How to Prepare Yourself, Your Customers, and the Next Gen for a Business Transition 

Transitioning power to next-generation leadership in a company is an imprecise process. It involves many actions over a period of time that are intangible, yet very real. “Power” is not a title or a corner office. It involves qualities like respect, authority, and influence. Power is about the relationships that can make or break a business – relationships with long-time employees, vendors, and customers.

When the CEO who built those relationships, and, hence, the company’s success, decides to step aside, transitioning the power that surrounds his or her relationships is a process that must be carefully managed.

Family Business Transition

In a family-owned business, the older generation may assume that younger family members will naturally want to run the company someday. That may not be the case. Have a talk – or perhaps a conversation that goes on for several years – with your child or children about whether they envision themselves in the family business. Remember, things change. Young people often try out different paths before settling into one that feels right. So, just because your college student doesn’t plan to come home and run the company right now, he or she may feel differently in a few years after working for someone else.

If younger family members want to be involved in company leadership, expose them at an early age to the company’s operations. Let them get their feet wet and build an understanding of how your company makes money.

Learning the ropes by driving a forklift in the warehouse has many benefits, not the least of which is building relationships with your employees. Employees are going to watch your next-gen leader on the job. If they see a young person who works hard and is willing to learn, they will respect him or her. So, a strong work ethic is a key to building relationships internally with the employees who have helped make the company successful.

A young person who gets involved in every function of the business and builds strong institutional knowledge will be better positioned when it’s time to take the reins. They may also see where things could be done differently to improve the company.

Continuous education and training, whether in targeted seminars or multi-week education programs, is an essential part of the transition. The more knowledge and education a next gen leader gets, the better. Moreover, employees will respect the fact that their future boss is receiving an education that can help improve the company. Investing in education and training – including leadership training – will take your organization to a higher level.

If your next gen leader worked at the company as a teen, then went off to college and worked for another company before deciding to come home and assume leadership of the family business, a different process for transitioning relationships should be envisioned. He or she may not work in every department of the company to prepare for leadership but will bring experience and perspective gained elsewhere. In the end, the result must be the same to be successful – building good relationships and earning the respect of employees, vendors, and customers.

A Seat at the Table

Relationships and institutional knowledge are key to the power shift. The best way to do achieve them is to have the next-gen leader involved in meetings and discussions with the people who are critical to the company’s success. This means senior management meetings, employee group (or union-management) meetings, and meetings with key advisors, vendors and customers. Your next-gen leader must be at the table for two to three years before the leadership transition takes place.

Giving the young leader a seat at the table yields several benefits, including conveying the message to employees, advisors, vendors, and customers that you have a strong succession plan, as well as encouraging your next gen leader to take ownership of these key relationships. These are the people who can help him or her navigate through the transition and many business issues that may arise down the road. Having a strong relationship in place before the transition will help.

What does all this have to do with transitioning power? “Power” is nothing more than relationships. It reflects how a person is perceived by others – in this case, employees, advisors, vendors, and customers. By enabling your next gen leader to build strong relationships in the years leading up to the transition in leadership, you will put in place the building blocks for long-term success.

Contact your Barnes Wendling advisor to start the discussion about how you can enable your next-gen company leaders to be successful.

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