Andrew Howard

New Zealand’s mid-market businesses are losing senior managers to Australia because most lack succession plans. Without clear pathways to ownership, experienced professionals leave for better opportunities. The fix: start succession planning three years early and create genuine equity pathways for high-potential managers.

What you need to know:

• 42% of mid-to senior-level professionals in NZ are open to relocation (mostly to Australia)

• 61% of business shareholders are aged 50+, but only 39% have viable internal leadership candidates

• Employees with equity stay 53% longer and build 92% higher net wealth

• Up to 10,000 NZ businesses will change hands in the next five years

• Succession planning needs to start at least three years before transition

Why New Zealand’s Best Managers Are Leaving

I’ve watched this pattern repeat itself across dozens of mid-market businesses over the past two decades.

A talented senior manager in their late 30s or early 40s. Ten years of solid performance. Deep operational knowledge. Ready for the next level.

Then they leave for Australia.

The founder is shocked. The business scrambles. The institutional knowledge walks out the door.

This is a succession problem masquerading as a retention issue.

How Bad Is New Zealand’s Brain Drain?

128,700 people departed New Zealand in 2024. 72,000 were New Zealand citizens seeking new opportunities abroad.

42% of mid-to senior-level professionals in New Zealand are open to relocation, mostly to Australia.

Nearly half of experienced managers are actively looking elsewhere.

These are the people who should be stepping into ownership roles in the next five years.

Meanwhile, 61% of business shareholders are aged 50+. Almost a quarter are over 60.

The succession time bomb is already detonating.

Bottom line: New Zealand is losing experienced professionals at the exact moment business owners need successors.

Why Founders Struggle With Succession Planning

I understand why founders delay this conversation.

Succession planning confronts mortality and control. It forces you to picture your business without you. The intellectual part is straightforward. The emotional part is brutal.

Daily pressures demand attention. You’re managing cash flow, dealing with staff issues, chasing growth targets. Planning three years ahead feels impossible.

What I’ve learned from working with business owners through transitions: the urgent always crowds out the important until the important becomes a crisis.

Only 39% of businesses have viable internal leadership candidates if senior leaders exit.

The majority are operating without a clear pathway for their most valuable asset to continue beyond them.

Bottom line: Delaying succession planning is understandable but leaves businesses vulnerable to talent loss and failed transitions.

What Happens When You Wait Too Long

The failure rate shows the cost of delay.

Finding suitable candidates for senior roles is increasingly difficult. Many organisations cite insufficient training and support for internal successors.

When you don’t create genuine pathways to ownership, your best people make a rational calculation.

They stay in New Zealand, work hard, and hope something changes. Or they move to Australia where the economy is larger, more diverse, and offers clearer progression.

In the December 2024 year, New Zealand recorded a net migration loss of 30,000 to Australia. New Zealand citizens made up 85% of departures. Half were aged 20 to 39 with a disproportionate share holding tertiary qualifications.

The Trans-Tasman pathway has become the succession plan New Zealand businesses failed to provide.

Bottom line: Waiting creates a pipeline problem where your best internal candidates leave before you’re ready to hand over.

How Equity Pathways Retain Senior Talent

The data on equity ownership is unambiguous.

Younger professionals who receive equity benefits early in their careers (aged 28-34) averaged 92% higher household net wealth and 53% longer job tenure than their peers.

Employees overwhelmingly prefer working for companies where they have an ownership stake, and equity compensation is widely recognised as a top driver of engagement and retention.

This is strategic, not generous.

When you give talented managers a genuine stake in the business, you create committed owners who think long-term, make better decisions, and build value.

Bottom line: Equity pathways transform employees into owners who stay longer and build more value.

Why This Matters for New Zealand’s Economy

Enterprises with fewer than 50 employees account for 99% of all businesses and employ roughly two-fifths of the workforce.

Structural failures in this segment have economy-wide implications.

Up to 10,000 businesses will change hands over the next five years. Small businesses employ 30% of New Zealand’s working population and produce around 27% of GDP.

When these transitions fail, the entire economic fabric of the country suffers.

The New Zealand Stock Exchange captures headlines with roughly 150 listed companies. The real story lies in the more than 600,000 privately owned enterprises driving local innovation and employment.

Bottom line: Succession failures in mid-market businesses threaten New Zealand’s economic stability and employment.

What Succession Planning Looks Like in Practice

Succession planning succeeds by developing internal candidates early.

Not two years before you retire. Not when health or circumstance forces your hand.

Three years in advance, minimum.

Strong succession planning becomes a competitive advantage when you operationalise it:

• Identify high-potential managers

• Give them increasing responsibility

• Create transparent pathways to equity and ownership

• Make staying and building more attractive than leaving and starting over

This requires expertise in leadership transition, family communication (if relevant), financial independence planning, and operational documentation.

You plan this deliberately with people who’ve done it before.

Bottom line: Effective succession planning starts at least three years early and includes clear equity pathways.

What’s at Stake for Your Business

I’ve seen what happens when businesses get this right.

Talented managers stay. They invest energy in building, not job hunting. They develop the next generation of leaders. The business becomes more valuable, more resilient, more sustainable.

I’ve also seen what happens when businesses get this wrong.

The best people leave. Institutional knowledge evaporates. The founder works longer than planned. The business sells for less, or closes entirely.

The brain drain is a symptom of systematic failure to create genuine equity pathways for experienced professionals.

You won’t compete with Australia on market size or diversity. You compete on ownership opportunity.

The question is whether you start this conversation today, or wait until your best manager hands in notice and mentions Sydney.

By then, you’re managing crisis, not planning succession.

Crisis management is always more expensive than strategic planning.

Bottom line: The cost of waiting is higher than the cost of planning. Start now.

Frequently Asked Questions

When should I start succession planning?

Start at least three years before you want to transition out. This gives you time to identify successors, develop their capabilities, and create equity pathways. Waiting until two years before retirement or until circumstances force your hand leaves too little time to prepare internal candidates.

How do I create equity pathways for senior managers?

Begin by identifying high-potential managers who demonstrate long-term commitment. Structure transparent pathways to ownership through performance-linked equity arrangements, profit-sharing, or staged buy-ins. Make these pathways clear and achievable so talented people see staying as more valuable than leaving.

What if I have no succession plan and my best manager is already looking to leave?

Have an honest conversation immediately. Ask what would make them stay and whether an equity pathway interests them. If you’re serious about keeping them, work with advisers to structure an ownership transition. You’re in crisis mode, but acting now beats waiting.

Why are so many New Zealand professionals moving to Australia?

42% of mid-to senior-level professionals are open to relocation because Australia offers larger, more diverse markets with clearer progression opportunities. When New Zealand businesses fail to create genuine ownership pathways, experienced managers make the rational choice to leave for better long-term prospects.

What happens to businesses without succession plans?

Most struggle to find suitable senior candidates. Many fail during transition because institutional knowledge leaves, operational documentation is poor, and no one is prepared to take over. The business either sells for less than it should or closes entirely.

How does equity ownership affect employee retention?

Employees with early equity benefits (aged 28-34) stay 53% longer and build 92% higher net wealth than peers. Equity transforms employees into owners who make long-term decisions and build value.

What expertise do I need for succession planning?

You need expertise in leadership transition (identifying and developing successors), family communication (if relevant), financial independence planning (structuring your exit), and operational documentation (transferring knowledge). Work with advisers who’ve guided transitions before.

What’s the economic impact if mid-market businesses don’t fix succession planning?

Up to 10,000 businesses will change hands in the next five years. Small businesses employ 30% of New Zealand’s workforce and produce 27% of GDP. Failed transitions mean job losses, lost innovation, and economic instability at a national level.

Key Takeaways

• New Zealand is losing senior managers to Australia because most SMEs have no succession plan and no clear pathways to ownership.

• 42% of mid-to senior-level professionals are actively open to relocation, draining businesses of the exact people who should become successors.

• Succession planning must start at least three years before transition and include transparent equity pathways for high-potential managers.

• Employees with equity stay 53% longer, build 92% higher net wealth, and make better long-term decisions for the business.

• Up to 10,000 New Zealand businesses will change hands in the next five years. Failed transitions threaten jobs, innovation, and economic stability.

• The cost of crisis management after your best manager leaves is always higher than the cost of strategic planning today.

• You won’t compete with Australia on market size, but you compete on ownership opportunity. The question is whether you act now or wait until it’s too late.