Consider Your COO as a Successor
The turbulence of the present year may understandably have caused some printing business owners to put certain management issues on the back burner until normal times return. One of these is succession planning: the process of appointing someone to lead the company when the owner is ready to relinquish the role. Normal times will return and, when they do, this strategic task will be as urgent to address as it ever was.
There are two kinds of succession planning, each defined by the owner’s intentions and personal timetable.
A formal exit strategy specifies the owner’s full departure from the company by an agreed-upon date, as would be the case after he or she sells the business and the new owner takes over. The other approach, which we’ll discuss here, is to gradually develop a chief operating officer (COO) as a successor. That way, when the time comes, the owner can back away from day-to-day management to whatever extent he or she would like, whether maintaining ownership or not.
The COO candidate needs to be qualified to run the business, but management skills by themselves aren’t enough. Complete trustworthiness, along with professional and ethical values that reflect the owner’s, also have to be present to make the choice of a successor the right one.
It’s fair to say that in most cases, the person the owner wants will be someone currently working for the company — an employee whose personality and management track record are already well-known. Besides simplifying the search, succession from within also sets up the candidate for a smooth transition into the broader set of responsibilities he or she will be taking on when the owner feels ready to hand them off.
A Case in Point
We have a client who has accomplished this by promoting his sales manager to COO and putting day-to-day oversight of the business into her capable hands. Nearly everyone who reported to the owner now reports to her, and the reporting relationships are solid — she’s well respected within the company because of her long tenure there, and everyone is happy to see her doing well in the COO spot. In this way, the owner has recovered a big chunk of time to do with as he pleases.
The alternative to internal promotion is hiring a successor from outside the company. This can work, and we’ve seen cases where it has. But outside recruitment gets mixed reviews because of the unknowns it introduces.
The main one is that without a personal knowledge of the candidate’s career history, the owner may find it hard to correctly gauge character, capabilities, and values — things that even the most thorough vetting process may not bring fully to light.
Bad bets on outsiders can be costly. For example, an otherwise qualified person might turn out to be someone bent on changing company culture to fit his or her own way of doing things — a potentially explosive situation for the business. More often, though, a hidden flaw is lack of competence, something that can take a good deal of time to become apparent.
We’re thinking of a situation where a successor was brought in from outside to drive a series of changes that the owner preferred not to spearhead himself. The new person was well liked, but his execution was weak — although revenue grew, the bottom line didn’t improve. Unfortunately, it took several years of flat results before the owner realized that, with this individual in charge, his succession plan wasn’t going to work.
Get Out of Your Own Way
Business performance is what succession plans ultimately are judged by, no matter where the successor comes from. But owners must be careful not to meddle in their own plans by failing to give their successors the full scope of authority they need in order to grow into the job.
Another trap to avoid is something we might call retiree’s remorse. Owners who think they’re ready for succession, but then balk at handing over the reins when the right moment arrives haven’t done the self-analysis that the decision requires. It’s important to be clear not only about how the transition will take place, but when the owner will make his or her graceful exit from center stage.
Succession by family members is a natural course of events in an industry as well stocked with second-, third- and fourth-generation owned businesses as ours is. But family ties by themselves won’t win the hearts and minds of employees who don’t share them. Someone perceived to have been chosen as a successor just on the basis of a last name isn’t likely to get the support he or she will need in the long run.
On the other hand, the industry is full of companies run by sons and daughters who’ve worked harder than most to prove that they’ve earned the positions they hold. If a family member has the talent, passion, and people skills that leading the business requires, then the ideal candidate has been identified, and problem of succession is solved. Like anyone else, a family member must earn the respect of other employees in order to succeed at the executive level.
To the Boardroom or the Beach
That leaves the owner free to pursue whatever comes next, including staying actively involved with the company if he or she so chooses. Now, instead of working in the business and sweating the diurnal details, the owner can work on the business at a higher level by shaping vision and strategies for the rest of the team to share.
But if the beach, the golf course, or just extra time with the grandkids is the objective, so be it — the personal reward is the owner’s to enjoy. Like every other meaningful achievement in life, business succession is the end-result of a plan. Make it carefully, carry it out diligently, and the outcome can be just as fulfilling for your company as your future will be for you.