Succession Planning and Its Impact on the Performance of Small Micro Medium Enterprises within the Manufacturing Sector in Johannesburg

摘要

Succession planning is a major problem within Small, Micro and Medium Enterprises (SMMEs). The literature shows that although most of these entities are run by their founders or by a small management team and very few such operators have in place proper succession planning. The lack of proper succession planning can have the direct effect of causing the collapse of these businesses especially when key players leave the business upon retirement or in pursuit of other options. The exit or exodus of key stakeholders can make a business vulnerable and diminish its worth as investors will not invest in a business that is not sustainable. Succession planning was identified as one of the most pressing issue for SMME’s within the corporate governance sphere. This was therefore investigated by means of survey that was done in order to take up this study. The intent was to ascertain what the current status is within the manufacturing sector in the Johannesburg region. A combination of qualitative and quantitative methodology was applied to get responses from 15 companies out of a total of 30.The study found that there was a gap between perceived and actual status of succession planning in the SMMEs studied and there is major room for improvement in this area. Further these SMMEs did not put plans in place to groom, train and develop top managers. The study found that there was no preference to recruiting from outside versus developing inside talent in preparation for succession planning. The findings also suggest that most stakeholders agreed that good succession planning can add value to SMME’s and they become more sustainable. It is evident from this study that the manufacturing sector has not changed from those recorded in earlier studies. The conclusion from this study served as a wakeup call to the SMMEs which took part.