While inventory may site on your balance sheet as your most important financial investment, every distributor owner and manager knows that their people are their biggest asset and can also be their biggest liability.
They are an asset as they are the #1 differentiator within your business. Without them, a distributor is a vending machine. People interact with customers, with other associates, and with the supply chain. While companies seek to automate roles, it is the people that develop the workflows and resolve the exceptions. They are, inevitably, the “why” of your business. And they need to be nurtured.
But they are also a liability given that, well, they are people. Each has their own personality and needs. Each has different needs. Further, some work out well for your company and some, inevitably, work better elsewhere based upon your or their accord. And then there are some that work great, stay with the company “forever” but then retire and a successor must be found.
The pros and cons.
And, for most companies, the people side of the business never gets enough attention. Companies have HR departments but, especially in smaller companies, HR is payroll and benefits administration. Some then expand to include training responsibilities and, as a company grows, additional people management services are integrated to support the business.
To help our readers, we’re partnering with Tracie Sponenberg. Tracie is known as a people strategist, but one that has been a practitioner … in distribution. She’ll be sharing her expertise each month her “The People Side” column.
Welcome to HVACRTrends Tracie.
There is a person at your company who knows things no one else knows.
He knows which customer will call and yell if the order ships a day early, and which one says Thursday but really means yesterday. He knows a guy at your third largest account so well, he knows his kids’ names and the sports they play. He knows the one vendor rep who will actually pick up the phone at four on a Friday. He knows the pump in aisle six has been mislabeled since 2011 and everybody just works around it.
He has been there thirty-five years. He retires in March.
When he goes, all of that knowledge goes with him, because that knowledge exists nowhere except in his head.
We plan for the position, not the person
Most distributors I know want to have some version of a succession plan for a role but have a really hard time getting there.
Traditionally, what we’ve always done is post and pray. Someone moves up, you post the ad, you wait for applicants, you hire someone. You fill the job description.
But what about the knowledge? The relationships? The judgment calls that took thirty years to build but take eleven seconds to make? None of that shows up in a job description, so none of that is planned for.
I’ve spent 25 years as an HR executive, with the majority of that in wholesale distribution. And at every company, every time someone with real tenure walked out the door, we felt it. Not right away. But by month four, when a customer called angry about something that had never been a problem before, and nobody could work out why it was a problem now, we felt it.
The answer was always the same. The person who used to handle that quietly, before it became a problem, is gone. Nobody has a number for what those costs. But you have felt it, in the margin you gave back when the new person quoted it wrong, and in the customer who quietly moved half their business and never told you why.
What actually works
The good news is this is fixable. Here’s where to start:
One note before any of it, on how you ask. Somebody who has been there thirty-five years can hear “document everything you know” as “we are getting what we need before you go.” That will shut the whole thing down, and it will do it quietly. You will get four bullet points and a polite smile.
So do not frame it as a handoff. Frame it as teaching. Most people with that kind of tenure care a lot about the place continuing to run well, and about being the person who made sure it did. Ask them to train their successor, not to transfer their files.
Who, not what. List everyone likely to retire in the next three years. Not by age. By stated intent. Most of your people who plan on retiring in the next few years have told their supervisor, their peers, maybe everyone. Gather that information. And if you are on an HRIS like ADP, Paylocity or HiBob, there is more in there than you are using. Most offer succession or workforce planning, sometimes as an add-on. Even if yours does nothing but store a hire date, pull a tenure report and see where the concentration sits. Tenure, not age.
Then narrow it. Go down that list and make two judgments about each name. How much would it hurt if what they know left tomorrow, and how soon are they actually going. You will end up with three or four people, not a program. Start with the top one. You are not trying to capture everything right now. You are trying to not get hurt.
Ask them one question. “If you were out for a month and unreachable, what would break?” People will answer that honestly.
Then do not ask them to write it down. For years the honest answer to “why didn’t you write it down” was that writing it down is miserable. You hand a thirty-five year employee a blank template and ask him to record what he knows. He stares at it, writes four bullet points, and goes back to work. That was never a discipline problem. Writing is a bad interface for what is in his head.
That is the piece that technology finally fixed. Sit down with a recorder, or a dictation tool like Wispr Flow, and ask the questions out loud. Tell people when you are recording them. Twenty minutes of him talking about an account will get you more than six months of asking him to fill out a form. Then feed the transcript to whatever AI tool you use and ask for a process document, a checklist, and an account profile. It will get things wrong. That is the point. Hand the draft back and ask him to fix it. People who will never write a document will happily correct one, and they will correct it in detail, because being right matters to them. That one move is the difference between a documentation project that dies and one that finishes.
And don’t do this once. Do it repetitively. Maybe it is 30 minutes a day or perhaps a lunch-time conversation. If you have a VoIP phone system, perhaps it can record calls … or selected calls.
For anything physical, a two-minute phone video beats two pages of text. For anything that happens on a screen, record the screen. Tools like Scribe write the step-by-step document automatically while someone clicks through the task. Order entry, credit holds, the special pricing workaround nobody can explain. Ten minutes of clicking becomes a document you did not have to write.
And once you have ten or fifteen hours of these conversations recorded, you have something better than a stack of documents. You can load the transcripts into an AI tool and ask questions of them. What did he say about that account. How did he handle the returns from that manufacturer. Two years ago, that was an enterprise project. Not anymore. One rule for all of it: do not put anything into a shared AI tool you would not want outside the company. The free consumer version is ok for how the warehouse runs, but wrong for anything about a specific person. And the free version is not a company training tool.
- Pair them with someone now. Give the person who is leaving the name of a real person and give them both at least an hour a week to share information. Protect that hour at all costs. And for ninety days, copy the successor on the account email. They will absorb the tone, the history and the shorthand without anyone teaching it. Costs nothing. The incremental cost of hiring, or promoting, the “replacement” early is negligible compared to the errors saved and costs incurred.
- Transfer the relationships, not just the process. Have them walk their replacement into the accounts, in person, or introduce their customers. A warm handoff from someone with thirty years of trust makes a huge difference.
- Find the accounts one person holds. Your sales team already knows this risk. Go through your top twenty accounts and ask who at your company actually has the relationship. If the answer is one person on a lot of them, that is your real exposure, and it is not dependent on an upcoming retirement.
- Put money on the handoff. Most companies give a retiring employee a party and a gift. Almost none put a dollar against the actual transfer of what they know. A knowledge transfer bonus, paid when the work is done rather than on the last day, turns a favor into a defined piece of someone’s final year. Against what it costs you to lose a thirty-year account relationship, it is well worth it.
- Ask them to stay part time. A lot of people who retire are not done working. They are done working fifty hours. Ten hours a week for six months, on the payroll, with a defined purpose, is one of the better investments you will make this year, but many of your people may not know this is an option. About ten years ago, I worked with someone who was looking forward to retiring but wanted to stay connected to the company in some way. Most of his work was transferrable, but there was one specific task that could not easily be given to someone else. So, he kept it. He could do it remotely, just a few hours a week. He felt connected. The company had someone trusted doing a task no one else wanted to do.
The window is now
Most companies start this work about ninety days out, if they start at all. By then you are not transferring knowledge. You are panicking and adding a bunch of questions to an exit interview.
Somebody at your company is going to give notice this year. You probably already know who.
Go ask them what would break.
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