Preparing The Next Generation of Leaders
Preparing the next generation of leaders is the most critical aspect of succession planning and/or ownership transition. Particularly for organizations in the service business, our competitive edge lays in the strength of the team we have created. Senior individuals who built your organization during its startup and growth phases may be nearing their retirement.
Understanding where your organization is in its life cycle is vital for preparing the next generation of leaders. For example, if your organization is in the growth phase, you could benefit from leaders with a different skill set than if you are in the decline phase.
Understanding the retirement goals of your current senior leaders in critical functional areas helps you know where you need to develop appropriate bench strength.
I have learned six critical actions in preparing the next generation of leaders by transitioning my own business through multiple generations of ownership and guiding my clients through their ownership transitions.
1. Always Think About the Next Generation
Do not wait until you are two to five years from retirement to start thinking about who might replace you. It is never too early. The market changes, people leave your organization, and new opportunities arise. Therefore, you want to always direct attention to preparing the next generation to lead, so they are ready to step up.
2. Grow Your Bench Strength
The strongest firms have several individuals ready to assume multiple positions within the organization because they received cross-functional training. Identify individuals with high leadership potential and grow BOTH their technical and soft skills. Every senior manager of a key functional area should have at least one or two individuals who could step into their role. Always be in a hiring mode for impressive new talent.
There is no better way to begin transitioning your organization than to prepare the next generation of leaders. And there is no better time than to start today.
3. Develop, Delegate, and Provide Feedback
Your next generation grows when you invest time in them. As a senior leader, your primary function is no longer to “do” but to mentor and coach the leaders a generation below you. Continuously delegate work and provide constructive, on-the-spot, and lessons learned feedback after significant projects are completed. Research suggests that organizations and their boards are poorly prepared for the transition. The most common transgression is procrastination, in failing to charge the next generation of managers with more responsibility.
4. Outline Both a Career and an Ownership Path
Each employee needs a personalized professional development plan that outlines their career path, and when relevant, their ownership path. Future job titles with position descriptions are one way to outline a person’s career path. In many types of organizations, interested employees (e.g., Associate, Senior Associate, Principal, Managing Partner), also need to understand their path to ownership, in addition to the skillset and responsibilities they need to possess at each level for them to move up the ladder step-by-step.
5. Build an Organization to Transition
Build an organization that someone else wants to buy shares of and/or commit their career to.
If you are a service organization, you need to identify what you have to sell or transition besides yourself. Have you developed a team of capable individuals to run the organization without you; a client base who will follow the organization after you retire; demonstrable revenue and profit growth; or proven operational systems and processes? This type of planning allows a firm to transition well and gets your next generation of leaders excited about being part of that next generation.
6. Create an Environment That Celebrates Risk and Failure
The next generation of leaders needs to be ready to tackle the significant challenges of running a successful organization in an ever more competitive environment. This requires the creation of a culture that embraces risk-taking, creative ideas, and fully understands that failure is a necessary step in the next generation of leaders’ growth.
Encouraging mentors and excellent communications, risks that turn out well can be celebrated, and risks that produce temporary failures can be contained and serve as fruitful material for robust lessons-learned discussions.
Preparing the next generation of leaders is a vital step in succession planning. To my mind, it is the most essential step. If applicable to your organization, remember to plan how you will finance your transition, value your business, look for internal and external buyers, and transition your clients.
Since there is no better time than today to begin preparing the next generation to lead, what can you start doing today to transition well?
