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How Strong is Your Employee Team?

By Sam Allman
June 23, 2011
Do you have a succession plan in place to continue the leadership of your business after you step down? Like any good team, you need to build a bench of go-to players for your business.


In sports, no team can win without a strong bench – the quality of its substitute players. No business can perpetuate itself either without a strong bench, i.e., competent employees ready to fill vacant leadership and other positions. To grow, survive and perpetuate in the future, a strong bench is critical. One Fortune 100 ceo said, “Every time I want to buy something or accelerate growth into new markets, I look down our bench and see that I don’t have the right players to play the key positions.” How strong is your bench?

Recently, I was asked to facilitate and lead a workshop of Starnet members, the commercial flooring cooperative, at their meeting in Phoenix. The workshop, “The Next Generation Leader,” focused on how to prepare and nurture next generation leaders. There were over 100 Starnet members present, representing more than 60 companies in the audience. The interest was very high. Why did this come about?

One day, according to Deb Esbenshade, vp member services, some members came to the realization that many of the leaders and owners of Starnet member companies were nearing retirement age. The looming question was, “What is being done to prepare for that change in leadership?” They realized that this leadership change could have a big impact on the cooperative, so they felt it was time to start addressing the issue head-on.

Let’s face it, nothing is forever and no one gets out of this life alive! Some day every one of us will face the issue of succession, either in our businesses or in our personal lives. Mufasa, the king of the jungle inWalt Disney’s The Lion King, called it “the circle of life.” As the leader, what did Mufasa do? He spent much of his time teaching and mentoring his son Simba, in preparation for his succession to the throne.

I have observed within the flooring industry that there is very little succession planning. I think many business owners have good intentions, but because of the demanding nature of business, they just don’t get to it. After all, new research from the U.S. Bureau of Labor Statistics suggests that most business failures will occur in the first two years of their existence. Because of that, many owners have put their hearts and souls into assuring that their businesses survive. After that, as the rate of business failure slows, sheer habit keeps them intimately involved in the day-to-day operations.

Because of that personal investment, it also becomes difficult for some owners to let go – to hand the reins to someone else. I can’t tell you the number of times I have heard, “this place will fall apart without me.” I may have even said that myself when I left our family business 30 years ago. Do you think you are indispensible, even if it means not preparing the next generation of your company’s leaders?

When I talk of management succession planning, I’m not talking about who will own shares or assets in the future; I’m talking about who’s going to do the dirty, thankless and countless tasks which make the business an asset worth preserving in the first place. I have also heard, many times, “No one cares like I care,” implying that no one works on the business as hard as I do.

Whether you plan to sell your business, use it as a way to fund your retirement or pass it on to your family, you should prepare your business to function well, produce profits and satisfy customers without you. If your business doesn’t work well without you, you don’t own a business; you own a job!

For most family and closely held businesses, planning for succession is one of the toughest and most critical challenges they face. Yet succession planning can also be a great opportunity to maximize opportunities and create a multi-generational institution that embodies the founder’s mission and values long after he is gone. However, the odds are, without planning, it will not happen.

Only about 30% of family and businesses survive into the second generation, 12% are still viable into the third generation, and only about 3% of all family businesses operate into the fourth generation or beyond.

Succession planning is a process for identifying and developing internal people with the potential to fill key leadership positions in the company. Succession planning increases the availability of experienced and capable employees that are prepared to assume these roles as they become available. It’s building your bench.

And it does matter. Leadership matters. As Warren Bennis and Burt Nanus said, “A business short on capital can borrow money, and one with a poor location can move. But a business short on leadership has little chance of survival.” Researchers at the Wharton School of Finance concluded that between 15% – 25% of the variation in a corporation’s profitability was determined by the character of their chief executives.

Following are some questions to consider when creating a succession plan. Most critical is finding the next generation leader. Sometimes, the best leader may not be the most obvious choice. At one Starnet member company that person was recruited from one of their vendors. Make a list of the desired characteristics and key behaviors for which you are looking.

Ask yourself, can this person make the tough decisions required to run a successful enterprise. Network, mentor current employees, expand their responsibilities and watch how they perform under pressure. Remember, success leaves clues. Begin the process well in advance. It you choose under pressure or urgency, you will always choose beneath your standards. Thoughtful consideration is a requirement.

Then, how do you install leadership qualities in that individual? How do you train the next generation leader if they are just coming aboard or only have been in one department of the company and are not familiar with the other aspects of running the business?

What are the most important aspects of the business to learn? Where do you start?

What, and how much, support should the current leader provide the next generation leader? What other tools are there, or whom else should the next generation leader learn from, besides the current owner?

In transitioning the business, what mistakes should be avoided? What are some really successful ideas to use when making the transition? How do you get customers to trust the next leader like they trust the current leader?

Obviously, with some Starnet member companies the emphasis has shifted from planning job assignments to the development of their bench, with much greater focus on managing key experiences that are critical to growing their future business leaders. Are you building, strengthening and nurturing your bench? Eventually, you will need to!

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Sam Allman is president of Allman Consulting and Training. He is an internationally recognized motivational speaker, consultant, trainer and author who delivers inspiring programs in areas such as leadership, customer service, management development, team building, retail sales and personal quality management. He has developed many audio and video programs and has created hundreds of training and educational learning systems.

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