For some time we’ve been writing and posting about the huge succession shift that we’re expecting over the coming half-decade.
Millions of baby boomer business owners will be shifting their focus from building and running a business to exiting their business. How they exit their business — selling it, turning the reins over to a daughter or son, or closing it down.
The Story of Mark and Peter
So it was with great interest that we read this piece in the Harvard Business Review that chronicled the story of Mark and his son Peter.
Mark had started his real estate business in the late 1970s. According to the article, Peter did a great job of running the business and taking over the leadership of the management team. As one would expect, some of the old-time employees were skeptical of whether or not Peter had the skills. This is no surprise since they were Mark’s team.
We can well imagine millions of businesses going through this same experience. All systems go. New practices being implemented by the next generation for the new generation. Old license software being switched out with new SaaS software. That old website being updated with a new responsive and much more engaging website. Perhaps even a more modern logo.
But them boom – COVID -19 comes crashing down in mid-March and hurls the succession plan into chaos.
This hit Mark and Peter particularly hard since the commercial real estate sector was hit particularly hard by the crisis. Tenants were asking for rent reductions, lenders were bailing on commitments. It was one thing after another.
As one might expect, Mark began to resume a more active role in the operations of the company. After all, he was the one who built the business from the ground up. And its very survival was now at stake. Mark’s new active role was off-putting to Peter and created significant tension within the management ranks.
The HBR article points to these key steps to assess when and if it is time for a founder to step out of the leadership role.
Have an outsider assess the capabilities of the person taking over
In this case, having Mark assess the skills and capabilities of Peter may well bias the assessment. It would come as no surprise to expect a father to overlook the weaknesses a son might have in terms of a specific skill set.
Expand the lines of communication
As with any transition, amping up communication is an import recipe to follow when there’s been a leadership change. When leadership change happens, employee anxiety follows close behind. Ramping up communication by the new leadership and between the outgoing and incoming leadership softens the anxiety. And such anxiety that can debilitate an organization.
Respecting the lines of authority during a “shift-change”
Once a leadership transition has occurred it’s time to move forward. Backsliding by virtue of the founder or past leader inputting and making decisions only adds to the chaotic nature of a transition.
These, and other considerations, are important to address as long time business owners make that hugely important decision to move on and shift leadership responsibilities.
During “normal” times, failing to take these things into consideration may not necessarily put a business on a path to failure. But during these turbulent times, it is imperative that any leadership change involves a thoughtful, disciplined transition plan to improve the odds of success.
Leveraging new technology, building a new website, and crafting a new mission statement are all important. Addressing the soft issues in a transition is paramount.
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