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Sunday, 19 November 2017

Planning Your Succession? Don’t Leave It Too Late!

During this last week I came across an example of leadership that was both unusual and reassuring.

So many times I have experienced situations where the leader, mostly an owner manager, is ploughing on, running the business, getting older and not considering what needs to be done or even what might happen.

In one instance I asked the owner of a medium sized engineering company employing around 50 souls what his plans were for exiting the business.

He was over 65 years old, currently fit and in full command of his faculties.  He looked at me as if I had just asked when he thought that he might die.

“I haven’t the slightest idea,” he said.  “I have no intention of giving up.  If I did, I would have nothing to do and I couldn’t live like that/”

I sympathised with his attitude.  I certainly don’t intend to retire until my faculties really do pack in and for the same reason.

However, I don’t own a business that employs people and as long as I am able and my mind holds out then I can reasonably keep going.

My old colleague in the US, Pat Hyndman, used to say before he died still in harness at the age of 95 that he intended to keep going until they had to carry him out on the flip chart and I feel much the same.

Not so the business owner.  As we age the potential for sudden inability to continue gets closer and unless there is some plan, in the mind at least if not exactly specified, then it can cause real problems.

I was asked during my consultancy days, to help out with a business in which the owner/manager had died suddenly leaving his wife, who knew nothing about the business, the new sole owner.  It was too late; the accountants had got their hands on it and were planning to  extract the assets while the business was still viable.  A sad experience.

On the other hand, I had a member of my Vistage CEO peer group whose husband had succumbed to a dread wasting disease and was unable to continue to run the business.  Very bravely she, with no experience of this technically complex operation, dived in and by dint of great determination, saved the company and ran it successfully until such time as she eventually sold it.

There are no hard and fast rules other than sensible planning at a stage when the owner begins to realise that he/she is not immortal.

Back to the beginning.  This week’s leadership lesson involves two partners in a successful business, both aged in the late 50s and desirous a beginning to take it rather more easy.  Very sensibly they discussed the matter and though they had been in sole charge of the business they decided to build a management team that could take the business forward without their constant input.

This included assessing the existing talent in the  company, determining what functions needed to be strengthened, promoting good people into the top team and then, crucially, giving them training to help develop them as leaders.

That, to my mind, is a forward looking, eminently pragmatic approach to what can be an intractable problem if left to fester.  All too often I have known people who ostensibly hand over the reins of a business to the next generation only to keep on as a looming presence without power except that of being a parent.  It is called interference and it doesn’t help and it doesn’t work.

Succession planning for a sensibly organised exit from a business is the right thing to do.  It can be very painful but if the business is to continue to thrive then it is essential.  The clever thing is to start before you realise that it is necessary.

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