As an advice business matures and its owners or founders start to think about the next generation of leadership, many issues rise to the surface.
One of these is the nature of leadership.
Billy Connolly once said that anyone who expresses an interest in being a politician should automatically be banned from being one. I wonder if this could be applied to leadership in general?
As owners/founders start to consider their succession plan, there are many issues that need to be addressed such as the ownership model, the new leadership team, how to extract value, their own role in the future, and many more.
This is why the one golden rule about succession planning is this: get on with it! You cannot start too early, and you simply must set aside time.
One challenge in particular influences succession plans: who in the business is going to lead once the founder steps back?
Leadership traits of founders
Like any good job interview, let’s start with the ideal situation before we consider the candidates.
Founders tend to have the entrepreneurial spirit. They need drive, vision and a strong character. These are admirable traits in an entrepreneur, but they do not necessarily make a good leader.
Leaders are people who bring others along with them. Yes, this can be the classic ‘knight in shining armour’, the one who is striding forward and inspiring others to follow.
However, this approach tends to lead to people who do, indeed, follow, and not those who are inspired step up and take responsibility themselves.
When the shining knight type leader leaves, who will the employees follow?
Part of the art of succession planning, therefore, is getting out of the way for others to ‘step up’.
Leadership traits of the next generation
Characteristics of great leaders include emotional intelligence and the ability to nurture talent in others.
This will be true of any business, but especially one that has plans to last for a long time (perhaps using the Employee Ownership Trust, or EOT, route to succession planning).
In advice and financial planning firms, advisers tend to make up the bulk, if not all, of the ownership and director positions. Often it is the most successful advisers, in terms of income generation, who get invited to the board.
This is not just true of financial services. You typically get to be invited to be a partner of an accountancy or solicitors practice if you are good at generating fees.
However, the characteristics of being good at doing the job or at bringing in income are not the same as those that are required to be a good leader. In some cases they are the polar opposite.
I have several friends who have been practice managers for GP surgeries. Being a great GP does not mean you know how to run a business, and yet these are the people to whom the practice manager must report. I have heard many a frustrated story along these lines over a beer or two!
Be careful what you wish for
When the ‘boss’ steps away, it is very common for others to seek the position. Terms will be used such as “I have ideas I want to put into practice”, “Drive the business forward”, and “I’ve always wanted to run a business.”
The day-to-day reality of being the boss is usually dominated by dealing with people.
It has often been said that both the best and the worst part of running a business is dealing with the employees. There can be an element of be careful what you wish for when it comes to finally getting control, as everyone now sees you as the person to whom they can complain.
Some practical tips
Here, then, are my tips regarding leadership within your business. Please note I am making an assumption that the business intends to continue beyond the owner and, for example, is not going to be to be sold to a consolidator.
1) Do not replace yourself with yourself (especially if you were the founder). The business needs a different type of character for the future.
2) Look for those with emotional intelligence. Empathy, nurturing, understanding; these are the bywords for leaders of a business which wants to be sustainable.
3) Gather a leadership team, as opposed to just one or two people. Include characteristics in the areas of operations, vision and people.
4) Look beyond the advisers. The boards of advice practices are filled with advisers not because they are always the best leaders, but because they bring in business, and demand a leadership role. But this may not be the best thing for the business.
5) Beware the person desperate to be in charge. Is this ambition for the best interests of the business, or their own?
The objective is to create a management structure which will see the business last, if not for ever, then certainly long enough to generate the profit that will pay you out. This is likely to be true whether you consider selling to an EOT, or to a management buyout of some form.
It means looking at your future leadership team not in terms of who wants the position, nor who you must give the position to so that they stay. Put together the best leadership team for the employees – the people that they will be leading.