Do you have a succession plan for your business? Does your notion of leadership include planning your business without you in it, or at least with a new version of you who has a more specialised role?
I know from my own years operating in business leadership functions that one of the hardest tests of leadership is defining a well-constructed and disciplined plan for succeeding yourself.
So, where to begin?
The first situation to address is your bench strength, and the key concept of succession development. Have you been able to attract talent to your practice? Have you hired for diversity? Are the people you’ve hired just like you, or are they smarter and do they bring broader skills and talent? Does every partner in your practice have a potential successor ready or nearly ready?
Without strong bench strength, it’s time to look at yourself and your business and ask, ‘Why not?’ Answering this question requires another quality of strong leadership: self-awareness and reflection. Don’t fool yourself – no one is indispensable. If you believe you are the only human being capable of successfully running your firm, then you are resigning yourself and the business to a future of indentured servitude.
If you are a business owner or managing partner, then bench strength should be one of your key KPIs, second only to sustainably building the business.
Invest in independent counsel
While looking below your rung on the ladder, also look above. An advisory board or independent chair is an ideal way to bolster governance and build accountability.
Having a small practice is no excuse for poor governance; fit the size of this external team to your practice’s resources. At its simplest, governance is about providing a foundation for high performance, enabling you to have a good handle on all the vital functional aspects of your firm.
Independent counsel will help you focus on succession planning through the lens of what is good for the business and its growth. They do not get lost in the emotions and confusion of partner or business founder politics. The right person in this role is an investment; such people are integral to a successful succession plan and provide insight one cannot measure simply through bottom-line cost. They will be on hand to provide continuity and guidance to your successor and make sure the succession process does not get bogged down.
The ‘letting go’ trap
Anyone who has owned and built a professional practice is, by definition, an entrepreneur. Management rarely understands what it takes to put it all on the line, to have your personal and business balance sheet, in effect, in the one chart of accounts, and to know that real cash flow isn’t a fortnightly salary cycle.
As entrepreneurial professionals, we tend to prefer action to introspection. This is why I would caution anyone thinking about his or her succession to take time to reflect. Consider your own needs before the transition; do not let your thoughts that you are a tough businessperson fool you. Do not underestimate how emotionally vulnerable you may feel when it comes time to let go of the business. Ideally, the partnership team will act with respect, empathy and support for the one letting go, helping to define a successful succession process.
Your partners will appreciate the emotional toll of handing over long-term client relationships. During this transition, take care and ensure that you are not the original entrepreneur lingering in the background. A clean transition is best. Hanging around may make your successor feel overshadowed or frustrated.
Set a firm handover date and then step away with a mechanism in place for dialogue, if needed. If you have chosen your successor well, that person will not lose sight of what has made the firm successful.
A successor who is a first-time leader may feel the need to reorganise and shake things up. However, you should advise the new leader to be patient instead, and allow for the social and political systems of the firm to realign themselves into new norms and relationships, before making big moves.
When it comes to those who remain as partners in the business after you leave, it’s important to remind them that growth is not linear. During a leadership transition, there will be a period of slower growth. Remind partners of the different stages the firm went through while you were at the helm. In my experience, organisational development occurs and is culturally embedded between periods of high growth, not during them. Slower growth should not be viewed with alarm but as an opportunity to be forced into examining what the business has grown toward or into. These transition periods may show less growth but they are crucial preparation for the future.
If clients, peers, partners and team members speak positively about you when you’re no longer in the room, it indicates real success in your succession – and shows your skill as a leader.
Matthew Rowe is an independent director, business founder and owner, as well as a former chairman of the Financial Planning Association of Australia.
