Considering issues from multiple points of view often provides new insights. That is the intent behind Truck Parts & Service’s “Industry Perspectives,” a regular new feature.
This installment of “Industry Perspectives” concerns the importance of succession planning on the success and longevity of the independent aftermarket, with views provided by a component manufacturer, a distributor and an industry trade association.
MANUFACTURER
Bendix Commercial Vehicle Systems
John Flad, vice president, North American Aftermarket Sales
Diane Shields, vice president, Human Resources & Organizational Development
TPS: Trucking and the aftermarket are not young industries. With an aging population at independent distributorships and repair facilities, particularly at the owner level, how important is succession planning?
Flad: Succession planning is extremely important, and one of the few things that independent distributors, in general, do not do very well. As a supplier partner, we are always evaluating our distributors. When a distributor suddenly sells out – many times to a national chain type operation – it’s a game changer for us. This happens all too often because there is no appropriate succession plan for the business and the owner. It’s also a game changer for the marketing groups, who lose members through sell offs and owners attempting to exit the business.
With this in mind, we focus more on the long-term future of a business when we review distribution options. Have they planned for the future? Are there skilled people in place to take control of the business when the current owner isn’t there? Are these people clearly identified and ready? Is there a financial plan in place for a smooth transition?
TPS: Is the aftermarket doing a good job at making succession plans for their businesses?
Flad: Some yes, most no; the bigger issue, a topic that was discussed above, is the lack of an exit plan for owners. This is a huge problem for those of us depending on our distribution partner, and again, for the business marketing group. The make up (membership) of marketing groups in the last few years has changed significantly, due primarily to membership loss by owners selling to non-affiliated chain operations. This potentially changes the strength of that marketing group, which impacts all the remaining members.
TPS: How does having a succession plan help communicate stability and strategic planning to customers and vendors?
Shields: A solid succession plan is imperative to achieve customer and vendor confidence, whether the company is publicly or privately held. Presenting a clear succession plan for companies is key to sustaining the strategic and operational effectiveness. The leadership and people within a company is what builds a brand – not the other way around. A clear succession plan communicates one more reason why a brand is solid in the marketplace.
A clear example in today’s economic environment has been the lack of succession clarity of Steve Jobs’ role as the leader of Apple computers. A lack of succession plan for Apple caused customer and shareholder speculation, and it was reflected in the company stock price and internal workforce stability – and ultimately brand perception.
TPS: What is the biggest reason companies don’t create succession plans – don’t know how, don’t feel it is important, don’t have the talent to step into the necessary positions?
Shields: There could be many explanations when it comes to the time needed to accomplish the succession planning exercise. However, the real driver is the level of HR [human resources] strategic integration in the business. A solid HR strategic partnership with the most senior levels in the organization will result in solid HR strategic outcomes – like succession planning aligned with the business needs. A succession plan view is not always internally focused. In fact, it could be external acquisition of talent as well. The exercise and the plan in place is what matters in order to react quickly to the external or internal factors.
TPS: What makes someone a good candidate to succeed in a particular position?
Shields: There can be many different factors, or attributes, depending upon “the position at hand” for the candidate. In general, however, a good candidate will succeed when they have both the right leadership behaviors and the performance accomplishment (track record) that they can leverage to achieve the next job challenge.
TPS: Does one factor mean more than another, such as longevity, skill set, leadership, familiarity with the company?
Shields: It all depends on the role. However, a critical piece is the capability to build and foster relationships as well as to demonstrate emotional intelligence. Experience becomes an essential factor as well. Again, depending on the role, experience serves as the foundation for continuous learning and the ability to apply that in the next job challenge.
Familiarity with the company, while important, is perhaps the least critical factor since that can be acquired as part of the learning process for any type of job. All these factors can vary in their level of importance depending of the job challenge: not all jobs are created equal, nor is the talent.
