The topic of succession planning comes up in many of my conversations with business owners. We are in the midst of the largest transfer of wealth the world has ever seen. Much of this wealth is in the form of businesses. Companies that have been formed by the boomer generation are now being passed down to the next generation of leaders. These leaders are Gen-Xers or Millineals. With that transfer of wealth and power comes something else, a transfer in styles, strategies and team dynamics. So, are you training your replacement? You should be.
Succession planning is critical for any organization, but it is especially critical for those in the midst of major transitions. A well-planned leadership transition can take an organization to incredible new heights. But if done poorly, can crush a company and lead to its ultimate demise.
Let me preface these thoughts with the idea that all of these comments are based on generalities. Every time I speak or write about millennials, someone points out the obvious exceptions. Yes, they are out there. But applying the Pareto Principle, these thoughts will ring true for at least 80%.
Succession Planning Requires Forethought
Succession planning doesn’t “just happen”. Many assume that if a company is passing from one generation to the next (let’s say a father to his adult children), then things will continue as always. But in my experience, there are almost always significant changes. Some of them are intentional, and some not.
Leadership styles change
This is probably the most obvious. Millennials and X-ers typically have different leadership styles from boomers. They are typically more participatory in their style. They are less likely to demand long hours and weekends from their team members. This generation is far more comfortable with virtual workers and looks at motivators like work-life balance as being more important than traditional compensation.
A shift to this type of leadership might be well-received by younger workers, but not necessarily. Sometimes the younger workers need the accountability brought by traditional leadership methods. Older workers might consider these trends as a new fad and not react well to them either.
One of the most commonly seen differences we see in millennials is how they possess significantly different values than boomers. They are less tied to their career and more apt to change jobs more often. They value relationships over profits. And most notably, they value the good an organization does over the product it delivers.
With these changes in values come changes in how teams are managed. Flexible work schedules, working from home, job sharing and less stringent overtime expectations are commonly seen. The work-from-home mentality really started with the Gen-Xers, much to the chagrin of most boomer-bosses.
With a change in leadership style and values comes the next logical step, a change in strategy. While boomers are almost always driven by growth and profits, you might see a company change its strategy to be more focused and purpose-driven. You might see it simplify so that it can provide a reliable source of income for the team, and less focused on grinding out 70 and 80 hour weeks in order to land the next big deal.
Another change that I have seen with some clients is the willingness to sell and move on. I have seen family businesses that have existed for decades that are now being sold or divided up. The idea of building a legacy business seems to be far less important to the next generation of leaders. They see legacy as what they do for society and less about what they leave to their children.
Succession Planning Takes Courage
Admitting that you are not going to be in charge forever takes courage. Being willing to step back, and let others start to take the reins of your company is scary. My most common “type” of client is the 60-ish-year-old business owner that is looking to start to step away from their business. In many cases, their children have not followed them into the company business, so they don’t even have a clear idea of what they are going to do with the business. In some cases, the children are involved but do not possess the same leadership savvy or visionary skills that made the founder successful.
Admitting that you are ready to step back or step away takes courage. Turning your business over to someone else to run takes even more. One of my clients recently decided to begin to step back from the business. He is probably 5 or more years away from retiring, but he recognizes that if he doesn’t start to do it now, he will never be able to comfortably step away. My role with this client is to work with the future leaders of the company. In working together they have already begun to develop new strategies that are truly innovative and will help the company grow. Their new initiatives will deliver an additional 10% of top-line growth this year. If the owner had not begun the process and utilized a coach to help facilitate the transition, this growth would most likely not have happened.
Training Your Replacement
When I worked in corporate roles, I always had my eye out for who could replace me on my team. Not because I was afraid of them. But because I did not want any excuse for when I wanted to move up or move on. Nothing holds you back from making a move more than the fear of your legacy falling apart. I can honestly say that I have always left a team better than I found it. And, I have always left a team in a state that it could carry on without me. If my attention had been on preserving my role as the leader, I probably would have never been on to the many fun and exciting endeavors that have made my life and career so interesting.
But Choose Wisely
One client did not choose their replacement wisely. The owner of the company was a very likable guy. His team rallied around him, worked hard and enjoyed their job because of him. He had a VP that ran most of the day to day operations of the business. This guy was just the opposite. He was a hard worker and drove everyone else even harder. The owner and he made a good pair. They provided balance to each other. But when the owner decided to step aside, it created a great deal of chaos in the organization. The lack of balance changed the culture in the workplace and they experienced higher levels of turnover and eventually had to make additional changes.
Succession Planning Takes Intentionality
Finally, it takes intentional efforts to make succession planning work. That is where I come in. As a business coach/consultant, I work with owners and their leadership teams to drive effective transitions. It all starts with clarity. Clarity around the vision of the owner and where he wants the process to go. Once the new leadership team begins to develop their own vision for the future of the organization, we can build effective plans, architect changes to the organization and begin to implement them in a measured and thought-out way.
If you are interested in finding out more about my succession planning coaching, please contact me today.