Building a succession plan for manufacturers

In small manufacturing businesses, critical knowledge often resides in just a few key people. The machine operator who’s the only one who knows how to troubleshoot that temperamental piece of equipment. The production supervisor who holds 20 years of process knowledge. The quality manager who maintains all the customer relationships.

When these people retire, leave, or are unexpectedly absent, the impact can be immediate and severe. Yet many small manufacturers operate without formal succession plans, hoping key people will stay indefinitely or believing succession planning is only for large corporations.

The reality is that small manufacturers are often more vulnerable to knowledge loss than larger operations—and succession planning doesn’t have to be complex to be effective.

Manufacturing Skills Queensland’s Industry Workforce Advisor Karen Knapton said succession planning often gets delayed because manufacturers don’t realise how accessible it can be.

“Small manufacturers sometimes think succession planning means elaborate leadership development programs they can’t afford. Really, it’s about identifying who holds critical knowledge and making sure that knowledge doesn’t walk out the door with them. You can start small and still make a significant difference.”

The key is identifying positions where departure would create significant operational, technical, financial or relationship disruption.

Start by asking: Which roles hold specialised technical knowledge that would be difficult to replace quickly? Who maintains critical customer or supplier relationships? What positions have long tenure where institutional knowledge has accumulated? Where would an unexpected departure create immediate production problems?

Another consideration that accompanies succession planning is the management of poor performance and consistent absenteeism and what effect that would have on your business.

This assessment helps you prioritize succession planning efforts where they’ll have the greatest impact. For most small manufacturers, this might be 3-5 critical roles rather than the entire workforce.

Practical succession strategies

Effective succession planning for small manufacturers doesn’t require complex programs. It requires deliberate action in a few key areas:

• Documentation: Capture the knowledge that exists in people’s heads—process documentation, troubleshooting guides, customer preferences, supplier contacts, and equipment quirks.
• Cross-training: Ensure critical tasks can be performed by more than one person. Key processes shouldn’t depend on a single individual.
• Mentoring relationships: Pair experienced workers with less experienced ones to facilitate knowledge transfer intentionally.
• Development pathways: Identify internal candidates who could grow into critical roles with appropriate training and experience.

The goal isn’t to have a perfect replacement ready for every scenario. It’s to reduce vulnerability and create options when transitions occur.

A well-considered succession plan reduces a business risk by preparing for unforeseen changes with key roles in a business.  Without a plan, business may face, internal conflict, operational instability and delays, lack of leadership, all of which can negatively impact staff morale, client confidence and overall business performance.

Karen said the most effective succession planning happens before it feels urgent.

“The best time to plan for someone’s retirement is years before it happens, not months. That gives you time to transfer knowledge gradually, develop internal talent, or build external recruitment strategies. When you’re planning ahead, you have options. When you’re reacting to a sudden departure, you don’t.”

Starting the conversation

One barrier to succession planning is discomfort with the conversation itself. How do you discuss someone’s eventual departure without making them feel undervalued or pushed out?

The key is framing succession planning as business continuity rather than replacement. Experienced employees often want to leave a legacy—they take pride in their expertise and want to see it continue.

Conversations might focus on what knowledge would be most important to transfer, who shows potential to develop in this area, what documentation would be valuable, and what timeline makes sense for gradual transition.

Karen said succession planning often reveals development opportunities manufacturers hadn’t considered.

“When manufacturers start mapping out succession plans, they often discover talented people in their workforce who are ready for more responsibility. Succession planning isn’t just about replacing people who leave—it’s about creating growth opportunities for people who stay. That’s good for retention too.”

The cost of waiting

Your experienced workers won’t be with you forever. The question is whether their knowledge and expertise will be.

Ready to develop practical succession strategies for your business? Manufacturing Skills Queensland’s Industry Workforce Advisor can help you identify priorities and build effective succession plans.

Strategic and long-term benefits

Beyond immediate operational needs, succession planning supports long-term strategic goals.  It allows for businesses to anticipate future leadership requirements, prepare for different scenarios and reassure clients and stakeholders that the business is sustainable and resilient.  Proactive planning can also unlock growth opportunities by giving your workforce the confidence and structure to innovate while maintaining stability.

Connect with our Industry Workforce Advisor today discuss practical succession strategies.

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DID YOU KNOW: From now until November 2026, small manufacturers with less than 20 employees are able to access a $2,000 skills and workforce development subsidy. The subsidy can be used on HR services including developing HR guides, succession plans and more.