Episode 166: Succession Planning Helps Businesses Prepare for Long-Term Survival

Welcome to the Workplace, a podcast by Cal Chamber listeners. We have a special treat for you today. Back on the show with us is Ricka. Brandon Ricca has been a professional recruiter since 2001 and a business owner since 2003. She's also the award winning and best selling author of Higher Power Everything Entrepreneurs need to Know to Hire Better in Any market. As an HR manager and business owner, she's made over 500 hires as a professional recruiter and helped companies find, select and hire over 600 other top performers with a less than 1% replacement rate. You can learn more about Ricka at her websites, rickabrandon.com or buildingguros.com and for those of you who have been listening to us lately, you may recall Ricka joined us a few weeks back for an excellent discussion to talk about effective recruiting and retention practices. Today we are fortunate to have her back on the pod to tackle another important subject, succession planning. So welcome back to the podcast, Ricka.

Hey, thanks so much for having me.

Yeah. And I think this kind of conversation will just dovetail into the excellent conversation that we had last time about, you know, recruiting and getting the employees to come in here. And now we want to talk about those employees who have been with us for 10, 15, 20, 30 years and what to do when, you know, they inevitably move on.

Yeah.

So something that we talked about last on the podcast with you was what was going on with declining birth rates over the last few generations. That's left us with a recruitment gap, but has also left us particularly vulnerable to baby boomer retirement. So with your background, Rick, you can clearly speak to the importance of having a well thought out plan in place for replacing retiring employees and how important that that subject matter is. So in your course of your work as a professional and doing this for the last couple of decades, how much time do you devote, really spend on succession planning and helping employers with that kind of process?

You know, that's such a great question. We spend a lot of time talking about it. A lot of owners really, they just keep kicking the can down the road. Right. I always say it's important, but it's not urgent. And what we're really seeing in the last year or two here is it has suddenly become urgent as well as important to many of them. So I would say it's been a smaller part of my business up until the, really until the pandemic kicked in and all of a sudden people were getting a lot of unexpected res and we're really starting to feel the baby boomers as they leave the workforce. So suddenly something that everybody could keep pushing on down the road became front and center important. So it's been a much bigger part of my practice in the last couple of years.

So when you have those conversations, I know succession planning is important. We don't want operational interruptions and things like that. Why are so many companies willing to put it off or just simply not do it at all?

Yeah, I think there's a number of reasons. The first main thing is it's overwhelming. It is very hard to imagine the future. It's very hard imagine what you want your company to do. And then, you know, especially if you're dealing with scarcity and filling openings right now, how are you going to plan for the future? So I think first off, most owners just get overwhelmed, and so they kind of stall. And that's one of the things that we're going to talk about on the pod here today, is that you got to take some steps. And I'm going to try break it down to simple steps you can take action on to move forward. The other thing is it's very emotional and political. Right. And a lot of times we, as owners, we create these situations that somebody anticipates that they're, you know, next man up, for lack of a better term, and we might realize they're not the best fit for that. But we're not sure to undo that expectation that we've created over the years. So I think that's the other part, is that most of us who are owners, we actually really like our employees and we want the best for them. And then it gets tricky when we realize that maybe the person we thought was going to be the next VP of sales or the next general manager just doesn't have that skill set to thrive in it. And then it gets tricky on how do we extract from that. So I think it's really that mix of being very overwhelming and then also being far more emotional and political than people think at the surface.

So something we get in our seminar webinar team, and something I'm sure you get oftentimes as well when you present. Ricka is kind of the so what? Right? Like you tell us this is important and that we should do this, but they want examples, they want real life situations of what the dangers might be if we don't engage in this practice. So, Rick, over the course of your career, have. Have you seen situations that have put employers or organizations into real tough spots because they haven't done this yet?

Yeah, absolutely. That is you know, it's not important and it's not urgent until you're bit in the tail. Right. You know, like tell the alligators are right at your back. And so a couple of things that I've seen, and frankly I think a lot of your listeners will recognize in their own is that during the pandemic, many people who and owners thought they had three, five years left to work suddenly are giving 30 day notice, three week notice. In the case of one of my clients, a 30 year employee gave a three day notice and that was it. There is no time to capture that know how knowledge. There's no chance to even hire a replacement. And so one of the things that really has come up a lot is, you know, one, it could just be an unexpected resignation that catches people flat footed. But these unexpected retirements that happen because your grandkids moved to a different state, you know, you're suddenly got sick, maybe somebody you love got sick. Like different things come up where suddenly life is more important than work and it changes it. So a couple of them is, you know, really that 30 year employee who gave three days notice, I had one client who, they had four people who had been there for over 30 years all decide to leave within three months right before their busy season. And they didn't see it coming and they hadn't been having the conversation to find out when people were going to leave. And I think that's another reason people keep just kicking the can down the road is it's a, it's a tricky conversation to be like, so hey, when you think about retiring. Right. You know, that can get complicated. Yeah. You know, but I think what I always want to remind people is people who've been with your company a long time, they're invested in its success, they want it to thrive after they're gone too. They're probably less worried about you trying to replace them than you fear they are. You know, they want to set it up to succeed.

So yeah, and I, I think that's really important what you just said there with the question, like when are you thinking about retiring? You know, you and I live in two completely different worlds and I live in this world of everyone's going to get sued or how do we prevent claims? And that question always comes up as you know, is that something that might be an age discrimination issue? And the answer really is it depends, as it does with all legal conversations. Right. Are you pushing them out? And I don't think that's what you're really getting to. It's Just being open with a channel of communication with your employees to just see how they're doing, temperature checks, their plans. You're not like, hey, I'm ready for you to retire so I can succession plan. But we need to know like what your thoughts are, right Ricka?

And I think that's, I'm so glad that you addressed that, Matt, because that's the biggest thing. Like what can I legally say? What can I legally ask? And I think a lot of times it's, you know, for us. I just started consulting with a company that has two employees that combined have over 100 years with the company. That's crazy. Right? You know what? Two people aren't replacing that. That isn't a two person replacement. That's probably a four to five person replacement because that's a lot of knowledge. But with that, you know, it's people aren't sure of the date they're going to retire. Most of us don't have like a date picked in advance seven years ahead. Right. Most of us are like, hey, when I'm sick of working, I'm going to be sick of working as long as I have enough money. And so, you know, employees aren't trying to be, you know, deceitful or not tell you. They honestly probably don't know they haven't set a date. Right. And likewise, owners are happy to keep those performers as long as they can for the most part. Right. But I think an easier way to approach it is really thinking about the longevity in the future of the business. Like, hey, we want to make sure we're set up to thrive and we know that you care and you don't want if it's sales, you don't leave your customers in the lurch, you don't want to use your vendors. Like, I mean, they've built relationships in this role. So it's like, how can we make sure as you want to take more time off, because that's the other part. People might not want to quit working entirely, but they do want more flexibility to do their hobbies and go and see grandkids. So I think it's something where we really do want to be mindful, but we also need to be having that conversation for the good of the business.

Okay, good. So I think that's a good segue then into really we've talked about the importance of why to do it. So a lot of companies, as you say, they put it off, they just don't do it at all. What are some of these initial steps that company leadership could take or should take now to kind of get started with this process.

Great. Okay. So I believe there are four steps to really get a good start on succession planning. And I actually believe they're very accessible to everyone. Of course, if you want to hire a consultant to guide you through it, great, do that. If you're like, hey, I don't have the money for that, like, listen to these steps. Take notes. It's going to be a great start for you. So the first one is you have to get really clear on your business vision. Now, what I think gets in people's way is they believe it has to be complex or grandiose and complicated. It's like, no, it doesn't. It can literally be just the status quo. How can we stay in business one year from now if these people retire? Or three years? So start with square one. Square one is business continuity. That's what you need to plan for. You know, obviously, if you have visions of expanding, diversifying, of course you should plan for that. But the first step for everyone I recommend is just making sure that business as is, you have a plan for that to continue. And so that's always called the status quo. Right? We've got status quo, growth, diversification, and then often, sometimes we're positioning ourselves to sell the business. And that's something that people don't think about when they're selling. It is you can't be doing most of the jobs and you can't have a bunch of people that are near retirement. It's going to affect your multiplier and how much people see value in your business. So succession planning is a big part if you're looking at scaling or selling. So that's step one is you got to get really clear about your goal, and then you got to start moving towards it. The second thing is to identify your key roles. Now, watch out. Matt, I might hop up on my soapbox here a little bit. Succession planning is not just for owners and it's not just for leaders. It is for any key role in your business. You have Salespeople that control 50% of your revenue coming in. That is a key role. If that person leaves and they're the face all your customers know, that's a significant problem. If you have a warehouse manager who knows everything and nobody else knows it, that's a key role. So one of the things that really I get a little bit like up on my soapbox about is the fact that it's not just for owners and it's not just for leaders. It's for every key role in your business. So that's really the second thing. I want you to be clear about those roles because we need to understand what are we going to have to replace if they leave. The third step is to do a swot and everybody knows, you know, strengths, weakness, opportunity, threats. We don't need to overcomplicate it. Keep it simple. It's four boxes, four sections. I don't even care if you use a box on the paper. You can just have sections like, we've got strengths here, we've got weaknesses here, opportunities and threats. And lay it out. Now what is tricky for people is in a perfect world, I'd love you to do that by role, right? So this role has this potential, right? But it's really hard when somebody's been in that role for 10 or 15 years to do that. So I always encourage you to start with the role and then realize you're going to bleed into the person. But once we've done that SWOT analysis on the role, we then assess our talent so we're not forgetting the people because frankly, they're the biggest part of this puzzle. But I want you to think about it from a business need perspective first. What are the key things that this business needs to succeed now and of course into the future and what are our opportunities? So the fourth one is once we're clear on that, then we got to capture our know how knowledge. What is in those people that have been doing it for 10, 15, 20 years in their head that nobody else can come in and learn. Now that is the tricky part because when people have that knowledge, you know, you think of the word, the book, blank, right? Like it's all your experience, your education, your instincts, everything. You're making very quick decisions. So know how knowledge is not just how to do it, right? We under there needs to be the decision making, like why did we choose to do it this way? And that can get a little dicey. But it's an important piece for people to remember and for you to help set up your veteran employees to share. You know, we need to capture not only how you did it, but why you made some of those decisions so the next person has the best chance for success. So in a nutshell, talking fast, those are the four steps I really encourage somebody to take to really move forward with succession planning.

Now is this something that should kind of be created as like a checklist internally for an organization or a master document or something to kind of go down the list with? We're used to here at the Chamber doing a lot of checklists and forms. They're very common for us for things like administration and stuff. And so it gets me thinking that with the four steps and key elements that you talk about here, is this something that we should have a checklist internally for to help guide us along the process?

You know, I think I'm also a fan of checklists and templates like work smarter and harder. Right. That's, you know, I mean, I like working smarter or harder, but really, frankly, I work hard. It's. I got a problem. Right. So I think yes, for sure. What I did, I created a training and it's. It's very clearly on these four steps. And it's basically like you create a document for each one and you just work through it. Right. So you're getting clear on that business vision. You're writing that narrative of what you see for the future, then you're identifying the key roles, then you're doing the SWOT analysis on those key roles, and then you're figuring out how to capture that knowledge and you work through it. So, again, a checklist, a template is awesome. Part of this is like, it's going to be unique to your business. And so that's the part where I always encourage you, like, even just start, do something is better than nothing. But, yeah, for sure. Templates and checklists are amazing. And just because it's overwhelming. So let's. One step forward. Right? Let's get you to move in the right direction. And when we have momentum, we just keep going.

Yeah. Something else this conversation is kind of making me think about here is, you know, as we get to the end of the year, we talk about new year stuff here in California, revising your handbook policies or updating, you know, policies and practices as you go into the new year, is this something that. Where you kind of just create it once and you're done? Do you stay on top of it? Like, do people come back to you, Rick, and. And, you know, do a second version, third version, succession plans?

Such a great question, Matt. Such a great question. As you can imagine, anybody who's dealing with people. Yep. It's a fluid, living document. I mean, did people predict, like, how disruptive Amazon would be? Not a lot of us. Right. You know, different purchasing, going overseas, things like that. There's things that we can't predict. Right. And so we need to adapt to the realities. One of the things that I think is most important for owners and managers to think about is the fact that you might think this employee is going to be a operations manager. You see a ton of potential in them and then you start cross training them and developing them for that role. And it becomes pretty apparent pretty quickly that they are not wired for the stress in that role. And so you always need to be do adapting to the information you have at the time. I always say we make the best decision we can with the information we have at the time, and then we adapt when we get better information. So, yeah, absolutely. This is something where we want to have the framework, we want to have that structure and that guideline, but you have to adapt for your reality and any change situation. Yeah.

And this I, you know, those who listened on the podcast know that I focus a lot here on employment law. And so I feel, you know, less in my element here talking about something like succession planning, which, you know, probably has an employment law element to it, but not very much of it. So for those companies who are not kind of used to this or those who might be tasked with this role, is there somewhere where they can go for help where you, they don't have to try and recreate the role, wheel themselves a template for this document or any other kind of resources that might help our employers out there in California as we leave today?

You know, I am not aware of one. I am doing some consulting packages with like employers in California right now on this. So I'm not aware of any templates, but they probably exist. I mean, Google is a powerful thing, but it is something for me. Usually it's, it's important enough to the owner to get right that they're like, hey, we're going to start here. But then we want some advice. But I mean, I'm sure there's templates out there. And again, those steps are going to be so important and again, just take action. Right. It doesn't have to be perfect. Right. You can improve it down the road, start moving forward.

Yeah. And I think to echo you, when we talk about templates and things, template policies, templates for notices and things like that, it's always about customizing to your needs, Erica. Like, we all have very different businesses and very different succession plan needs. So I thought this was a fantastic conversation, just like we had with recruitment. So, you know, by the time, you know, you and I are done doing podcast episodes, we're going to be able to have employers get their employees, keep them, and then know how to move on from them all in one big package. So I really appreciate you joining us today on the workplace, Rekha.

Yeah, And I just one more thought, Matt Recruiting and retention are two sides of the same coin. And succession planning gives your long term employees a path of where to go. And that's something that owners don't realize they're missing, is that they want to know a path, they want to know there's a care. They love the company, so it actually has a huge impact on your culture as well. So anyway, that's just a little thought on it and I love it. I am not an expert on employment law, so we can each stay in our lane and help everybody get better.

Well, that's why I have you on here, Ricka. It's been fantastic. So thank you again for joining us.

Absolutely. Anytime.

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