5 Ingredients To Outstanding Succession Planning
A law firm’s Managing Partner is sitting across the table from me and he’s at a crossroads. He knows he can’t live forever. It’s time to have the challenging conversation about the next phase of the firm and its leadership. I know it. He knows it. So what does he say?
“I know, I know. I have to think about this succession planning stuff. But look, I really don’t want to think about that right now. I don’t want to get into talking about who will take over as the leader of the firm I founded and built. I just foresee a lot of conflict. We have three very strong candidates, each with a different skill set the firm needs. How do I tell two of them they aren’t going to be my replacement without them leaving for our competitors or clients?”
Anybody involved with this kind of planning knows all too well that people don’t love talking about their succession plans and an individual’s strengths and blind spots. Why is that? It doesn’t have an easy solution with a clean answer. These conversations are even more challenging when they involve the transition of leadership to the next generation of your family, your will, how you plan to divide your wealth among your children, and which of your children will be the head of the family trust. The list of issues and the potential for conflict seems endless.
No matter the scenario or industry, rather than deal with the question of succession planning, people are so prone to avoid the conversation altogether – until they’re not left with any more choices.
Make no mistake: The decision not to deal with the next phase of your company and what that looks like…is actually a decision too. It’s the decision you’re left with and it’s rarely the most appealing. You no longer have as much control and are now into a state of acceptance.
Settling for the best option left on the table means you could be handing a key role in your company over to someone who is:
Not prepared for the role
Not interested or passionate for the job
Handling tasks that nobody else wants to do, so they may be unhappy
Is that “default person” really the best solution to the challenge of succession planning?
In reality, we rarely see this kind of “next person up” identified. The conversation is pushed off, again and again. So here’s the question: If you don’t have the conversation on succession planning, what do you think is going to happen to the firm?
9 times out of 10, by having no plan at all, the firm is going to go out of business and everyone will be out of a job – from the partners to the rest of the employees.
So you have to take a hard look in the mirror and ask, “Am I most interested in providing a job for myself, building my reputation, or creating a self-sustaining business?”
If you’re in the latter camp and want to build a legacy for your firm rather than collecting a pension, the next several steps will be invaluable for putting together the pieces for succession.
Ingredient #1: Start With A Giant Dose Of Knowledge Transfer
In professional services, the primary product is knowledge. When a leader leaves without transferring knowledge, the product is gone as soon as they’re gone. And this is happening an unprecedented pace. According to the U.S. Census Bureau, 9 Baby Boomers are going to retire at the rate of 9 seconds, every day, 365 days a year, for the next 12 years. So how do you transfer the knowledge you have? How does the customer experience get properly maintained or enhanced after you or another key partner are gone? Where are the prospects for new business going to come from? It’s not enough to identify the next leader, even when they’re a promising one. You have to put an agenda in place for transferring knowledge to the next generation.
It’s convenient to push this conversation off. But when you think about it, that’s irresponsible – to your firm, to your partners, to your employees and customers, and even to yourself.
To be perfectly honest, the primary motivation for succession planning is often a concern for future pension payments as they say, “Who is going to make payments to me for what I’m owed?” This is the question that drives many leaders to put the conversation on the table at all. Then they’re enlightened by other factors they need to consider.
Ingredient #2: Add 3-5 Years Of Time
An owner of a successful business should allow 3-5 years in order to cement all the broad strokes and define the details of a succession plan. That much of a window is often enough to get the business ready for change and maximize the value. So whether it’s a transfer of leadership or a sale, the business will likely be more prepared for the new phase if there’s dedication to solidifying the plan over that 3-5 year period.
Think about this in relation to your retirement. You wouldn’t take 3-5 years for that, right? You’ll have taken many years planning as you lead up to that big change in your life. You’ll think about your goals in reaching retirement but also what you’d like to do in your first few years (traveling, playing golf, learning a new skill, etc.) and the costs of your long-term care. This can’t be done overnight.
So why should it be any different for planning what happens next in your business after you retire?
Ingredient #3: Mix In 9 Factors For Retention
When we’re giving workshops through Leading With Courage℠ Academy, we speak to employers about a retention model that features 9 factors for employee retention. It’s absolutely crucial for keeping your emerging leaders happy.
You can’t satisfy most of these people with better pay alone. Sorry. That’s not going to cut it.
You also need to consider how you’ve helped them create their own career development plan or if you’ve talked to them recently about the level of satisfaction with their manager or if they’ve expressed frustration at not being given new projects and responsibilities. These can’t be ignored if you value that person’s long-term contribution at all.
Here are the Nine Factors we recommend our clients consider when evaluating employees. How satisfied is each employee with their:
Pay and benefits
Recognition of performance
Coaching by their performance advisor
Feeling part of a team
Has the tools and technology required to do the job
It’s one thing to assess the situation and want to change it. It’s another to actually incorporate next steps into a retention plan revolving around career development. This requires both your full intention and attention.
Ingredient #4: Add A Measure Of Speed When someone is about to leave the company based on many behavioral indications – and they’re clearly a keeper – you have a problem. You can’t sit still or schedule a conversation weeks from now. That may be too late. You have to move with all the urgency that a sit-down needs to happen today. In fact, it needed to happen yesterday.
Now, let’s say you’re not completely sure whether or not that person is a keeper. You still need to move lightning fast to have a conversation to understand their mindset because if they’re not a keeper, they could be a threat. They may poison the culture with their behaviors the longer they stay or may even be a security risk by downloading sensitive company material.
Either way, accelerate to the problem so that a question mark becomes an answer. Faster.
Not sure who’s at risk of leaving? Here’s a link to a tool that will help you identify who might be planning to exit your organization based on behaviors they are exhibiting: 13 Signs Someone Is About To Quit. (It’s a good example of the sort of the practical tools and processes that are part of our Leading With Courage℠ workshops and programs.)
Ingredient #5: Add A Large Understanding Of All Roles
Granted, it’s going to be easier to know everyone in an organization when it’s a small to medium-sized one compared to a Fortune 500 company with 10,000 people. However, the effort must be made to truly know the roles of your people in order to assess their capabilities and whether or not they’re candidates to be elevated. As you gain this deeper understanding of each individual’s role, ask yourself: Is this person ready to take the next step in their career right now? Are they going to be ready in one year? Will they ever be ready to move up? When it’s clear that certain people may have the potential to grow after you’ve evaluated them, the question becomes:
What do they need to do now to prepare themselves to take the next step, and
Why aren’t they ready now? What’s missing?
Perhaps the answer is that they need to be involved in more high-level client engagements. So what are you waiting for? Get them that practical experience now.
Classifying these people overall will help separate the high potentials from others. These are the people who have a unique, irreplaceable skill set that must be identified quickly and nurtured.
Succession Planning Is Not A Promise. It’s A Commitment.
What’s the difference?
The commitment is that you’re going to focus on the ongoing development of your highest potential performers. However, in the same breath, you are not
promising them that they’re going to become C-level executives in the company. You are identifying, nurturing and ultimately elevating a key group of individuals who you believe offer tremendous value to the organization today and tomorrow. Some of them may land in the C-suite. Some of them may not. All of them should feel that they have a special career development plan that your company is committed to and that communication on that plan is consistent.
Succession planning can impact everything from the intern program to the next Managing Partner. The sooner it begins for your people, the better you can begin to develop the next group of amazing talent to deliver great things to your business.
What’s The Next Step From Here? A Leading With Courage℠ Workshop.
Give us a call at (312) 827-2643 to learn how we can help you prepare a succession plan using tools and techniques that are both practical and pragmatic. Our advisors bring real-world experience and industry expertise to succession planning because each of them have been C-Suite executives. They have been in your shoes and have dealt with the challenges you are facing.
Another option is to show your highest potential performers how they fit into the big picture by sponsoring a Leading With Courage℠ Academy Workshop. In two days or less, we’ll give your emerging leaders the tools they need to increase their capacity for bigger roles to come. To learn more about how to bring a Leading With Courage℠ Academy Workshop into your work environment, call us at (312) 827-2643, visit our website, or email LWCAInfo@LWCAcademy.com.