When you’re the owner of a construction business, the work doesn’t end when you leave the job site.
Between buying construction materials, securing work for new clients and filing your quarterly taxes, you have to lead your organization, too. One of the underrated, yet critical parts of people management is succession planning.
What is succession planning?
Succession planning is the process of identifying key roles in your construction business and recruiting or training talent with the skills to take on those roles in the future.
Succession planning is often associated with replacing the CEO or top leader of a business. However, you can (and should!) put succession plans in place for any key roles in your construction company. Think about it this way: If someone on your team quit tomorrow, how disruptive would their departure be to your operations? Is there someone else who would immediately be able to replace them?
It can be tempting to wait until a specific need arises – such as a project supervisor letting you know that they plan to retire at the end of the year – before you begin planning for a replacement. But experts underscore that it’s never too early to start the succession planning process. In fact, it can take years to properly prepare someone to fill a role, especially one higher up in the company.
Why you need succession planning
Having a succession plan in place creates continuity for your construction business. Whether someone retires, is unable to work anymore or moves to a different company, minimizing the time that a critical role is left open creates more stability. A significant disruption can affect employee morale, productivity and, ultimately, your bottom line.
Without succession planning, you risk losing the institutional knowledge and skills that the person in that position brought to the table.
Tips for successful construction business succession planning
There’s not one right way to implement succession planning for your construction company, but these pointers will help you get plans underway and pave the road to successful transitions.
1. Identify critical roles that require specific knowledge. Not every role rises to the level of needing a succession plan. Sketch out your org chart and assess each position. What would the impact on your construction business be if that role went unfilled? Who has knowledge of operations, processes, clients or skills that no one else has?
This will certainly include you, as the owner of your construction business. Depending on your company’s size, it could include executive- or director-level positions. It may also include employees with unique or technical specialties that are critical to your services.
You’ll also want to make plans for roles filled by employees you know intend to leave, or who are reaching retirement age in the next five years.
2. Determine the necessary qualifications, qualities and skills. It would be a mistake to assume that you understand the ins and outs of every position in your construction company. For the best information on the qualifications, qualities and skills that are needed for a specific role, go directly to the incumbent employee in that role.
Put together a template to interview employees in each role. Avoid spooking your workers by being transparent about why you’re asking! You’ll need their buy-in to groom potential successors, so keep them close in the process.
You’ll also want to put on your strategy hat as the organization’s leader. Stay abreast of changes to the construction industry and its operations to determine what attributes or qualifications will be most helpful for your company in the next five years – and in the next 20 or more.
3. Build in training. There are different approaches to choosing and training successors for roles. Some companies will identify the lower-level roles that most logically feed into a job. Others will invest in specific top talent. And some will take a broader approach to cross-training a variety of employees. There are pros and cons to any method, but the key is to build training into your process.
When grooming your own potential successors, make sure they get a broad range of experience to understand all parts of the business. If you have a board of directors, include candidates so they get up-close experience at the highest level of your company.
Ideally, your candidates for succession will be fully prepared to take on the critical role when the incumbent leaves. Minimally, they should be able to fill the position on an interim basis if you need to make an outside hire.
4. Hire to fill gaps. It’s possible that when you look at the roles and requirements for your succession plan, you simply don’t have an internal employee who could be a fit. Internal candidates may lack the requisite skills, necessary motivation or company values for technical or leadership positions.
Research on large companies that replace exiting CEOs with external candidates shows that hiring an outsider can really cost businesses. Bringing someone in sooner at a lower level, getting them familiar with your company and giving them additional training may be a better route.
It can be risky to count on just one person to fill a critical role. Instead of putting all your eggs in one basket, consider hiring talent with the specific skillsets for your most important jobs. It’s a way to set your company up for future success with a pipeline of qualified and trainable employees.
If your construction company is a family business, pulling in outside talent for coveted roles can get sticky. Keep communication caring and candid when having crucial conversations about the company’s future.
5. Schedule time to review and update your plans. Succession planning isn’t a one-and-done activity. Once you’ve gotten succession planning in motion, schedule time to revisit your plans. Are there new roles that need to be included? Is training going according to plan, or can it be improved? Have you made the progress you wanted in preserving institutional knowledge? Make time at least once a year to assess and update.
Get support for your succession planning
Including an accountant in your succession planning can help you avoid financial snags. And if you’re an owner who’s tying in succession planning with estate planning, be sure to have an accountant working with your attorney to help with the tax implications of your plans.
If you have questions, we’d love to help. Schedule some time to meet here