DILEMMA: Though I don't plan to retire for a couple of years my thoughts are turning to succession. How do I choose the right successor and groom them to take over?
ISSUES: Choosing a successor is a tough job for any business leader and even harder for owner/managers. Entrepreneurs are naturally attached to their creations. It can be difficult to achieve a successful transition even if you pick the right person.
A change of leadership alters the nature of many relationships within the business and managing communications is critical to success, particularly for those with venture capital backing.
Many entrepreneurs overlook the fact that their successor could just sell off the business. If you retain a share in the company, though, you need to be clear about why - and about the level of your continuing involvement. Will you withdraw gradually or suddenly? How attractive is your successor's job if you're still hanging around? And consider the impact on your partner's life, especially if they're the one encouraging you to let go.
How good are you at picking people? What the business needs for the future may be someone very different from you. Can you make the process objective?
At a session on succession in family companies in Yorkshire, I commented: 'It's hard to be objective about people you love.' To which came the swift reply: 'Aye, I know. It's even harder if you hate 'em.' If you are lucky enough to have suitable internal candidates, how will you decide? Do you really want a competition? Will you pick alone? Will the successor be respected by the team? If you identify your successor ahead of time, how can you avoid them behaving like a conqueror and you feeling like a lame duck?
ACTION: Decide whether you want a successor at all. Clarify their role and start date and set expectations. Get professional advice if necessary.
Think like an owner first and a coach second.
- If your successor is an external candidate, spend money and time checking them out. Get good tax and legal advice. Know what you'll do if it doesn't work out.
- Assess what extra experience or training they need. Business school courses could prove excellent value.
- Test your successor, develop them, delegate with clear parameters.
Endorse your choice; don't undermine them. Make the handover short and then get out of their way. Get busy on other things to make sure you do.
There is life after success.
Patrick Dunne works with 3i.