It's no secret that UK manufacturing has a skills gap. We haven’t done enough to attract the volume of people we need entering the sector, to match the rate that people are retiring. We could be doing more to encourage more young people and women into the sector. Two huge demographics that could alleviate the skills gap challenge we have.
I’m in my 4th decade of working in the manufacturing sector, and one thing seems to have remained constant for the whole of this time – owners and Managing Directors of SME Manufacturing businesses do not take enough time out of the business to set a robust strategy and plan ahead. The cut and thrust of the day-to-day running of the business takes up so much time, there is nothing left at the end of the month to spend on the big picture stuff for many manufacturing leaders.
The skills gap and succession planning are strategic priorities for UK manufacturing and need senior leadership buy in, and it starts with the owners and Managing Directors of SME manufacturers. The foundations of the manufacturing sector and the UK economy.?
What Are SME Manufacturing Business Owners & Directors Missing with Succession Planning?
I can’t speak for every SME manufacturing business in the UK, but I have met a good few hundred over the years. I have worked in these businesses and also supported them from the edges. I have seen what happens at the coal face, and feel that succession planning, the skills gap and people stuff is left to the HR department (where there is one in place – because not all SME manufacturers have a HR person in the business).?
I believe, as I’m sure many other people do, that the skills gap and succession planning are strategic priorities for UK manufacturing. And as it’s a strategic priority, I feel owners and Managing Directors of SME manufacturing businesses should be paying more attention to it and supporting it. So, I thought I would help to distil down a few key points and clarify the importance of succession planning in your future strategy for the business.?
The Top 6 Benefits Owners and Managing Directors Are Missing with Succession Planning?
- Improve Business Resilience – I believe a lot of senior leaders in SME manufacturing businesses get pulled into the day-to-day to work on the efficiency of the business. The solving of the day-to-day problems that keep our efficiency levels up. But as an owner or Managing Director you are responsible for futureproofing the business and mitigating risks. Your strategic focus should be on improving the resilience of the business. You need to protect the business against the potential loss of anyone in key roles. This does happen. I’m sure you’ve experienced it. The person you can’t afford to leave leaves. Nobody is irreplaceable, but you should not have high risk failure points that have very little contingency. I believe having the appropriate succession plan for key roles makes your business more resilient, and generally good business practice.?
- It Shines a Spotlight on Underperformance – One thing that scares people with succession planning is the time it takes to get the structure in place. We know it’s wrong, but because it takes time and we don’t have the tools to do it, we ignore it. Building a good succession plan you will need to clearly define roles, including the responsibilities, knowledge and skills required to carry out the roles effectively, in line with the needs of the business and your strategy. In my experience underperformance is usually down to a lack of clarity on what is expected of the person, and no formal or informal review of performance. The succession planning process and gathering of the facts around people performance is critical to running a successful business. It is good practice to highlight performance gaps in your team and invest in the person that needs help rather than ignore it.
- Increase Your Business Value – A business that is overly reliant on its owner or any key roles within the business will reduce the overall value when you come to the point of sale. To someone looking to acquire the business it presents a high risk when the business doesn’t function without its owner, Managing Director or a key role. Having a clear succession plan will help you to remove yourself from the business and remove the hub and spoke scenario for prospective buyer. Your succession planning documentation and evidence also provides a prospective buyer with confidence during the due diligence process that your people strategy is not a huge risk.?
- Effective Strategy Deployment – Great business leaders have a clear purpose, vision and strategy. They have a good grasp on where they are headed and why. Your vision of the future should include the future organogram. What does your future team look like and what differentiating skills are you developing? Are you even thinking about the skills your business will need in 5 years’ time? Are the skills you require readily available in the market or is everyone competing for a small pool of talent. Think of the rate of change in technology, new equipment and the cultural and attitude aspects of the people you plan to employ. To effectively plan and deploy your strategy you will need to include succession planning, and the future role and behavioural needs for the business.?Not just a repeat of what you have today.
- Improve Talent Retention – I see so many young talented people leave businesses because they don’t see any opportunities for progression in the business. Often there are future roles for them, and many opportunities, but nobody has indicated to this person that they are on the radar for development and have a future in the senior management team. Young people in manufacturing today want investing in. They want to continue to learn, grow and develop. The culture of the manufacturing industry is different to what it was 25 years ago at the turn of the century. Set up developmental conversations with your team and let them know you see them, and work on a development plan of how you can support their growth over the coming years. Don’t lose your best people.
- Attract More Young People & Women into the Sector – The whole UK manufacturing community has a duty to futureproof the sector. Waving our fists at the government, or schools, or the young people of today is not going to change anything. We need to be the change. We need to be creating the environments and cultures within manufacturing businesses where young people and women want to come and work. To make your own business resilient and futureproof it for the next few decades you need a strategy to attract people towards your business. A company that is a great place to work, where people feel valued, included and supported. I would recommend getting your business culture audited and understand where you are starting from, and use an external provider to ensure you get the honesty from your people.
I’m sure there are many other benefits, but these are the ones that have stood out to me when I have witnessed what good succession planning looks like. Hopefully some food for thought for owners and Managing Directors or SME manufacturing businesses, and not something that will continue to be delegated to HR to sort out. This should be a team effort that includes everyone.?
If you would like some help with your succession planning, do reach out. We are flexible and can work in different ways to provide you with the support you need. Contact us if you would like to chat through support options.
This article has been written by Founder and Managing Director of the Manufacturers Alliance, Gary Sheader. Gary has supported a wide range of manufacturing business in creating and deploying successful growth / improvement plans throughout the UK and Europe. He has built a team around him with a core strength in strategic facilitation and winning the hearts and minds of people.?Get in touch?if you would like to discuss transforming your manufacturing business.?
