If you develop a reputation for being less than forthcoming, you could derail a critical ownership transition – and even destroy your firm.
Upper management has to walk a fine line between communicating effectively, guarding sensitive information, and telling the truth. And as we all know, the truth these days is an elusive thing in our society, as we have been inundated with alternative facts, fake news, mistruths, and retracted statements. It’s really hard to tell what’s even real anymore. But we cannot let the confusion of the outside world infiltrate our AEC firms.
As managers and owners existing in our own ecosystems, we can control how we are perceived and how information is received in our organizations. And in the event of an ownership transition, this cannot be overstated. Times are difficult enough when you are asking someone to purchase the mountain of value you (and they) have created over years of running a successful business. So, when you are dealing with the ever-complex environment of transition, being trustworthy and open from the beginning can truly improve your chances of executing the plan.
We often see internal transitions “fail” when owners wait until it’s too late, or don’t prepare the next generation for leadership. We also see them fail when communication has been botched from the beginning. The owners could be making the right choices at the right time, preparing the next generation of staff, and allocating funds properly, and still handcuff themselves by misstatements. Making promises or extending “soft” offers years before you actually take any dedicated action can also backfire in a big way.
Address transition planning with great care and be intentional about your communication. Planning should begin a decade before you actually see yourself sailing off into the sunset. Even if you are thinking that far out, it does not mean you should promise a portion of the company to a key hire, or subject staff to half-baked ideas about how it “might happen” when it finally does happen.
Make sure you yourself are viewed as a trustworthy person. When an owner (or anyone for that matter) develops a history of questionable statements, distrust can be an issue lurking beneath the surface and can be problematic when it comes time to bring others to the table. The difficult thing for owners is that they have a great responsibility to take care of their people, while at the same time maximizing, or at least optimizing, their returns.
Being fair in compensation across your firm is primary in keeping staff happy. So, in that endeavor, owners must balance their own returns – which may be used to pay back the obligation of ownership – with investment in their staff. To that end, while managing the firm – incentive comp, business development, strategic initiatives, and personnel matters, among many others – owners disseminate, and withhold, sensitive information. This is reasonable. Maintaining a motivated workforce depends on a leader’s ability to do this effectively.
But when normal discussions and simple conversations devolve into questions about one’s integrity, it can be damaging – not only for an ownership transition but for morale across the organization. Continually evaluate your people, and yourself, on the barometer of truth and make sure the organization’s moral compass is correct. From internal and external project communication to who spilled the mustard in the fridge and didn’t clean it up, look for truth and accountability. Simple situations handled improperly can hamper real negotiations years down the road.
The process of transition is highly refined and meticulously maintained in some organizations. In others, it’s an afterthought. In either scenario, it’s still up to management to figure out how to effectively communicate what’s going on inside the firm. Communication, or lack thereof, is among the most important and most cited issues facing AEC firms today. Staff continually gripe that that they don’t know what’s going on and don’t understand leadership’s direction. If you believe in Reaganomics or fluid mechanics you are familiar with the concept that “you know what” flows downhill and that aggregate wealth, water, or even information, does the same thing. Effective communication in an organization starts at the top, and those at the top owe it to themselves to be truthful about every aspect of their business, and to everyone on their team.
Will Swearingen is Zweig Group’s director of ownership transition. He can be reached at firstname.lastname@example.org.