If you’re planning on selling your business to a successor (family or key executive), developing them as thoroughly as possible is essential. Not investing the time to properly develop them can lead to retirement delays, frustrations, missed payments or worse (like having to come out of retirement and salvage things).
After working with leaders for the last 20 years, we’ve determined that these are the five smartest things you can do – above and beyond teaching them “the mechanics” of your business – to maximize the likelihood of success.
1. Get an Objective Assessment
Let’s face it, we all have blind spots. And our blind spots cause us to miss things – especially when it comes to successors because we’re too close and have a lot riding on their success.
In addition, although you no doubt have many years of experience, your opinion is only part of the equation. It’s critical to find out how others view him or her, since they’ll be the ones who will either follow the successor’s lead or will choose not to trust and respect them.
The smartest way to evaluate a successor is by conducting a 360° assessment. This assessment solicits feedback from people all around them (you, peers, direct reports, etc.). The report generated by an objective 360°assessment will highlight their strengths and their weaknesses, which will provide you with guidance on how to further develop them to be more effective.
2. Have Regular Developmental Discussions
Successors can’t be trained. They must be developed over time. In other words, if successors could be trained, they could simply read some books and attend a workshop or two and become a better leader and an owner. It doesn’t work like that. For someone to become more effective as a leader and owner, he or she must break old habits and form new ones. They need to improve their interpersonal skills, learn to think strategically, and become effective at influencing others. In addition, they have their own blind spots and can’t see what they’re missing nor can they see where they’ve gone wrong.
That’s why, for successor development to be effective, it’s important to have developmental discussions once a week or at least twice a month. During these discussions you should talk about things that happened since your last meeting with them and suggest ways they could have handled things differently or more effectively. It’s an ongoing process and usually takes about 6-12 months to get the results you want.
3. Help Them to Think More Strategically
I’ve seen it over and over again. Leaders looking to increase profits develop a strategy to get better results. Except the so-called strategy they develop is not really a strategy at all. It’s just a goal. Or a tactic. Or sometimes it’s simply a platitude – a nice-sounding, but meaningless statement.
Regardless of whether they developed a goal, a tactic or a platitude, the results are always the same. The so-called “strategy” is never realized. No amount of encouragement, accountability or table pounding will lead to achieving the desired results. Only a true strategy stands a chance of achieving significant results.
In order to help a successor think more strategically, two things must happen. First, they need to understand the distinctions between strategies, tactics, goals, and platitudes.
A good strategy addresses a problem or an opportunity. Help your successor learn the differences between strategies and tactics.
And then they need to learn to differentiate between problems and symptoms. A strategy developed to address a symptom almost always produces weak results and always causes new issues to arise, thereby compounding the situation. The key, therefore, is to teach your successor how to uncover the problem or problems causing the symptoms.
4. Help Them to Be More Persuasive/Influential
Mastering the ability to influence others is critical to the success and effectiveness of a leader. A strategy, no matter how well thought out, will get mediocre results if there isn’t strong buy-in. A leader will always get compliance because of his or her authority. But compliance and commitment are two different things.
How do you influence people? How do you change their perspective, so you get buy-in? The most effective means of influencing others is by asking good questions and the use of analogies.
Asking good questions is an art. It took me many years to master it, with lots of practice and plenty of missed opportunities. Help your successor learn to ask questions that will change someone’s perspective. The right questions will give them insight into how the other person thinks and give your successor the needed insights to shift the person’s thinking.
The second tool for influencing people is through the use of analogies. Analogies are an excellent vehicle for bringing someone around to your way of seeing things. Help your successor see that using an analogy can help people “see” and “feel” the concept they’re talking about and does it in such a way as to keep them from becoming defensive.
5. Refine Their Decision-Making Abilities
As every owner know, it’s up to them to make the final decision on every significant issue. In order for your successor to make smart decisions, you need to groom him or her in several areas.
Often, decisions must be made without certainty about the future. Therefore, you need to help them improve their judgment and learn to balance risk and reward. They need to be savvy about business in general and understand financial statements. Since your successor has probably only ever been an employee (and never an owner), you need to help them think like an owner, see the big picture, and balance long-term and short-term needs. And finally, you need to help them learn the wisdom in getting outside perspective. It will help reveal blind spots and give them objective insights.
Properly developing a successor is important. The future of the business depends on it, the livelihood of your employees depends on it, and your retirement plans depend on it.
If you’d like help developing your successor, please contact us. It’s our specialty.
Contributed by Michael Beck