A posting on LinkedIn got to the crux of this quite succinctly. If your business cannot run without you for 30 days, you do not have a business. You have a J-O-B with a very expensive sign that has your name on it. When you can sit back and say ‘my business will work without me’, you probably have a strong business and a succession plan.
KPMG International’s 2014 Global Audit Committee Survey has highlighted some positive things about the management and structure of New Zealand companies, specifically around the role of CFO.
It has also highlighted issues with succession planning. When it comes to succession planning, New Zealand is doing just as poorly as the rest of the world.
The survey showed 73% of New Zealand companies reported that the performance of their CFO was ‘rigorously evaluated against clear performance objectives’ which was well above the global average of 59%.
The downside risk highlighted the need to put in place formal succession plans. The survey revealed that 62% of global companies do not have a formal succession plan in place for the CFO – and warned this was a ‘major risk’ for any company.
This goes for all the major roles in large businesses. For the typical New Zealand business of less than 10 employees, it is even more of an issue. Your small business is typically reliant on fewer people to ensure its success, if just one person is not there then it can become difficult to trade, if this is a long term situation it can become difficult to survive. Especially so if that person has key skills for your business.
Add to this, emerging concerns for businesses, like health and safety. This is currently a top of mind subject, particularly in the wake of the Pike River disaster. With the Government signalling changes to legislation that will place more onerous responsibilities on directors. With significant consequences for non-compliance, these are areas of risk that now need specialist support.
Where do you go to make sense of all of this?
One of the things we do when we are looking at a business’s insurance planning is identify areas of risk that you may not have considered.
With business succession; helping you find the right people to help you work through putting together an effective succession plan, for you, your key people, and your business.
Interestingly a well-implemented OSH/ACC compliance system in your business can often save you more money than you will spend setting it up. Less staff down time from injuries and less compliance costs once it is implemented, maybe even some savings with ACC levies, with 15-20% savings able to be achieved in some situations.
Want to chat about creating space for you and have your business work for you instead of it being a job, give us a call.