The Aldermore Future Attitudes report finds that more than three fifths (61 per cent) of small and medium-sized enterprises (SMEs) – equating to 3.4 million UK firms with fewer than 250 employees – have no clear succession plan in place to ensure that their businesses do not suffer when key staff leave.
This is despite the survey of more than a thousand senior business decision-makers at UK SMEs revealing that more than one in seven (15 per cent) believe the biggest threat to their business is the departure of a senior executive.
More than one in six (17 per cent) are worried about a whole team leaving; this figure increases even further to a quarter (27 per cent) of medium-sized businesses – those with between 50 and 249 employees – that are concerned about multiple leavers.
When asked about succession plans, only one in ten (10 per cent) SMEs feel they could survive without one on the basis that none of their staff members were indispensable or would be difficult to replace. Moreover, a further one in six (16 per cent) SMEs have no defined succession plan in place because they are not expecting any key employees to depart in the short-term.
Of the two in five (39 per cent) SMEs that have a succession plan in place, nearly half (47 per cent) say this includes ensuring employees view their long-term future at the company and providing training to widen employees’ capabilities beyond their current roles.
More than two in five (42 per cent) of those SMEs with a succession plan already have individuals in mind to take on the pivotal and specialist roles in the business if other employees leave or step down.
Carl D’Ammassa, group managing director, Business Finance at Aldermore, says, ‘It is concerning to find that the majority of SMEs do not have any succession plans in place despite being conscious of the adverse consequences that may result should crucial employees leave the business.
When faced with the day-to-day demands of running their company, business owners can easily push succession planning down their list of priorities. However, good employees are hard to find so for SMEs putting in place a strategy to deal with the departure of key individuals is imperative, particularly since the departure of a key employee has the potential to hit smaller firms with fewer employees hardest.’
Further reading on having a succession plan
Nominations are now open for the British Small Business Awards, the leading event celebrating the brightest stars in the SME sector. Click here to enter, and make sure you get involved today using the hashtag #BSBAwards. Good luck!