Recent political events serve as a timely reminder for those in the business world to plan for the unexpected.
The first casualty of the result in the UK's referendum on EU membership, was David Cameron. After a short lived leadership contest, Theresa May was anointed as prime minister. Given that the role of prime minister might be regarded as the most important job in the land, the seemingly haphazard nature of the succession is surprising. The handover period of 48 hours can hardly have been adequate given the scope of the role and the length of the 'to do' list.
Avoid group think and make space for difference
Brexit appeared to be an unthinkable outcome for many, just a few weeks before. It is clear that the result of the referendum took the establishment by surprise and, with the majority of the government at the time backing the remain campaign, it's obvious there was no plan B.
This illustrates how group think (otherwise known as burying your head in the sand) leaves an organisation very vulnerable. Having a more diverse management, with room for those with different experiences, views and opinions can help avoid that. The recent drive to get more women on company boards has emphasised this point, but ideally senior employees would be drawn from a range of ethnic and social backgrounds as well.
Leadership is key
An organisation may stand or fall on the competence of its leadership so key personnel play a vital role in maintaining confidence and building business success.
Reactive decision making is always far from ideal but when it comes to key personnel, a failure to plan adequately for change could leave the business with no room for manoeuvre.
Many organisations will carry out risk assessments and/or have a risk register which may very well identify loss of key personnel as a significant risk. However, this tends to assume death or serious illness and is often addressed by putting in place so called 'key man' insurance policies. However, there is also the risk of poaching by competitors or simply individuals giving it all up for a change of lifestyle. Organisations need to think creatively about how they address these different kinds of personnel risks?
An ageing workforce?
If an organisation understands the age profile of its current workforce it can anticipate problems and when they might occur, so this data should be kept under review. For example, if managers at a certain level are all of a similar age, are they all likely to retire around the same time, leaving a knowledge/skills gap? Alternatively, if the data shows key managers are younger, will they need to take time out for maternity or paternity leave?
However, people's personal circumstances are all different and with no formal retirement age in the UK it is important to keep communications about individuals' future plans open. It is legitimate to discuss retirement and succession, particularly in respect of the most senior people as this will have a real impact on the business. However, this need to be handled sensitively. It may be appropriate to talk about this in any annual appraisal or any more regular performance discussions.
Tips for employers
- Review key positions to understand the age profile of senior management.
- Conversations around future plans should be handled sensitively to avoid any potential age discrimination issues.
- Ensure that performance management reviews are carried out regularly and records kept as a hedge against any future disputes.
- If this shows that key personnel are all of a similar age strategies should be put in place to deal with this.
- Ensure there is enough time to transfer corporate knowledge and skills to more junior staff and that there is a mentoring scheme and succession plan in place to facilitate this.
- Ensure that if you engage recruitment consultants their terms include an obligation to deliver diversity in any list of candidates put forward for senior positions.
- Identify the potential stars of the future in your organisation and nurture them. Invest in their learning and development and ensure knowledge and skills are transferred through mentoring schemes.
- Consider how benefit and reward structures can be designed to engender loyalty and longevity to guard against poaching by competitors.
- Benchmark internal salaries against external recruits to ensure long serving personnel have not fallen behind market values.
This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.