With over 70 straight months of private sector job growth and the unemployment rate below 5 percent, according to government figures, there's no denying that many Americans are back at work. Because companies are hiring, workers are also taking advantage of new opportunities that come up - sometimes with rivaling companies.
Unfortunately for business owners, a number of entrepreneurs haven't accounted for this possibility, a recent poll showed.
"50 percent would have to hire an outside worker to replace employees who quit."
Only 10 percent prepared for key employee quitting
This is particularly true in the financial sector. Only 1 in 10 respondents said that if a worker who played a critical role in the company were to leave for a different job, they know who would serve as the replacement, according to a survey done by staffing services firm Robert Half. Additionally, among those who hadn't prepared for such an occurrence, 50 percent indicated they'd have to hire someone who wasn't already within the company.
It's for this reason that business owners are advised to use job rotation techniques so workers have an idea of what positions require in terms of knowledge and capability. In a separate survey also done by Robert Half, when asked what the greatest advantages were to job rotation, nearly 1 in 4 pointed to staff being exposed to various elements of the company. This was tied with getting a different opinion on how to maximize a position or role as the most common response.
Other benefits of role rotation, according to the respondents in the poll, include improving retention rates, accelerating worker efficiency and augmenting succession planning.
Less than half implementing role rotation strategies
Yet despite these clear advantages, most business owners aren't using role rotation. At 56 percent, a majority said this form of company management was not something they were doing with any regularity.
"More companies can benefit from role rotation than are currently practicing it," explained Tim Hird, executive director for the management resources division of Robert Half. "This is an effective way to strengthen the organization by providing access to diverse viewpoints, building employees' skills and grooming future leaders."
"Succession planning accounts for the expected and the unexpected."
Robert Half senior executive director Paul McDonald stressed that succession planning is of critical importance for business owners who intend to hand their companies off to a family member or star employee. Because it's perceived to be a laborious process, it seems that many employers are neglecting it.
"Succession planning may feel like a long-term initiative, but the pain felt watching a star employee walk out the door with no backup in place is immediate and costly," McDonald warned. "Having no 'Plan B' puts the business at risk, particularly at the executive level, where it can take a significant amount of time to replace someone."
He added that employers can prepare workers to take on new roles by utilizing ongoing training techniques.
If you have clients who own businesses and are nearing retirement, they already have a lot to think about, given the cost of living and how they'll finance everything in the post-working world. Helping them establish and fund a business succession plan provides a sense of assurance and confidence that their company is in good hands once they "hang it up" and enter their golden years.
For more information on funding and implementing business succession plans and how GFD can work with your clients to facilitate the process, please speak with a GFD Financial Services representative who will be happy to provide you with assistance.