Grooming the Next Generation

As you’ve built your business over the years or decades, your fondest dream has been that your children will one day take over to continue your legacy. Now you are ready to retire, but they’re far from ready to lead.

Uh oh.

Is this really the right fit for your son or daughter? Do they really want to do it? Do you really want them to?

Without open and honest conversations, many families fall into the obligation game; children think they are expected to run the business when they grow up, whether they want to or not, and parents think they owe it to their children to pass it on.

But as you would expect, some adult children’s passion is anywhere but the family business. Those successors aren’t going to be ready to lead for a long time – their hearts just aren’t in it – or they aren’t a right fit.

And some parents realize deep down that their children would be better served over time in a different career than their own.

Assuming the children want to run it badly enough and you want them to run it badly enough, it’s time for another important conversation: the right role for the adult child, based on their strengths and experiences, and the complements that need to exist within the leadership team.

In some companies, the son or daughter is a great visionary and strategic thinker but doesn’t really have the skill sets to manage at a high level (cue the executive team). Or perhaps the adult child is a tremendous manager, but their ability to set the vision and strategy isn’t as strong.  

You must figure out the right leadership role for this individual and the development they need to get there. This may include skill gaps that need to be filled in or experiences to put on their plates over the next few years to make sure they are ready.

Likewise, you will want to develop the rest of your management team for their ultimate roles so that the company will be profitable and sustained over time.

You may find that some highly driven and successful employees resent a succession plan that puts a family member they may perceive as less qualified in charge. Talk with them. Acknowledge that you realize they have strong skills and important experience to contribute, and there is a key role for them at the management team level, and you want them to be a part of the ongoing success of the business.  

By acknowledging the critical role these employees play in the company’s success, and putting together a compensation package and meaningful work package that shows them they are valued, they are more likely to want to be a part of creating the future. If you create a set of expectations of how employees will work together and build the relationships across the team, you can create a powerful integrated team.

This won’t always work, and high performers may not stay. If your son or daughter is smart, they will replace them with team members who are even smarter than themselves.

It really gets complicated when you have multiple adult children in the business. Even if they all want to be part of the business, you still have the difficult job of discerning who is the right one (if any) to run the business and what roles the others should play. How can they be complementary to each other? How can you structure the ownership model to be fair, whether or not they are at the top?

A fatal flaw in family businesses can be their tendency to approach business decisions first in terms of what’s best for the family. Sacrificing the business’ success to appease complicated family dynamics isn’t good for your family members and it’s not good for business. If the company shuts down, everyone’s out of work, including non-family employees. That’s a lose-lose-lose.

When you can’t figure out how to pass on your company without harming your family or the business, it may be best to sell it to a strategic third party and allocate the return to your adult children. You may even be able to write a provision into the sale documents that allows them to continue to work there, as long as they perform against a set of expectations.

Have the courage to look through the dual lenses of doing right by your business and doing right by your family. It may take require fierce conversations. You may have to make very difficult decisions, and you may ruffle family member or employee feathers – but if you approach it with a long term view of what is truly best for all concerned, in most cases you can create a viable win-win path forward.

How to Walk Away From Your Business…and still collect a paycheck!

Most business owners invest a tremendous number of hours in their business. From the day to day activities to making high level strategic decisions, there is never a shortage of work to be done. So how can you possibly walk away and still collect a paycheck? The more responsibility your management team takes on, the less you have to do. Of course giving your leaders more responsibility requires that you have highly capable leaders with enough capacity to take on more. And while it’s true that those leaders can free you up, you also have to be willing to let go.

If this sounds enticing to you, read on!

Strengthening your management team

1.       Assess them!

Whether you do a formal assessment or a back of the napkin look at your team, you need to be honest with yourself about what you’ve got. You need to evaluate their competencies, skills, attitudes, and the key behaviors against what it takes to make your company profitable. Do they have it? If so, are you using it? It’s amazing to me how often I find a highly talented underutilized resource doing 1/10th what they are capable of! What roles and responsibilities can you give them that will maximize their effectiveness?

If your team doesn’t have enough of what you need, where are the gaps? You know what it takes to run your business – you’ve been doing it for years! You know the gaps that would show up if you took an extended vacation.  Can you develop your employees and close those gaps? Could they be capable one day?  

2.       Hire or Develop?

My experience is that in most business owners are loathe to let anyone go who has been a good loyal employee, even if they don’t have what it takes to contribute more to your business. And unfortunately, most owners don’t have a budget to add more employees to their payroll to round out the gaps. They need a manager who can take on more. These are tough calls and there is no right answer. If you think you’ve got employees who have the potential to grow into a key management role, the investment in developing them is well worth it! If not, your loyalty may stand in the way of your ability to step away from the day to day.

Let’s plan to work with what you’ve got.

3.       Build Bench Strength

When I talk to owners about building bench strength, I usually hear something about how they want to send their employees to training, but …  ‘they can’t free up the time, or it’s too expensive, or I can’t find the right training, etc..’   Training can be highly effective for development, but it’s not the only approach. Why not consider how much they will learn through immersing them in broadening experiences. For example, send your key employee to spend a day or two with a non-competitive similar agency. The exposure to other work processes, culture, and methodology can be incredibly enlightening and pay tremendous dividends.  Or give them a special project that forces them to engage with your business differently. Or support their participation on well-respected local or national non-profit board, or encourage them to apply for a seat in a Chamber of Commerce Leadership Program. All of these are powerful broadening experiences that will benefit your employee and your business. Of course, you must ensure they have a clear set of objectives and outcomes going in to these experiences, and you’ll want to debrief with them afterwards to make sure they get the learning you expected.

When you think about developing your people in this way, they will seize opportunities that you may not even know existed and reach potential you may never have recognized in them.

4.       Let go.

So you did it! You developed your employees and they are doing a great job! Now it’s time to let go. You need to give them enough space to do what they are capable of doing. It doesn’t mean you abdicate responsibility, but it doesn’t mean that you tighten your grip, either. Will they make mistakes? Absolutely! Should you set up boundaries so the mistakes are not a catastrophe for the business? Absolutely! So what will it take for you to release a little bit? Maybe it’s up front meetings to discuss strategies and plans? Maybe it’s agreeing upon a set of boundaries or criteria -- within which they can make a decision --  and outside of which they need to involve you. Just be aware of a natural tendency you may have to negatively judge any action or decision they recommend, just because it’s different than yours. Your job is to help them learn, and to learn from them! They just might have a better idea! 

5.       Enjoy Baja … or Tahiti… or your house at the beach.

You’ve done well. Your business remains profitable – or maybe has become even more profitable. Your management team is running the show. You can check in periodically, give them a pat on the back, and maybe eventually, they’ll become your new owner.

When Talking Isn’t Enough: How To Hold An Engaging Conversation

What would you say if I told you to quit talking to me? In fact, I want you to quit talking to everyone. What I want instead is for you to engage with others. Engagement occurs on a different level than talking to or talking at someone. When we engage, we transform our experience of ourselves and our experience of others. Let’s look at three levels of conversation and discover what it means to be engaged.

3 Levels Of Conversation

Level 1: Level 1 conversations are about exchanging stories. I tell you about my day or week and you respond with your own story that complements, outdoes or reminds you of mine. Sometimes the intent is to validate you and your experience, as in, “Oh my gosh! The same thing happened to me!” Other times we go for the attention grab: “Oh, that’s nothing! Listen to this.” While rich in information sharing and often energizing, Level 1 conversations don’t require a high level of emotional engagement.

Level 2: Level 2 conversations circle around common interests or beliefs. We hash out the latest political scandals or vent about work. In these conversations, each party seeks commonality and support of their worldview. For this reason, Level 2 conversation frequently morph into advice-giving sessions. However, engagement begins as we tap into our core interests and beliefs in these conversations.

Level 3: Here’s where the real work gets done. In level 3 conversations, we are discovering—and appreciating—the uniqueness of the individual. These conversations have more depth, more vulnerability and require deep listening for thoughtful replies. It’s not enough to share a story, though a story might be exactly what is needed to communicate understanding. It’s not enough to discover common interests or beliefs, though we likely will. Instead, we go further and make a commitment to listen and create a safe environment for others to share who they really are, rather then the person we want them to be.

Not every conversation needs to be a Level 3. In fact, that would be exhausting! A quick round of stories at the water cooler or a lunch date to gripe about the boss is fine and often all that’s needed. But look for opportunities to hold Level 3 conversations. It may be with someone you’re mentoring, with a vendor or client with whom you seek to establish a relationship or with a colleague you feel has ideas and opinions—even if they differ from yours—worth exploring at a deeper level.

These conversations take work. It’s hard to let go of judgments or stop our minds from racing to what our reply is going to be and instead be fully in the moment and listening to the person in front of us. In the long term, however, Level 3 conversations are where the deepest of friendships and business relationships take place and grow.