Leadership and succession

One of the biggest challenges a leader ever faces is identifying, developing and handing over to their successor.  Having recently done so myself I can confirm it is really difficult even for someone like me that is well educated int he subject.  Having  worked with many other leaders, both those existing and those that are the nominated successor I have knew a lot of the challenges but it was still the biggest challenge of my career! Whatever here are a few tips to help you, the busienss leader, make a success of the process!

Plan well ahead

You need to start talking and planning three years ahead as a minimum. Develop and agree a roadmap, planned timeline and choose carefully the timing of each stage of the communication and the transition. Timing is critical.

Communicate well and early

Announce the change six to twelve months before it becomes official so people can deal with it in the abstract first. Also so that those that might feel bypassed/they’ve lost out can be handled positively, but clearly by the outgoing boss that they are used to leading them.

Whatever you do, don’t spring it on everyone. Introduce the idea gradually.  Make it a natural progression for the existing leader to step back and for the successor to take control. Indeed, one approach is to try to effect the transition in practice before formalising. If the existing leader is seen to let the successor make all the decisions and that is working, the formal job title and role change becomes simply that – a formality.

Announce internally first

It sounds obvious but staff do not like finding out about important business changes from the press or customers. Although stating the obvious a little, the key message has to be a positive one demonstrating the benefits to them of the change. Put simply, the best way to present benefits, especially if you have carefully engineered a long term step by step transition, is that the succession is to sustain and secure the future of the business. In most cases your team will find a message of continuity less concerning than a message of change.

Think about what happens when something goes wrong

How will that be handled – because it will happen.  The successor will NOT make all the same decisions that their predecessor would have made. It is inevitable they will do some things differently. It is of the nature of business that not all of our decisions work out as we would wish them. So, some of those different decisions WILL be mistakes that the predecessor would not have made.  

Don’t forget that there will also be different decisions that work well. The problem is that those tend not to get so much attention.

Overall, ensure the perspective is balanced and discuss up front how you will deal with the situation if something goes wrong. Including how the existing leader would have done it differently. Maybe there are situations so serious that it is appropriate for the existing owner to step back in. However, it is in everyone’s interests to avoid that except in very, very exceptional circumstances.

Your successor won’t always do it the way you would have done it but that doesn’t make it wrong and may actually be a good thing – change, for the right reasons, is nearly always a positive in my eyes

Separate the ownership change from the role change

Whilst ownership and leadership are often linked and there may be personal and financial reasons why they have to be, our conclusion was that the smoothest and safest transition was to separate the ownership change from the leadership change.

This differs from the normal more obvious approach. There is often a gap between the value of the business anticipated by the existing owner and what the successor can afford. That can be addressed. Accountants often suggest the vendor lends to their successor the money to buy the business. That is a good solution… as long as the business meets the agreed growth ambitions.

The problem is that it doesn’t actually relieve the editing owner of the risk. When the transition creates disruption and the business/new owner can’t meet the loan repayments, the former owner can end up having to step back in with legal complexities and operational/commercial pain all round. So, consider carefully whether the linkage of the two (which is at face value simpler and appropriate) creates a risk to the business of a sudden change of direction.

Be clear about the different roles

Succession can and does work smoothly when all parties know what they are responsible for and authorised to do. So, define roles/authorities clearly and document them in writing. Think carefully about who is accountable for what.

The Chairman as consultant

One perspective that emerged from some discussions I've had was that the role of the Chairman, the existing owner, was to focus on the board, the strategy and market direction, and business resilience. They described their role as ‘like a consultant but better.’ Their job was to research the situation, consider the options and make recommendations to the CEO/board but not to decide or implement themselves. That was for the board and the successor CEO.

To finish with what I suspect is the most important comment below.

TRUST will be absolutely key in making any change like this work – when you handover you do need to let go and completely trust the new person taking over to make the good decisions and do the right things