It’s essential to the success of your manufacturing organization that you plan for the future, both near and far out. One key aspect of this growth and continuous operation of your business is succession planning; as employees retire, you need to fill their shoes with someone who can confidently take on that role and those responsibilities! Read further for an in-depth explanation of what succession planning is, why it’s critical for your manufacturing business, and tips on where to start.
- What is Succession Planning?
- Why Should Your Manufacturing Business Consider Succession Planning?
- 9 Tips for Effective Succession Planning in the Manufacturing Industry
What is Succession Planning?
Succession planning is a strategy for passing on leadership roles to an employee or groups of employees gradually over time. It ensures that the business continues to run smoothly over the course of time so that the operations don’t become so critically attached to the presence of one specific person.
It’s a process that involves cross-training employees so that they develop leadership capabilities, multidimensional skills, company knowledge, and a holistic understanding of the organization. Essentially, it’s about preparing the next generation of leaders in order to thrive in the future. The succession planning process can take anywhere from two to several years to effectively complete.
Why Should Your Manufacturing Business Consider Succession Planning?
There are many reasons to consider succession planning for your manufacturing business, such as empowering your employees to understand the possibility of advancement and potential ownership roles that might be possible for them. Succession planning also puts supervisors in a position to mentor employees in order to transfer knowledge & expertise, so internal operations strengthen as part of the process. As management demonstrates they value employees, they further affirm your manufacturing company’s vision and values. This cultivation of new leaders also assures stakeholders that your organization has plans for the future and its growth!
To not actively work on succession planning has several potential consequences. A lack of succession planning puts your manufacturing organization at financial risk in the short and long-term future and could lead to loss of knowledge and experience from skilled or specialized employees leaving your organization. By losing these key employees, your manufacturing organization might experience internal power struggles and other related issues, as workers could be tempted to leave if there is no clear path for them moving forward.
9 Tips for Effective Succession Planning in the Manufacturing Industry
Now that you understand the significant impact succession planning can have on your manufacturing operations, you want to get started on implementing a plan as soon as possible! There are nine critical steps to successful succession planning; here’s where to start:
1. Identify Critical Positions & Roles
First, your manufacturing organization should identify roles and positions critical to your current successful operations. Think, if that person were to put their notice in tomorrow, how would that affect your business? Would that impact be felt immediately or is it a job that can be easily and quickly filled? Try to estimate if there are internal employees who could step up to the plate and maintain that role to the same level, or better, than that current person. Overall, you want to recognize all key players in your organization to plan for the future.
2. Build the Profile of Success for those Positions
Start with what the job actually entails and what those responsibilities are in relation to the business. You need to understand the knowledge, competencies, experiences, personal attributes, leadership qualities, and more to adequately do succession planning for that position. It’s like putting an ad together for your ideal candidate in that position and how they would affect your manufacturing organization.
3. Nominate Successors
To assist with evaluating potential successors for these various positions you have outlined to target with succession planning, utilize a rating scale to evaluate potential candidates. Factors might include:
- Urgency: Now - 5+ years
- Level of confidence in that candidate: 1 (Not at all) - 5 (Extremely)
- When do you need to fill this position? 1 (Never) - 5 (Now)
This will help create a more objective outlook on potential successors to help organize your thoughts when doing succession planning.
4. Assess the Development Needs
Now that you’ve identified a few potential candidates for critical roles in your manufacturing organization, you need to assess their development needs in order to get from their current position to the future role. Do a gap analysis in which you evaluate their present performance against their future potential, and get the person in the soon-to-be succeeded position to do their own assessment of the candidate, too. This person will give an insider perspective and sizing-up of any future candidates that might take over their role someday.
5. Develop the Talent
Upon selecting an appropriate successor for a role in your manufacturing business, you need a development plan. This is essentially a timeline of moving from Point A to Point B within your organization, and includes appraising the candidates' current operational factors, their readiness for growth, areas for improvement, goals, objectives, and more. This plan should also be held accountable for completion by target date and measures for progress over the course of time, in addition to providing resources and training for this candidate.
6. Create an Implementation Plan
It’s best to use your succession team within your manufacturing business to assign actions, plan out target dates, and create metrics relevant to the position and which are reasonable for the circumstances. This internal team should meet regularly to review the progress of the candidate and the implementation plan in order to adjust as needed.
7. Document the Process
In order to replicate this process and refer back to the order of operations for succession planning in your manufacturing organization, you need to document various factors along the way. Such documentation should be pertinent to the position involved, the incumbent and potential successor(s), retirement status or potential for retention, mobility within the organization for that person or position, etc.
Be sure to keep track of relevant training completed, both internally and externally, staff readiness, gap analysis, and more. This paper trail can serve as a guide for other areas of your manufacturing business and can be referred to in the future!
8. Measure your Succession Planning Progress
To keep the process of succession planning as streamlined as possible, your internal team needs to track its development! Objective metrics appropriate for each position considered should be outlined and clarified for everyone to be on the same page, time periods for reviewing the progress should be determined, and this can enable patterns to be tracked over time, as well.
9. Evaluate, Reset, and Continue
At the end of the road, it becomes clear how your succession planning process played out. This is a key time for reflection on what went right, what caused some speed bumps along the way, or what didn’t work for your manufacturing company. Take the time to gather this information from all pertinent stakeholders, and realign your succession planning goals and implementation for the next time!
Ready for the next step in succession planning? For a no-cost business assessment and plan of action exclusive to California manufacturers, request a meeting with an Expert Business Stabilization Consultant at CMTC today!
About the Author
Gregg Profozich is a manufacturing, operations and technology executive who believes that manufacturing is the key creator of wealth in the economy and that a strong manufacturing sector is critical to our nation’s prosperity and security now, and for future generations. Across his 20-year plus career in manufacturing, operations and technology consulting, Mr. Profozich helped manufacturing companies from the Fortune 500 to the small, independents significantly improve their productivity and competitiveness.