Simply knowing how the business runs doesn’t qualify someone to be the head of a company. It also takes leadership, vision, and good judgment. Without strong leadership skills, a leader will simply get compliance from his or her team and results in mediocre performance. Without vision, the business stagnates and only grows incrementally. And without good judgment, poor decisions that may put the company in jeopardy.
Improving Ownership Competence:
Owners and employees think and act very differently. Employees tend to think narrowly, focusing on the task at hand and/or on their specific domain of responsibility. In contrast, owners need to consider the bigger picture and how their decisions impact each aspect of the business. Employees tend to think short-term and their focus tends to be on current matters, current revenues, current expenses, and current profits. Owners, on the other hand, need to consider both short-term and long-term success.
Owners understand that their business is their life and they think about it at all times, no matter where they are. Owners also feel a responsibility to provide a livelihood to the company’s employees. They understand that their decisions not only impact the bottom line but impact the people who work for the company.
And finally, employees know that if they make poor decisions or the business doesn’t do well or they become dissatisfied or they lose their job, they can always find a new job elsewhere. Owners understand that failure is not an option. Generally, there is no “Plan B.” They understand that the business is their only future, and this understanding colors their decisions and their actions.
Here are three things you can do to prepare a successor for ownership:
- Help them become knowledgeable about all aspects of the business.
They don’t need to be an expert in all areas, but they do need to be knowledgeable enough to carry on a conversation about any topic related to the running and the success of the business. Important areas are production/operations, sales/marketing, and finance/accounting. For example, if they’re going to be successful at growing the business profitably, it is essential that they understand why some marketing works and some doesn’t, and they need to be able to understand and interpret the company’s financial statements.
- Help them study the competition.
It’s important for a successor to not only be aware of economic and industry trends, but also of what competitors are doing and how they are responding to the marketplace. Have them read trade publications, make note of competitors’ advertising, and pay attention to comments (both good and bad) made about the company and the competition by both customers and prospects.
- Help them develop a vision for the future.
Employees tend to think about how they can improve on the existing business by maximizing revenue, profits, efficiency, and quality. And while those are all important, they generally produce only incremental improvement. Help your successor develop a vision for the future that is different and better than what already exists. It is essential they become good at this. It is the only way to make significant improvements.
Improving Leadership Competence:
In order to be effective, an owner must also be a good leader. Leaders guide the organization, inspire the organization, and bring out the best in people. A successor must earn trust and respect, reinforce the company’s culture, learn to influence others, think strategically, and develop others.
Here are five things you can do to prepare a successor for leadership:
- Earn Trust and Respect.
It is essential that the successor earn the trust and respect of those around them. Make sure they act with integrity and that they show respect for others. It will help them become accepted as the new owner.
- Reinforce the Culture.
The culture of a company is made up of the values and behaviors it embodies. By going out of their way to speak and act in alignment with the company’s culture, it demonstrates that a successor is well-aligned with it, that they believe in it, and that they expect others to live by it as well.
- Become Influential.
Mastering the ability to influence others is critical to the success and effectiveness of a leader. An influential leader has the ability to sell his or her ideas and get buy-in throughout the organization. A strategy, no matter how well thought out, will only get mediocre results if there isn’t strong buy-in. Help the successor learn how to shift people’s perspectives. Help them to use questions and analogies effectively in order to persuade people.
- Think Strategically.
The ability to think strategically is essential for leaders guiding an organization. Development of a proper strategy allows a leader to prepare an organization for faster growth and profitability. A good strategy addresses an issue or problem and provides a direction for the company. However, a misguided strategy can cause a decline in growth and profitability. In order for leaders to develop a good strategy, they need to uncover what the underlying problem is and not react to the symptoms it causes. Help them to become good at uncovering underlying problems.
- Develop Others.
One of the most important responsibilities of a leader is to develop the people around him or her. Study after study has shown that an important factor in driving employee engagement is having the opportunity for professional growth. Given the impact and far-reaching implications of developing others, it is critical for a leader to adopt a “coach-like” approach when developing people.
What does a coaching style of leadership look like? A coaching approach is to ask rather than tell. Instead of starting off by telling people what to do, a leader should ask them what they would do and how they would do it. It not only demonstrates that the leader has an interest in what the person has to say, but their answers will reveal their level of insight, judgment, and problem-solving abilities. Asking good questions will help a successor understand how to help and guide people. Help your successor learn to ask good questions.
These essential leadership and ownership competencies don’t come naturally to most people. Plus, leadership skills aren’t trained. They’re developed over time – usually a six to twelve-month initiative. Utilizing the expertise of an experienced executive coach is the perfect solution for grooming a successor.
When properly coached, they’ll be able to leave poor habits behind and form new, more effective ones. They’ll have their blind spots revealed so they can expand their thinking. They’ll have an unbiased sounding board, so they’ll make better decisions and sharpen their judgment. And they’ll gain a deeper understanding of people, along with how to engage and inspire them. By getting outside perspective, they’ll accelerate their leadership and ownership effectiveness, and the business will thrive.