4 Common Mistakes in Construction Company Succession Planning4 Common Mistakes in Construction Company Succession Planning
Keep these errors—and their solutions—top of mind as you craft a plan for the future of your business.
September 21, 2023
Succession planning comes up all the time in construction owner peer groups, particularly because of our industry’s aging leadership population and the overarching worry of who to choose to carry on your company’s legacy.
Whether you’re planning on retiring soon or many years from now, here are five common succession planning mistakes I’ve seen and how to tackle them before you’re ready to leave the company.
1. You involve the HR department too soon.
I’ve heard a variety of company owners admit to including HR leadership as an integral part of the succession planning process. While it’s important to consult HR at a later point in the process, for small to midsize contractors—and even some very large contractors—it’s unnecessary at the outset and simply adds another voice to an often already overcrowded group. If you have specific questions related to HR, certainly get them involved. But until you do, there’s no need to bring them to the table.
2. You utilize an outside advisory board of consultants.
One succession planning speaker consulted his “outside board” throughout his planning process. This board comprised his CPA, attorney, insurance agent, banker and company CFO. While these professionals may be able to add value to a succession plan and outline how retirement will affect you and the company, advisory boards should make sure to include people who truly understand your position: fellow businesspeople who know what it takes to meet payroll, run a business and prosper. Voices from other companies can also provide unique insights that you may not have considered or encountered in your company.
3. You utilize only a top-down approach.
If the process is driven solely by senior leaders, especially those who intend to depart in the next five years, then who will the process favor and support? Involve the senior leaders but include their likely successors, too. Additionally, bring in a representative or two for the mid- to lower-level employees. This provides a level of transparency and helps everyone to know what's happening in the organization. Having diverse representation from all levels of the business also helps align all parties as the future culture and strategy are designed.
4. You excessively defer to the senior leadership at the expense of junior employees.
Excessive deference to the senior generation is a tragic succession planning mistake. In most cases, there is genuine respect, possibly even reverence, for the senior leaders in your company. But deferring primarily to them does not help set up junior leadership and employees for success when the senior leadership is ready to retire. Make sure to listen to all opinions and thoughts and remember that junior employees will one day make up the senior leadership of your legacy.