He claims this qualifiable measurement is sometimes a better guide that more ‘quantifiable’ variables, and it can help with moving the business forward, beyond simple succession planning.
He says: “If you can find ways to gain feedback from clients on the service they are being provided with this is a great way to score staff’s impact and uncover areas that need to be improved upon. It is direct from the horse’s mouth.”
Productivity and efficiency is also key from a management perspective, adds Mr Murphy, but it needs to be addressed and made easy to report on.
He recommends the use of internal key performance indicators (KPIs) to allow direct monitoring regularly in relation to levels of output as well as detailed quarterly and annual reviews carried out as part of a pre-agreed development plan.
Vendors need to demonstrate the business won’t fall apart without the managing director. Tim Scott“Progression is key,” adds Mr Murphy. “Ensuring staff develop is not only important for their own growth and moral but also important for your business to evolve.”
“Building up skills and competence also builds up confidence and more independence among your team. Setting challenging targets for them to work towards is really important to show a long-term commitment from both employer and employee and this kind of approach helps build a strong long-term relationship.”
Lisa Winnard, HR and business services director at Sesame Bankhall Group, agrees that continual assessment of the workforce is key to a smooth succession experience, priming the business for a successful sale.
She says: “We favour people assessment through a performance evaluation programme, which assesses performance against set objectives and a competency framework. This involves reviewing not just what is delivered, but also reviewing skills, knowledge and behaviours.
“This provides data to feed into a learning needs analysis to identify where you need to invest your time and money into developing capabilities to deliver your business objectives. “
Continual assessment of your workforce is critical in helping you to establish the key capabilities, drivers and development areas of your staff. However, you still need to invest the time, management skill and effort in order to embed a performance assessment process that really works for your business.
Tim Scott, a partner for Knights Professional Services, says that owner-managed businesses need to be particularly careful when assessing their workforce.
“Vendors need to demonstrate the business won’t fall apart without the managing director which will ultimately allow vendors to maximise proceeds on day one.”
“Too many owner managers decide to take higher than market rate salaries and run expensive cars; it’s important to illustrate what actual earnings are and how much profit would there be in a different buyer’s hands.
“Vendors who are transparent with their financials and present the business in such a way that buyers understand the financial benefits of any potential investments, in new machinery or senior team members for example, will be a great position to sell.”
Keeping a business in the family is not always the right thing to do, he adds.
“Family businesses need to ask themselves if the next generation has the skills and experience to run the business and it is hard for parents to make an honest appraisal of this.
"If family members don‘t wish to continue running the business, or it is deemed that they aren’t suitable for the role, then non-executive positions can be an ideal way to keep them involved but it’s essential that good management support is in place.
“Because of the name and culture often associated with family businesses, there is often more flexibility during a deal in terms of funding if parents are prepared to leave more money in the business.”
“It is important that there is a credible team in place that can run the business although in the current climate private equity are more willing to work with the exiting team and add individuals where there are skills gaps."
Assessing your business - key points
Assessing your workforce in a structured way provides you with real-time information on your team’s skill levels. It means:
- No more second guessing why they are not succeeding in certain tasks.
- You will be clear on their competency levels and where the training should be invested.
- You can then identify development needs to help fulfill progression.
This approach provides tangible metrics to enable you to promote / keep challenging / keep motivating team members.
It also ensures you take dedicated time to understand what an employee enjoys and how they wish to progress their career.
The only cons are that you may reveal things you don’t particularly want to know (but this needs to be done anyway for compliance purposes.
Other factors that are not always seen as appealing are the analytics required to successfully monitor project KPIs, but this is essential, even if it can be time and resource costly to implement.
samantha.downes@ft.com
