For many business owners, their companies are not only their most valuable financial asset, but also symbolize a sense of achievement, power, and prestige. Business ownership provides an identity, a purpose and a place to go to from Monday to Friday. Thus, the very idea of planning one’s succession evokes a number of much larger questions, such as who will I be and what will I do after I relinquish control of my reign?
Retirement for many of us is associated with mortality, provoking the realization that we have fewer years ahead of us than we do behind. Is it any wonder why so few business owners actually plan for their succession?
In the context of succession planning, business leaders must disengage from business goals by reducing their effort and level of commitment to entrepreneurial pursuits, and re-directing their energies towards identifying new and meaningful endeavors. However, letting go of business goals and setting new retirement goals is also tempered by the owner’s beliefs about the ability of the successor to take the helm.
I assisted researchers Gagné, Brun de Pontet and Wrosch of Montreal’s Concordia University, to collect data on this subject. People who can abandon old goals in favor of new challenges cope better with transitions, display higher levels of well-being and life satisfaction and lower levels of depression. The results of the study revealed, however, that trust in one’s successor is an integral part of establishing new goals and nurturing positive expectations about retirement.
There are a number of strategies that business owners can adopt to ease into succession.
- Expand your definition of yourself
Many business owners may be unsure of who they are without their business titles. One way to alleviate such anxiety is to establish new roles and identities outside of work.
For some, it may be nurturing an identity as mentor, for others it may mean pursuing new hobbies and expanding one’s personal identity repertoire to include golfer, skier, or gardener. For others, it may mean placing greater emphasis on the role of friend, parent, or grandparent. Of course perfecting one’s golf game does not preclude being more present in the lives of one’s grandchildren!
The evidence from the social science literature is quite clear. People who have multiple roles have better mental and physical health. For people who primarily derive their sense of self-worth from their work-role identities, the opportunity to develop additional roles outside of work will be beneficial to their retirement adjustment. Once business owners devote more time to non-work related identities, such roles become more central to their self-concept.
Tips on developing trust in your successor
The study findings clearly indicate that trust in one’s successor is an integral part of establishing new goals and nurturing positive retirement expectations. Businesses characterized by a high sense of trust outperform low-trust organizations by approximately 300 percent.
Below are some tips that will help you pass the torch!
Successors must have the necessary skills to lead which may necessitate that they enroll in university business courses or require on the job learning.
They will also need to be coached and mentored. It is essential that business owners offer support and timely feedback.
A successful transition requires that the owner let go of the reigns while still at the helm. Meaning, the successor needs the opportunity to experience running the company on their own while benefiting from the owner’s expertise and guidance.
Successors need to gain experience from the trenches in order to confidently take the lead. And owners have an easier time moving into retirement if their replacements demonstrate business acumen and managerial competencies.
- Communicate, Communicate, Communicate!
Honest and timely communication is one of the hallmarks of developing trust in others. As such, owners need to express clear expectations of their replacements.
Owners must also foster accountability. They can do so by slowly handing over more and more responsibility to their successors and making it clear they are the ones who are now responsible for the success or failure of their new mandates.
Please note that this does not preclude the owner from giving advice or guidance.
- Develop a post strategic succession plan
Lastly, both parties should together develop a post strategic succession plan. Such a plan provides the company with a roadmap and helps others to see the future direction of the business.
The beauty of the post strategic succession plan means that the owner and the successor spend more time together, which will encourage communication and nurture trust.
Succession planning can be quite challenging. For many business owners the process involves an internal struggle of having to let go of their cherished positions. Developing trust in one’s successor will help business owners ease into succession and plan for life after work by establishing new goals, new dreams and a new sense of direction.
About Gillian Leithman BA, MSc, Ph.D Candidate:
Gillian is a corporate trainer and Certified Retirement Coach. She has facilitated programs for Canada’s premiere organizations such as Bell Canada, Air Canada, Investors Group, Telus, Novartis, and Exxon Mobil. Gillian is the founder of Rewire to Retire™, www.rewiretoretire.com, (formerly Directions Third Age Consultants Inc.), and teaches in the Faculty of Management at the John Molson School of Business. She is currently pursuing her Ph.D. focusing on aging workers, knowledge transfer and retirement. She can be reached at gill@rewiretoretire.com.