THE FIRM: What will get you there?

By Leo MacLeod The Daily Record Newswire When there is a major shift in leadership - for instance, a founding principal leaving and a new principal running the show - the planets are suddenly out of line. Staffers are unsure what matters and how to react. They even question their own status or value to the firm. It's not uncommon for projects to flounder, productivity to drop and team spirit to unravel when the management structure changes. While leaders in waiting often are anxious to assume leadership, the other staffers typically are more interested in having owners stick around to maintain the status quo. When a leadership change takes place, time is needed for a new equilibrium to be established. But some transitions not well conceived can be disastrous: people leave, clients disappear, and the identifiable culture - indeed a company's only real asset - withers. To ensure a smooth transition in leadership, start by understanding the culture. Know "what got you here" and "what will get you there." What got you here Firms, like families, are defined by the DNA of their parents: the values and personality of the founders create the unique culture. One needs only to look at founders to understand how one firm is hard-charging, competitive and unafraid of taking risks and another firm is stable, family-oriented and conventional. When I work with firms going through transition, I use a values exercise that helps define the motivations and values of the people in charge. What matters most to the owners will determine management and strategic decisions. The company shared values tend to fall in line with the owner's values, because we tend to hire people who reflect our own values. A core values assessment is a realistic view of what truly drives the firm's daily decisions: Who do we hire? What kind of work are we drawn to? Is it about the numbers or the people? Is it about the work or the clients? This is critical because values and personality define both reputation and worth in the market. It's what clients and partners come to expect of working with you. Just like there are Peet's customers and Starbucks customers and anything-but-a-chain customers, clients are attracted to firms because of their values, personality and work style. Understanding what got you here ensures that you can retain the brand "equity" or value of the firm during the transition. When you make transition decisions -- whether it's a merger, acquisition, sale or internal transfer of ownership -- be mindful of how well the core values of the new leaders/owners match the core values of the founders. What will get you there While retaining the firm's core values is important, change in leadership is often a good thing, and sometimes critical. What got you here, may not get you where you need to go. Firms can get complacent and lose traction with the industry and clients. They may want to position themselves as leaders in sustainability or integrated design or the newest modeling technology. Younger leaders may be more passionate about advancing those capabilities. New leadership often is willing to take more risks to go into new areas that keep the firm relevant. Founders are human, so they are naturally strong in some areas and weak in others. Maybe a firm that had a market-leading visionary needs a steadier hand paying attention to the internal business. These days, when there is less control over revenues, profitability often rests not on fees but successful management of expenses and productivity. Perhaps the firm started with one office, but now it needs someone with skills and experience to manage five offices. In other instances, firms have grown by tying their fortunes to a handful of large clients. When those clients dry up -- as many have -- it's time for a stronger rainmaker, unafraid of knocking on doors. That may not be in the skill set of the remaining owners. Take an honest assessment of what's happening in your firm, the competition and the industry to plan for what's needed in new leadership. Successful transition requires a balance of appreciating and valuing what got you here with a realistic understanding of how the world is different today and what's required in new leadership to get you where you want to go. ---------- Leo MacLeod, a partner in the Succession Consulting Group, helps firms plan for transition and develop the next generation of leaders and rainmakers. Contact him at leo@successioncg.com. Published: Thu, Mar 1, 2012