If you want your business to be a multi-generational enterprise, you need to recognize when it’s time to step aside and pass the reins to your successor.
A huge problem in the AEC industry is the founders or CEOs who cling to their positions and will not get out of the way so an actual leadership (and often ownership) transition can occur. When this happens, it destroys morale and motivation at all levels beneath that top individual. And unfortunately, I have witnessed this way too often over my 42 years in this business and am still seeing it today.
The typical evolution of the problem goes something like this: A successful firm is led by someone who is good at what they do. It’s growing and profitable. They either started the business or assumed control of it at some point in the past. That person gets very used to the power and authority, as well as the perks and rewards that go along with the job. They like it – who wouldn’t? If they are lucky, they build a competent team of people underneath them. Then, they age in place. The world changes around them. Over time, their client base evolves and other people in the business start bringing in and maintaining their own clients. Those people naturally want to see their opportunities and rewards expanded. And they do – for a while.
At some point, the awareness sinks in. The top person isn’t going to hand the reins over to anyone else. This person may not actually say that but their actions prove that is the plan. No specific time frame for them to move over is ever established. Or if it is, that time comes and goes and there is no change, justified for any number of reasons – the economy, firm valuation is not high enough, no single person is ready to take over, the firm’s financial strength won’t allow them to buy their ownership back – or any variety of other conditions exist that “legitimize” no change.
Then the second tier starts slowing down. Their motivation wanes. Maybe the best of them leave to go somewhere else. Maybe those people then take some of the best people below them. Revenues flatten, maybe they even decline some. The firm finances compound the problem. It’s harder to replace those people. The CEO’s retirement goals are less likely to be able to be met. The firm is in an even worse position to be able to afford the transition. Nothing changes at the top. More people leave. Eventually, the only option is an external sale because by now only those with the least ability to run the business are left. And the external sale at this point yields a much lower value than would have been achieved years earlier had it been pursued then.
My point is this: Firm leaders – don’t stay at the party too long. If you just can’t leave the party because you are having such a great time, be the one who helps the host clean up. Don’t outlive your usefulness. There is a window of opportunity – for both you and your people – to have a smooth transition and ensure the firm’s continued prosperity. It probably won’t stay open forever. Your best people have high expectations for themselves. If you can’t move over and let someone else take the wheel, those people can’t move over and let their best people have more responsibility, either. It all starts at the top. Go out on a high note instead of a low note. Or at least get out of the way. It doesn’t mean you can’t stick around and help out if that’s what you and your successor(s) want. But don’t be so selfish and put that ego aside so you can do what you know you need to do, when you need to do it. The business can outlive you and truly be a multi-generational enterprise IF your actions support that goal.
And isn’t that what you really want your legacy to be?
Mark Zweig is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.