Why your business needs a succession plan

Regardless of how perfectly managed or structured a foodservice business is, the reality is that in our transient industry, key staff members are not permanent fixtures. Tony Eldred explains how to prepare for top-tier fall-out by putting in a succession plan.

Over the last 34 years I’ve restructured a number of hospitality businesses. The process usually starts with a request from an owner who wants to spend less time running the show and more time either on a new venture or smelling the roses. It takes, on average, about two years and costs what most owners perceive as quite a lot of money, so it's no shock 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 while their business ticks away without them. They figure that my team has done its job, and in spite of our careful warnings, they tend to bolt off and indulge in their new found freedom without looking back. I suppose it is human nature: “I’m not needed in the business, the business is running really well, why do I need to keep employing these consultants?”

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 capable understudies are always ready to step up into any vacant key position in the business. Succession planning is the key issue in the maintenance of a successful management structure, but is so often overlooked.

There is also a kind of egotistical thought process within the owner that rears its ugly head at about this time, which compounds a lack of succession planning. Once a business is placed under effective management, the owner has to recognise that it is no longer their job to run it. This can be very hard if they happen to be a high-profile business owner because there is a strong tendency for human beings to believe their own publicity. That is: ‘The Good Food Guide says I’m incredible, therefore I am’.

So the business is now being run by the managers and supervisors who were recruited and trained by our staff and not the owner, but the owner thinks they are the one who has done it. Tricky. The key staff members are not permanent fixtures, and oughtn't be taken for granted as such. Unless the owner takes steps to stabilise them with a share of the action or a very high salary, they will leave or be poached by other venues. Sometimes they go into direct competition with the owner.

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's 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 easiest place to look is to your existing staff.

I divide the process of placing a business under management into two distinct parts. First, key staff members have to be recruited, trained to replace the owner, and 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.

After all these years in management I believe that installing good long-term recruiting skills within 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 members leave a well-structured business and less suitable staff are placed into their jobs, each staff generation tends to be weaker than the one before it. Inevitably the owner will be drawn back into the business, or the whole thing eventually collapses – and this doesn’t take long.

In my experience, owners who have had 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.

Once they have spent the time and money to get their business running smoothly under management, it may seem unnecessary or extravagant to keep spending money on a management issue. We don’t view it that way – we see it as an absolute necessity. If proper succession planning isn't in place, a whole business will slowly unwind back to where the restructuring process began and all that time and money will amount to nought.