Today’s guest blogger is Bill Benson with WilliamCharles Search Group located in Grand Rapids, MI and Pittsburgh, PA. WilliamCharles is an executive search and professional recruiting firm specialized in finding managerial and executive talent in finance, HR, operations, sales/marketing as well as president/CEO roles. They have a concentration of clients in Michigan but they also work across the US. Bill is a past chairman of the NPAworldwide Board of Directors. In this post, Bill shares why retaining your most valuable people is one of the most overlooked parts of succession planning, and how family businesses can keep the talent they need to lead the next generation.
Keeping Key People Through the Next Generation
Family-owned businesses pride themselves on long-term relationships. Some of their most valuable employees have spent 10, 20, or even 30 years helping build the company. But that strength also creates vulnerability. When a key employee leaves, the company doesn’t simply lose a person. It can lose institutional knowledge, customer relationships, cultural continuity, and, in some cases, an important piece of its succession plan.
We continue to hear from business owners that retaining key employees is becoming more difficult. And while compensation is certainly part of the equation, retention is rarely about compensation alone.
For family businesses, this creates both a risk and an opportunity. You may not always be able to compete with a Fortune 500 company on compensation, but you can compete on relationships, access to leadership, development, purpose, and the opportunity to build a career with an organization that takes a long-term view.
Here are six areas we think deserve attention.
1. Know Who You Can’t Afford to Lose
Start by identifying your critical people.
These aren’t necessarily your highest-paid employees. They may be the operations leader who understands processes nobody has documented, the salesperson who owns several key customer relationships, the controller who has been with you for 18 years, or the emerging leader you see running a division someday. It may be a key leader that you have hired within the last five years who has become invaluable.
Ask a simple question: If this person resigned tomorrow, how concerned would we be?
2. Don’t Wait for the Exit Interview
One of the simplest retention tools is also one of the most underutilized: the stay interview. SHRM describes stay interviews as a proactive way to understand what keeps employees engaged and what might cause them to leave, with career growth, autonomy and learning opportunities frequently emerging alongside compensation.
Ask your key employees:
What keeps you here? What frustrates you? What would make you consider leaving? Where would you like your career to go? What could we be doing differently?
You won’t be able to accommodate every request. That’s not the point. The objective is to learn about a retention problem before someone has accepted another job.
3. Make Their Future Visible
Imagine being a talented 40-year-old executive who loves the company but looks upward and sees family members occupying most of the senior positions.
They may naturally wonder: Is there really a future here for me?
You need an answer.
Career development doesn’t always require a promotion. Consider expanded responsibilities, strategic projects, board exposure, cross-functional assignments, mentoring, executive coaching and leadership development. If someone is an important part of your succession strategy, talk to them about their future without making promises you can’t guarantee. People are more likely to stay when they can see themselves in the company’s future.
4. Don’t Let Loyalty Create a Compensation Problem
Here’s an irony we’ve seen in long-tenured organizations: sometimes your most loyal employees become your most underpaid employees. Market compensation can move considerably faster than annual internal increases. Someone you’ve employed for 12 years may be making substantially less than what you would have to pay to replace them.
Periodically compare the compensation of critical employees against the replacement market, not simply your internal salary structure. Look beyond salary to incentives, retirement benefits, flexibility, and professional development. For certain key executives, long-term incentive arrangements can all be part of the equation.
5. Take a Hard Look at Your Managers
Employees can love the company, respect the family and believe in its mission — and still leave because they work for a poor manager. Gallup finds that managers account for 70% of the variance in team-level engagement. Its research also finds that employees receiving frequent feedback and participating in goal setting are substantially more likely to be engaged.
That makes developing managers a retention strategy, not simply a training initiative.
6. Use Your Family-Business Advantage
Employees can know the owners. Decisions can be made with a longer-term perspective. People can see the impact of their work. There is often a genuine connection to the community, customers and company legacy. Make those advantages visible. Share where the business is going. Give key employees exposure to ownership and senior leadership. Talk about the next generation. Recognize contributions. Invest in people’s development. Most importantly, don’t confuse long-term employment with maintaining the status quo. Your best people typically want stability AND opportunity.
Succession planning and retention planning should go hand in hand. Developing your next generation of leaders doesn’t do much good if they leave before it’s their turn to lead.