Let's face it: Whether voluntarily or involuntarily, most employees will leave their current job at some point. As much as we want people to remain loyal to the firm or to live forever, neither is reasonable. Retirement, death, disability, career changes, recruitment by other firms—all will take employees from us at some point. The question is, how effective will the business be in finding a replacement who can perform the role at the same level or better than the previous seat holder?
In the past, my most distressing times as a leader occurred when I had to search outside the firm to replace a departing employee because there was not an obvious candidate internally. My most rewarding moments occurred when I could fill key roles with people already within the business.
This may surprise some who think the highest stress point is when a key person actually tells you he or she is leaving. That's inevitable. Preparing for that eventuality makes the difference between a great business and an also-ran. Preparing includes developing people within the firm and accepting departures without going into crisis mode.
Of course, it is normal to feel angry and disappointed when employees tells you they are leaving. Often you feel sour because you think they did not appreciate the opportunity you gave them, or embarrassed that they chose someone else over you. Your ire truly rises when you realize the key person did nothing to prepare the firm for their absence. Once you get past the rejection and hurt, and the frustration of being left in the lurch, you should look at staff turnover as an opportunity rather than a setback. At a minimum, use the experience as the catalyst to say "never again" will you be unprepared for someone's departure.
The ability to replace a departing employee with an obvious internal candidate is a great marker for business maturity. A staffing strategy allows you to create opportunities for existing employees and move the business forward with minimal disruption to culture. Further, it is far less expensive than recruiting from the outside.
The best firms make individual succession plans a key component of their compensation and promotion practices. I often tell our associates that they may miss out on another opportunity in the firm if they have not developed someone to do their current job. This tests their individual leadership and their commitment to the firm mission. Failure to plan ahead and groom their successor may be reason to reduce their bonuses or limit their pay raises until you see behavior change. Every key person has an obligation to their fellow stakeholders in the organization to think about what would happen to the firm if something happened to them.
Ironically, many employees believe that by making the business dependent on them they increase their value to the enterprise. The opposite is true. There is a bright line between occupational blackmail and having the confidence to make you indispensable.
Why Prepare for Individual Succession?
There are five important reasons why every financial services organization should prepare for the inevitable departure of key people:
- Business continuity with minimal disruption
- Profitability
- Opportunities for employee growth
- Opportunities to improve the organizational structure
- Re-energizing the enterprise
Minimizing Disruption
Fundamentally, the financial advisory business is a "people business." While technology is the great equalizer, this profession requires individuals who can process work, interpret data, interact with clients, develop business, deliver recommendations and support those who are providing advice. In addition, most advisory firms are relatively small and tend to lack redundancy in key positions.
