Are the Company
Subjects: What makes a company, succession
“A closely held construction company is the sum and substance of its experience. All of that sum and substance resides in its people”. (Dr. Thomas Schleifer)
Think about that for a minute. Most of us think of our company as an entity separate from the people who might populate it at any given moment. We may even imagine it as a kind of disembodied organization populated by interchangeable individuals who come and go over time. Many describe the company simply as something owned by the contractor. Founders and sole proprietors often name their company after themselves. It’s their company. However, any collection of individuals organized around a common effort is far more complex, fluid, and changeable than this vague notion of a disembodied entity.
Sum and Substance (S&S)
Your “company” is, in its essence, the collective energy, motivations, knowledge, points-of-view, ethical standards, respect for one another, and technical expertise that your key employees infuse into your mutual effort. People and their insights, creative solutions, and positive impetus are the sum and substance of every closely held construction enterprise.
Some S&S Sticks
Some “sum and substance” becomes institutionalized or more or less permanently installed into a company’s “culture”. Attitudes towards customers, work ethics, and values, for example, can be woven into the “fabric” of an organization through mentoring and training. In addition, a portion of things such as customer relationships, union contacts, and production and process knowledge can be transferred from one person to another with deliberate and diligent effort.
However, a considerable portion of the S&S cannot be institutionalized. It is simply not transferable, and in spite of best efforts, can be forever lost to the organization when a key person leaves. Unique insights into business or project risks, creative innovation, policies and actions born out of years of experience, or masterful hiring selections and solutions to personnel issues made with a unique ability to read between the lines, all tend to depart with key employees.
So, as people come and go in the life cycle of all construction firms, how can the sum and substance, the very essence of the company, be maintained? The steps necessary to minimize the loss of S&S to the organization are generally referred to as a succession plan. I offer the following step-by-step succession procedure as a suggestion and welcome further discussion and elaboration on this site.
Five Steps to Succession
- Discover and evaluate exactly what S&S is captured in each key employee well before they leave the organization.
- Determine what portion of this individual S&S could be institutionalized and outline steps to assure that it is firmly engrained into the “fabric” of the organization.
- Identify the sum and substance that can be transferred to a successor then determine who they should be transferred to and devise a methodology for transfer.
- Identify the S&S that is not transferrable and take steps to minimize the resulting impact.
- Develop a Professional Development Plan (PDP) to cultivate the same talents in the person succeeding the key person who is leaving.
- Recognizing the essential sum and substance of a company is difficult and must start at the top.
- Unfortunately, there is often no notice when key personnel leave the firm, and the program outlined above can take up to five years to install in a company.
- The more senior the person or the greater the amount of S&S estimated to be lost, the greater the effort and resources that must be applied to succession planning.
- A formal company succession plan must be designed and continuously executed in order to capture, transfer, and retain the true essence (sum and substance) of your company.
Read More: Business Strategic Long Term Planning