel their career with you is static and may consider any promotions out of reach.
While succession planning does take time, it’s time well spent for leadership. Leaders’ main role should be creating a vision for the future, building their team and communicating. Spending time on these objectives is key to long-term growth.