Written by: Christine Nicholson, Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
One of the most important aspects of succession planning is choosing the next leader in your organization. The challenge is understanding what you are looking for. If you are honest with yourself, you were probably not the best leader for your business once you got it past the initial startup phase.
As businesses go through the various stages of growth, they need different skills and knowledge to allow them to grow and thrive. Many businesses are kept at a ceiling because of their structure and the capacity and capability of the people within them.
“True leaders practice the 3 Rs – respect for self; respect for others and responsibility for their actions.”
A classic example of this is the 30-year-old business that has been unable to exceed £2m turnover because of the stranglehold on leadership by the shareholders. Every time the business expanded to exceed the effective span of control of the owners, things would start to fall apart. The business would shrink back for a few years then grow again. Rinse and repeat over the decades.
During all the expansion and contractions, the business was not building on sustainable, solid foundations and remained reliant on the business owners. Many CEOs have been and gone over the years, most lasting no more than 2 years before being worn out from the battle of trying to establish processes and make the business owners redundant.
It was only the impact of aging that made the owners realise that they could not go on forever and they were relying on the business for their retirement funding. Now in their 70s, they are taking active steps towards removing themselves from the day-to-day and letting their team take the reins.
It’s not without the odd hiccup as old, established behaviours rear their ugly heads and the business takes a step backward. Now they are measuring not just profitability but capital value, their bad behaviour can be measured in value damage which is a very effective way to manage it.
They also know what it takes to run a bigger company and they are making the choice to not be part of the leadership team so the structures can be put in place.
A £1m turnover business with 10 employees needs a very different set of skills to a £100m turnover multi-national organization with 10,000 employees. In an ideal world, the people you started out with would all stay for the growth journey and be able to step up into the senior management roles as they developed with the business. But that’s not what happens.
The people who are great at start-ups, do everything because there is no one else to do it and stay to get that customer order out no matter what are very rarely the same people who can handle a business with external investors and multiple layers of management.
In family businesses especially it can be a default that the eldest child takes over the company. This might explain why there are only 1 in 25 family businesses that last 4 generations. Age and position in the family hierarchy is not the best indicator of leadership success.
So how do you find the next leaders?
There are entire libraries written on leadership that can cover this far better and, in more depth, than I can. See references and reading lists for more.
To get started in thinking about this meaty subject, here are a few ideas on how to find the leaders in your business:
Look for potential in passion
Anyone in your team who is driven by passion might be exhibiting all the characteristics of the next leader, though they may be a bit rough around the edges. With potential and passion, there are training and development opportunities.
Get a coach or mentor into the business
If you have several people who have great future potential, then getting a coach or mentor to guide them into their full capabilities is a worthwhile investment of time, money, and energy. The most unlikely potentials are unlocked in a mentoring or coaching program.
Offer job rotation
Job rotation is where employees from different areas of the business spend time doing each other’s jobs. It can be a day, week, or month and has a positive impact on team building or breaking down silos in a business.
When I joined the Wrens in the 1980s, a junior WRNS officer did a 6-month rotation as a junior Wren before starting officer training. It was a great way of gaining insight into what a rating faced in daily life. It was literally walking in the shoes of the people you would eventually command.
Baroness Karen Brady uses job exchange and rotation as part of her business practice to make sure that all employees do at least 2 days of job rotation every year. She’s got this working at West Ham Football Club to great effect. Not for players on match day’s I must emphasize, though sometimes with the results you might wonder.
In other organizations, I have implemented multi-week job rotations to great effect not just from identifying leadership potential but also for building better performing teams and improved business processes.
“Train people well enough so they can leave, treat them well enough, so they don't want to.” ‒ Richard Branson
Ask your team “who” they would want as a future leader. This might seem obvious but asking other people in your organization who they like working with and why can bring up some interesting observations. In a positive and encouraging culture, it’s a great method of gaining insight. In a poor culture, it’s an offer to bitch and moan about other employees.
Building a team
“I don’t have a leadership or management team!” I hear some of you cry. Or you don’t have the right team, which is more common.
No successful entrepreneur has ever built something bigger than themselves without the aid of a supportive and talented team. That doesn’t stop it from being lonely at the top – being an entrepreneur can be just as lonely whether you have 1 or 100 staff.
Successful entrepreneurs weave together a collection of the right skills and attitudes to enable their businesses to become greater than the sum of their parts. Whilst founders may be the ones who take the first brave steps, it is their ability to recruit followers, supporters, and challengers that keep their businesses in the top %.
Ideas are cheap, action is the critical factor in getting those ideas into reality and delivered, repeatedly and consistently. All the biggest and most successful companies have a mix of different characters, inspiring an army of talented people who help turn an idea into reality.
Building a Team to Scale
Despite all the evidence that a team is essential to business growth and success, many business owners simply do not “staff up” effectively or quickly enough to grow their businesses. It is important to find the skills and talent for each activity in the business – from administration, finance, sales, and marketing to customer service.
Doing it all yourself means you are going to get tied up in what I call £10 per hour work instead of £10,000 per hour work. It makes no sense to spend hours doing your own bookkeeping if you can get it done quicker and more effectively by someone you pay £15 per hour to – thus releasing you to spend those hours getting sales, negotiating contracts, or building a strategy that grows your business.
Yes, some jobs won’t be done exactly how you do them – but they might be done better or differently OR both!
But what about the cost?
One of the barriers to recruiting staff is the way business owners perceive the cost of employing expensive team members. Once you have considered what additional staff does in your business and you are clear about what value they add, then it’s a matter of viewing it as an investment.
Is it different with a permanent fulltime employee? ‒ NO!
Regardless of how you employ additional members of your team, they all need to be paid whether that’s by invoice or through payroll. If you are earning more than it is costing you in the hours you now have free, you are investing in the growth of your business.
And what if it doesn’t work out?
Even if you are employing personnel directly, they are always on a trial period when they first start. Making your recruitment processes rigorous should avoid most problems but there is always the odd person who just doesn’t fit no matter how well they interview or look good on paper.
That’s why there are probation periods in your contracts of employment (if there aren’t, get some added!).
Your investment is not the annual wage, it’s only the amount of money you need to pay until the new employee becomes effective or you find out they don’t fit. Be slow to hire and quick to fire to make sure you get and keep the right people. It’s more important to get rid of anyone who isn’t right. Don’t be afraid to make decisions. I’ve seen too many business owners make themselves AND THEIR STAFF miserable by not firing someone that isn’t right for the business.
Building a team and delegating to them allows your business to THRIVE.
There are 4 key steps for getting started:
Get the right essential talent in your in-house team.
Use freelancers and contractors for specialist activities that are not part of your core offer.
Collaborate with partners, affiliates, and joint ventures to extend your reach.
COMMUNICATE.
If you are serious about having a business that’s worth more, then give the exit ready quiz a go – your results might surprise you.
Christine Nicholson is a multi-award-winning Business Mentor, author of 4 business books, a regular keynote speaker, and a businesswoman who has built multi-million turnover businesses over the last 30 years. She’s started several successful multi-million turnover businesses, as well as business ventures for others, including taking one from bankruptcy to an 8-figure exit in 18 months. She has spent a few years accidentally running a zoo! Find her at www.businessmentoruk.com
Christine Nicholson, Executive Contributor Brainz Magazine
I am Christine Nicholson, an author, speaker and award-winning Professional Business Mentor who works with multi-million turnover business owners of technology, engineering or product/services businesses.
I'm UK Business Mentor of the Year 2021 and a Global Top 50 Woman in Accounting. I've appeared on BBC talking about business!
christine@christinenicholson.co.uk
0333 567 8011
