Knowledge Transfer is a Critical Part of M&D Leadership Succession Planning and Preparation

November 9, 2018 | Vermeer strong Story updated by Mark D. Wyzgowski, CPA; Original author: Brad D. Baumann, CPA, Managing Principal, CLA,

Many people on the brink of retirement from manufacturing and distribution companies have been on the payrolls for decades. We’re talking 30 to 40 years at the same company, in the same department, with intimate knowledge of the company’s history, its customers, its industry and its sub-industries. So much invaluable information is warehoused in these individuals’ minds, and they are on their way out of business and into retirement. Where will all this information go? How do business owners replace key leaders (and capture their expertise) who will be walking out their doors in the next few years?

By preparing for it, of course. And preparation starts with an acknowledgement of certain inevitabilities. Whether they are baby boomers or Xers or millennials, one generation will always yield to the next. Succession will always be a factor for any business that wants to endure, and succession can be a risky prospect.

In our practice, we encourage business owners and leaders to square with the reality that one day they will indeed exit the business, and they can’t prepare for that eventuality soon enough. They don’t have to know for sure what that exit will look like (sale, transition to family, etc.), but they must begin crafting a succession plan that allows for a host of possibilities.

So whether you and your company are somewhat prepared or very unprepared for the inevitable transition of leaders, the time to plan is now. A well thought-out succession plan that includes a strong culture component, satisfies key stakeholders and provides for seamless leadership change is critical to your business’s future and the preservation of your legacy.