Business owners are increasingly aware of how much value their employees provide to their organizations and, indirectly, to their assets.
When you initiate a leadership transfer, it’s in your best interest as the seller to take into account your existing workforce. This is true across all sectors and specializations.
Recognizing the value of sought-after workers
Your potential successors are your employees or children (if you run a family business), but these workers are also likely to be solicited by the competition. Headhunters will go to great lengths to lure them to new positions, offering them the opportunity to take on important roles, collaborate on shared projects and get valuable training and coaching along the way.
In addition, most future leaders have a clearly defined set values and beliefs that they hope to find in the company they choose. And with the labour shortage being as serious as it is, top talent can be selective about which company they want to invest in and develop. This makes the prospect of a talent drain all the more threatening to companies.
Involving the next generation of leaders
The new market reality is forcing outgoing business owners to pay closer attention to the needs of next-generation leaders. This means enlisting their help in developing a realistic succession plan that includes concrete steps and a clearly defined schedule.
The more recent wave of uncertainty has only amplified this need.
Current leaders need to put their emotional intelligence to use and be transparent when transferring leadership. This strategy will help ensure their successors remain committed during the transition period.
Young workers are educated, perceptive and sophisticated. They have specific expectations and want current management to be frank and deliver on tangible commitments. They’re looking for a real transfer of responsibility and leadership. If they find the handover process unclear or poorly planned, these talents—who are otherwise known for their loyalty—could very well accept offers at other companies.
Employees and children involved in family businesses need to be patient during the transition. Sellers need to prove to buyers that they can be relied on throughout the process.
Anyone hoping to sell their business should take action right away by implementing a transparent succession plan that engages workers. After all, good talent is hard to find and productive employees drive growth.
Planning a gradual transfer
Too many entrepreneurs fail to take the time to properly plan their business transfer. Eventually, they may try to make up on lost time, only to find themselves faced with a dizzying list of consultants and organizations promising quick-fixes. This can lead to hasty decisions and considerable damage that’s sometimes irreparable.
In most cases, you need a comprehensive succession plan based on a gradual transfer of management responsibilities and property over three to five years.
The plan should be based on a solid assessment of the situation and lay out the financial considerations and other details, including the new generation’s involvement and capabilities. More specifically, a succession plan should provide for:
- Stronger governance
- More fluid communications
- Concrete qualifications of the successors and key persons
- Successor emotional intelligence
- Roles, responsibilities and assignment of duties
- Successor goals and expectations
- Sellers who have benefitted/are benefitting from their assets
- Satisfied sellers who act as ambassadors
A new governance structure, such as a succession committee, family council, management committee or board of directors is needed to oversee the plan and ensure its successful implementation.
A leadership transfer plan should reflect the needs of both the sellers and buyers, while ensuring that all changes are approved by all parties to boost engagement.
Finally, since business transfers always come with uncertainty, the succession plan should be paired with a strong internal and external communications strategy and plan.
Getting help from seasoned professionals is essential for building a viable leadership transfer plan.