Navigating Ownership and Leadership Changes in Manufacturing and Construction: Leveraging Risk Management Strategies for Success
One of the top concerns from a survey of our clients was ownership or leadership changes in their organizations. These changes can be welcome or predictable for a business, and other times it is spontaneous. Being prepared for ownership and leadership changes in manufacturing and construction organizations is key to mitigating risk and minimizing headaches and stress for all involved.
So how should an organization prepare for the future leadership adjustments? How can they plan for more unpredicted changes? What should always be considered? With the right strategies and planning, these transitions can be leveraged as opportunities for growth and innovation rather than challenging your organization.
As a leader in your business, here is how to consider navigating and planning for changes and where risk management strategies can make a positive impact:
1. Developing A Plan For Leadership Changes
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Challenge: When a change occurs, there is often uncertainty in the company’s future. This can especially be felt by both employees and clients, leading to impacts in revenue or sales that may last for months.
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Solution: Planning ahead of time with your executive team for any transitions is the way to solve these challenges. Your plan doesn’t have to be detailed or robust, but should include who is involved during a transition: ie the CEO, COO, CFO or heads of these departments and any one with an ownership interest. It should also include a simple communication plan that defines how to make the announcement and who drafts such announcement, how and where it is distributed etc. Lastly, what is the transition plan for the new leadership in terms of reviewing any operational or risk changes. More on that below.
2. Assessing Operational Risks & Financial Impacts
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Challenge: After the transition, the new owner or leader may make immediate or quick shifts in strategic direction, which can introduce risks to the business. This may be a difference in sales strategy, adding or removing clients that no longer work which can create financial impacts. Some leaders like to move fast, and with the speed and need for change, understanding the full impact is critical. For example, do these changes create disruptions in supply chains, shifts in project timelines, or a need for new compliance with regulatory standards are often questions that arise.
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Solution: Part of your plan should be how to review changes during the leadership shift. Develop a committee dedicated to managing risk and change management who has access to trusted partners to involve in any discussions. This should include your financial team and accountants, insurance brokers, compliance team and other outside resources you trust or already engage with in business relationships. By identifying who should participate you will already have shortened the time it takes to review changes and how it impacts your organization, making the transition smoother.
3. Maintaining Employee Stability and Morale
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Impact: Another impact is uncertainty among employees, potentially leading to decreased productivity, increased turnover, and loss of key talent.
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Solution: Plan for strong communication strategies to keep employees informed about changes and how they will be impacted. This is both before the transition and after if its possible to plan and prepare. The goal is to help employees adapt and feel secure in their roles or let teams know their role if layoffs are necessary. Use employee feedback to identify and mitigate potential morale issues before they escalate.
4. Reevaluating and Optimizing Insurance Coverage for Risk
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Impact: Ownership changes may alter the risk profile of your business, which means a review of existing insurance coverage to ensure it is still adequate and aligned with the company’s new structure and goals.
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Solution: Engaging with a trusted partner, ideally an insurance broker focused on risk management is a great solution. A great broker will understand your business, any new strategic direction and build a plan that provides options and flexibility for your changing organization.
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For example, if your new leadership wants to expand sales into additional states or territories you may need additional coverage or a new policy. Or if you plan to add online sales for a more traditional sales organization adding cyber liability or an umbrella policy, may become more relevant. Rather than trying to determine your options, use a broker focused on risk management to ease any burden and stress.
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Every organization goes through business changes. Manufacturing and construction is no different. By proactively addressing and identifying what can happen with leadership and ownership changes, you will not only secure your operations but also realize opportunities to drive future growth. If you don’t have a great succession plan or risk management plan in place, contact Bickle Insurance today. Our team of risk management experts can help. Schedule a free consultation today!
