Succession

What happens when a key staff member leaves?

This essay considers the issue of succession planning and it’s importance to long term business health. It is especially relevant to medium and large sized hospitality businesses.

Over the last thirty years I’ve restructured quite a number of successful hospitality businesses. The owners are generally extremely happy with the results we’ve delivered, but I’ve felt that I’ve never really been allowed to finish the job properly, to my satisfaction.

The restructuring process usually starts with a request from an owner who wants to spend less time running their business and more time either smelling the roses or developing a new business. It generally takes about two years and costs what most owners perceive is a lot of money, so they’re anxious to finish the process and get on with their lives.

We generally get everything running sweetly within that time and off they go doing other things and find that their business runs the same or better without them. They figure that we’ve done our job, and in spite of our careful warnings they tend to bolt off and indulge in their new found freedom without looking back. It’s human nature, I suppose: ‘I’m not needed in the business, the business is running really well, why do I need to keep employing these consultants?’

Consistency requires ongoing succession planning

What they haven’t taken into account is the fact that management structures are not stable for long until the owner or senior managers have taken care of what we call succession planning. This is the process of ensuring that there are always capable understudies ready to step up into any vacant key positions in the business. Succession planning is the key issue in the maintenance of a successful management structure and consistent operating standards.

Succession Planning
Absolutely necessary but easier said than done

There is also a kind of egotistical thought process within the owner that rears its ugly head at about this time and it compounds a lack of succession planning. Once you’ve placed a business under effective management the owner has to recognise that it is no longer them that is running it. This can be very hard if you happen to be a high profile business owner (as most of our clients are) because there is a strong tendency for human beings to believe their own publicity, eg: ‘The Good Food Guide says I’m a legend, therefore I must be’.

So the business is now being run by it’s managers and supervisors, who were recruited and trained by a specialist consultant and not the owner, but the owner thinks they are the one who has done it. Tricky. The key staff are not a permanent fixture and unless the owner takes steps to stabilise them with ‘golden handcuffs’ (a share of the action, or a very high salary), they will leave one by one and go off to do other things as time goes by. Sometimes they go into direct competition with the owner.

Develop your own staff, recruitment from outside is always risky

The one thing that will ensure that the business continues to run consistently is a steady supply of well prepared managers and supervisors. In reality, no one person runs a well structured business; it is a team effort. As each key person leaves they must be replaced by somebody who can not only do the job required, but who will also fit into the team. The best and cheapest source of these people are the existing staff, but this presupposes they have been recruited at lower levels with the potential to move up. Again, we’re describing one aspect of succession planning.

Strong Recruitment
Recruit very carefully with a mind to the future

After all these years in management I believe installing good long term recruiting skills in a business is the key to successful succession planning, because you are always at the mercy of the quality of your staff. If key staff leave a well structured business and less suitable or less well-trained staff are placed into their jobs, each successive generation in the business tends to be weaker than the one that came before. Eventually the owner is drawn back into the business or the whole thing eventually collapses — and this doesn’t take long. When I talk about a generation, I mean the time a layer of staff stays within the business. A generation can be as short as six months, depending on your staff turnover.

In my experience, owners who have experienced the luxury of being able to withdraw from their businesses tend to be very reluctant to come back ‘on the tools’, and don’t usually react until their business has unravelled quite badly. Obviously this is not a good thing.

I only see proper succession planning in the most professional and thoroughly managed hospitality businesses. Once you have spent the time and money to get your business running smoothly under management it might seem unnecessary or extravagant to keep spending money on a management issue that may appear to you to be a luxury. We don’t view it that way — we see it as an absolute necessity. If you don’t set up proper succession planning your whole business will slowly unwind back to where the restructuring process began and all your time and money will amount to nought.

In my mind I divide the process of placing a business under management into two distinct parts: first, key staff have to be recruited, trained to replace the owner, then settled into their roles; and second, the structure has to be maintained — strictly and forever. Do the first without the second and you’ll find yourself in an interesting situation. There’s nothing sadder than a business owner who goes from owning and managing four or five business to ending back on the tools, owning only one.

To learn more about the topics discussed in this article please consider the following courses,

For documentation to support the management systems discussed in this article, please visit our resources website.

If you are not sure where to start, contact us now to speak with a consultant.

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