With unemployment reaching near decade-long lows over the last several months, ambitious Americans are "seeing what's out there" in order to keep their options open. In the process, it's bringing to the forefront an important question for business owners: Do I have a succession plan in place should my employees decide to walk?
As a new poll suggests, the answer to that question is a resounding "No."
In a recent survey of approximately 1,100 accounting and finance professionals, only 10 percent of respondents indicated they knew of someone internally who would be able to step into a role that was left by a former employee, staffing firm Robert Half Management Resources found. Additionally, approximately 50 percent said that they would have to recruit a new hire or hires by advertising one or several openings, whichever the case may be.
64 percent would have to hire new executive to fill role
"Two-thirds would have to hire a new executive if the boss stepped down."
Business owners' succession planning - or lack thereof - is even more acute should they themselves step down, whether due to retirement or some other reason. At 64 percent, nearly two-thirds said that they'd have to pursue outside help, the survey revealed.
Paul McDonald, senior executive director at Robert Half, stressed that succession planning isn't something that can be put on the back burner, as one never knows when indispensable employees will decide their position is no longer desired.
"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 explained. "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."
Unemployment rate at 5 percent or lower since October
At the height of the Great Recession, many full-time employees were intent on staying where they were, given that hiring came to veritable standstill. For instance, in October 2009, the unemployment rate in the United States reached 10 percent, based on figures from the Labor Department. Five years later, the jobless rate has plummeted and held at 5 percent or lower for the last four months, with 151,000 new jobs being added to the economy in January.
Matt Ferguson, CEO of online employment search engine CareerBuilder, said that 2016 looks to be a banner year when it comes to hiring, and in a variety of industries, including customer service, information technology and sales, among others.
"Roughly 200K jobs were added to the economy per month in 2015."
"On average, the U.S. has added 200,000 jobs each month over the last two years, and we expect 2016 to produce similar results, if not better," Ferguson explained. "The market is also showing signs of broader wage pressure. While employers have been more willing to pay a premium for high-skill labor, they now have to pay more competitive wages for entry-level positions. Workers are gaining leverage."
Speaking of leverage, as a business owner, Leveraged Planning® Solutions can provide you, your company and your successor with the plan you need to make the transition process more seamless. For a primer on how Leveraged Planning® Solutions work, be sure to get in touch with one of our Global Financial Distributor advisors.