Preparing for future leadership
Succession plans can be delayed and, in some circumstances, perhaps not even commence because the stakeholders are concerned about the readiness of the future owners to take on the business. In this article we discuss how to prepare the next generation for the challenges that lie ahead
When we undertake a succession planning program, we commence with a discovery process. This gathers hard facts such as business structures and property ownership. We also engage family members through a confidential questionnaire to better understand their feelings about the process and their expectations and concerns. One of the questions relates to the skills and knowledge required to take on the business. In many cases the future owners express concern that they know how to run the operational side of things but feel they lack the managerial and business skills necessary to run the business. This includes issues such as communication, staff management, decision making, strategic thinking and leadership.
It is important to remember that succession is not an event. It is a transition over time. Preparing for succession is just as important as the actual changeover and a key component can be a leadership mentoring program to enable the next generation to have every chance of success.
The program cannot, however, exist in isolation. It must be implemented against a background of business best practice. For example, it is of no use to teach better communication if there is not a formal communication structure in place. Also, why explain the techniques of good staff management if there is no organisational structure or documented job descriptions.
The program should be undertaken over a defined period with progress and outcomes monitored and measured. In a number of the succession plans we have implemented the family have defined a ‘checkpoint date’ to determine whether to proceed with the finalisation of the management transition and commence the business restructure.
Prior to this date the mentoring and development program prepares the next generation for their future roles. At the checkpoint date an analysis and assessment exercise is carried out to determine the suitability to take up management and/or business ownership roles.
The development program should include key business considerations alongside the personal development of skills, knowledge, attitudes and behaviours.
The program should have defined objectives and attainments that can build upon existing capabilities. A gap analysis will establish which areas will require further development and support.
The following outlines what a typical management skills and leadership program can achieve. It should, however, be tailored to the particular family and business circumstances.
Objectives of the program
- Reporting and analysis
- Business plan preparation
- A SWOT analysis
Develop the capacity to:
- Present a point of view
- Provide accurate and meaningful supporting evidence
- Accept rejection
- Project empathy
- Acquire necessary information to make well informed decisions.
- Avoid using just ‘gut feel’
- Make good decisions at the right time based on trustworthy data and analysis
- Develop good judgment skills
- Be flexible enough to change your mind when new information becomes available
Have the skills and knowledge to:
- Read and interpret a set of financials
- Chart and plot a future course
- Know how to respond to unfavourable or unexpected circumstances
- Evaluate a business case
- Know when to seek professional advice and how to interpret that advice
- Prepare and monitor budgets
- Understand debt and finance
- Make financial decisions
- Understand input costs and their impact
- Understand ROI and ROE
- Deal with bankers and financiers
Develop the capability to:
- Understand your market position
- Read changing trends
- Respond to price changes
- Understand supply chains
- Understand current and future demand
- Understand points of difference and a competitive edge
- Deal with export markets, if necessary
- Monitor industry benchmarks and competitor analysis
- Develop a marketing plan
Develop leadership attributes necessary to:
- Reflect appropriate business and family values and impart them to others
- Inspire, motivate, energise and encourage those around you
- Communicate fairly, openly and honestly
- Know how to go about the process of decision making
- Have the strength, perseverance and ability to keep going, even in the face of adversity
- Use lateral thinking and imagination to help the business to navigate through difficult times and also maximise the opportunities when times are good
- Create a sound vision and impart that vision to others
Becoming the next leader requires preparation and development. Being a good farm operator is not enough and the right business skills and knowledge are essential for future success.
Next Transition Group develop and implement leadership mentoring programs and advise on best business practice to ensure the outcomes can be effectively implemented