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

  •  Ajay Garg    
  •  Erich Van Weele    


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.

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