Design firms that plan and implement successful leadership transition are well-positioned to build upon their legacies and achieve new levels of growth and success.
Effective transition of a leadership position results from a transparent process that identifies an organization’s changing needs, objectively evaluates candidates, and implements decisions in a way that all leaders might aspire to new levels of achievement. Any organization routinely manages a variety of transitions in the course of doing business. These might include changes in markets, clients, technology, and staff resources. But the transition of top leadership has the potential to profoundly impact an organization’s direction and success for years — perhaps for a generation. When this need arises in a design firm, skills typically reserved for developing client solutions are also effective when applied to the matter of leadership transition. Thoughtful and well executed processes will place the organization on a solid course toward a prosperous future.
At some point all viable organizations will inevitably experience a transition of leadership. Many entrepreneurs begin the process early by choosing to expand their enterprise through sharing power and control. In future years these founders have several options for the transition of leadership and ownership. They have developed leaders who are capable of running the business or who otherwise add value if the business were to be acquired. In contrast, there are entrepreneurs choose personal control of decision making over delegation and business expansion. In these cases, leadership transition happens by default as the founder retires, with the business often ceasing to exist. Both approaches are valid, of course, yet they lead different types of rewards. Legacy enterprises that are perpetuated beyond their first generation provide lasting and ongoing contributions to the general economy, industry growth and stability, as well as to research and innovation.
Leadership Development – A Core Competency of Successful Organizations
Leadership transition is more about a philosophy and less about an event. The design firm that has been my home for 30 years now has its fourth generation of leadership firmly in place. Decades ago our three founders witnessed the slow demise of a once successful competing firm that had little will for leadership or ownership transition. Seeing an uncertain future, several of that firm’s emerging leaders left and took risks leading to better opportunities. That event inspired our founders to strive to leave a legacy and they built their firm’s values and culture accordingly. Along with expanded ownership came shared leadership. As my firm approaches its 65th anniversary, we have broad ownership and an entrepreneurial culture where accountability and meritocracy are key values. Leadership development, and well-planned leadership transition, have always been central to the firm’s competencies.
Good leaders are always looking for ways to develop the leadership skills of those who are less experienced. For example, a design firm principal once suggested to an emerging professional that he might be late for the evening’s project presentation to the local school board. Further, he said the young architect should be ready, “Just in case”. That entire afternoon the young architect prepared for the possibility that she might need to deliver her first public presentation. When the agenda item came up, the principal architect was nowhere to be found and the emerging professional proceeded toward the front of the board room. Upon beginning to speak, she was surprised to see her mentor in the audience eagerly awaiting the presentation! Good leaders are adept at assessing the leadership potential of others. They place people in challenging situations where they must reach deep within to bring out their leadership skills. Yet, there is a safety net, “Just in case.”
Before highlighting ways to identify and develop leaders, it may be helpful to briefly explore the general topic of leadership, though simple definitions are elusive. Leadership is different from management. It has been said that while management is about doing things right, leadership is about doing the right things. Managers can be trained while leaders must be developed. Good leaders know their strengths and use them as a basis for action. They also know their weaknesses and resist the temptation to revert to coping mechanisms when under stress. We might take comfort from the words of the late Warren Bennis, an acknowledged leadership expert of our time.
“It is one of the paradoxes of life that good leaders rise to the top in spite of their weaknesses, while bad leaders rise because of their weaknesses.”
Other writings of Warren Bennis resonated with me as I was learning to lead an organization. Regarding the qualities of a leader, Bennis said (paraphrased),
“There are four ingredients leaders have that generate and sustain trust. Constancy is about staying the course. Congruity is about leaders walking their talk. Reliability is about being there when it counts. Integrity is about honoring commitments and promises.”
Leadership is a complex topic because each individual brings forth leadership qualities in unique ways. Further, leadership is becoming an increasingly important topic for the design firms because industry demographics and the silver tsunami point to an accelerating need for energetic new leaders.
Leadership Development Programs
Back to the example of the young architect who found herself in the position of making the school board presentation. Most of us can likely recall similar defining moments when mentors provided opportunities for us to grow in leadership. Many of the boomer generation developed leadership skills through observing the behaviors of their leaders. They were part of a large generation where Darwinian principles and survival instincts often prevailed. Today’s context is different. The Great Recession impacted the number of professionals entering the design disciplines. Further, the business of design is more complex and collaborative than in the past resulting in the need for a different breed of leaders. The result is that many organizations are developing more structured approaches for the development of new leaders.
Virtually all businesses today recognize the need for accelerated leadership development and many consulting firms exist to fulfill that need. While teaching leadership skills is elusive, experts have developed methods for helping individuals unearth their inherent leadership qualities that reside deep inside. Some firms retain consultants directly while others take advantage of programs professional societies offer to their early- and mid-career members. Larger organizations are increasingly offering in-house leadership development programs to selected staff on an annual basis. The intent of such programs is to remove emerging leaders from their comfort zone of daily practice and to immerse them in broader issues germane to leadership of an enterprise. Objectives for such programs often include developing competencies in areas such as the following:
- Strategic leadership and intellectual agility
- Dealing with ambiguity and paradox
- Organizational balance
- Risk analysis and management
- Negotiation and conflict resolution
- Fostering diversity and equity
- Organizational politics
Effective leadership development programs begin with an assessment of an individual’s personality traits and inherent strengths. It is essential that trained experts administer and interpret the results of such assessments. The Meyers Briggs Type Indicator is one of the classic assessment tools; however, there are several others that should be considered in combination because each reveals different qualities. Self-understanding is the first step toward an individual becoming an effective leader.
In addition to understanding personality types, leadership development programs include topics that go beyond traditional practice skills. Examples include communication styles, conflict management, negotiation, motivating others, understanding trends, and knowing when and how to lead. Successful programs involve groups of young leaders who are encouraged to share both their learning and vulnerabilities with others. Group exercises enable participants to test their skill at dealing with real world conundrums often encountered in the C-Suite of organizations.
Leadership development programs benefit firms in multiple ways. Mid-level leaders who better understand how their team’s work contributes to the overall success of the enterprise are motivated to perform. As these mid-level leaders become more adept at leveraging their leadership skills, the organization’s growth will accelerate. And, of course, investment in future leaders builds their loyalty and leads to an optimistic outlook for the future. Simply stated, leadership bench strength is an asset to any organization no matter how small or large.
In addition to the intrinsic value of leadership development to employees and their firms, the extrinsic value can be measured in tangible ways. For example, greater leadership depth contributes to the market valuation of a design firm. For firms that desire to transition ownership internally, strong future leaders are essential for an internal sale. Similarly, leadership depth is key to commanding top dollar for firm’s external sale. An acquiring firm wants assurance that new leaders are ready to assume control when the original partners move on. For owners who plan to retire and close the doors, leadership transition may be less important. However, as noted earlier, good employees will invariably move on when the future of their firm is in doubt.
Turning Over Control – A Deliberate Process
Every leader eventually comes to the realization that it is time to step aside and relinquish primary to others. Similarly, today’s connected and well-informed employees are cognizant of the changing marketplace and they judge the effectiveness of current leaders to bring fresh and vibrant ideas necessary for remaining competitive. It is healthy to begin the dialog about leadership transition before the topic becomes part of the backroom gossip. Just as transparency is important in so many operational aspects of today’s design firms, transparency is equally important in the area of leadership transition. Inadequate information or misinformation leads to rumors, lack of trust, and loss of confidence. Thus, reasoned openness and transparency is the best policy.
In smaller organizations the heir apparent may be an obvious choice. Perhaps an individual has been groomed for many years to assume both leadership and substantial ownership of the enterprise. Yet, there is value in following a process to validate such a choice so the greatest success is assured. Similarly, in larger organizations the choices for future top leaders may seem obvious — perhaps top-selling principals. We are reminded, though, that the skills and competencies of a top seller are often different from those of successful enterprise leaders. The CEO of a large public corporation once generalized by saying, “If you take your top salesperson and make them the leader, you’ve lost a salesperson and have a lousy leader.” Thus, it is advisable to conduct a deliberate process for assessing and identifying those best suited to ascend to the top leadership roles.
While each organization must determine procedures consistent with its culture, universal principles should be considered. While much of the process, as well as the final decisions, are necessarily in the purview of the organization, the participation of a neutral third party trained facilitator is beneficial in most cases. Based on a recent process for leadership transition followed by my firm, the following general steps for determining of the next leaders of an organization should be considered:
- The need for transition is identified and discussed among organizational leaders. An outline for a process is determined along with a preliminary timetable subject to further refinement.
- A pool of qualified candidates is identified. These individuals are likely proven leaders who have successfully led an area of the business such as a market sector, discipline, or branch office. In healthy organizations there should be available candidates capable of assuming the leadership role. In organizations facing challenges, outside candidates may deliver the necessary antidote. In such cases, cultural fit is a strong consideration.
- Utilizing a trained facilitator, an in-depth assessment of each candidate should be conducted to determine the participant’s motivation, abilities, career goals, competencies, and character. Candidates will gain an understanding of leadership roles for which they are best suited. In the process, candidates will become aware of new skills and competencies that must be developed in order to lead in a new role along with an understanding of current duties that must be relinquished. In most cases, it is productive for in-house candidates to share insights with their peers, notwithstanding information that might best remain confidential. Concurrently, an assessment of the current leader or leaders should be conducted as a benchmark for comparison.
- A 360-degree assessment for each candidate should be conducted. This assessment solicits feedback from peers, superiors, and subordinates and it provides insight into how others perceive an individual’s leadership skills.
- Individual candidate coaching leads to an understanding of behaviors and styles expected of senior leaders. Knowledge of roles that align with the candidate’s talents is developed so the right motivations are behind the advancement.
- In a parallel process, an assessment of the organization’s strategic needs should be developed or updated. Areas to be addressed include competitive analysis, market position, profitability, processes, growth, and expansion. From the strategic assessment, the required strengths and competencies of the next organizational leader will come into greater focus. A position description for the next leader should be refined.
- Through a series of candid meetings, options are considered and it is determined which candidate or candidates might be most suitable to move an organization forward to the next level. Current leaders have key roles in facilitating these discussions, with the objective that conversations remain positive and constructive. Ideally, the right candidate is revealed through a process of discernment. Ultimately, the new leader must be capable of fostering a common purpose, shared values, and an aligned vision for the organization.
All participants should benefit from a well-orchestrated process and their careers should accelerate through greater self-awareness. Yet, it is possible that an individual who is not selected may choose to pursue his or her career elsewhere. That is why it is important for a firm to have solid processes for performance assessment and accountability in place. Such processes help individuals to have a realistic understanding of their potential to advance in their organization along with incremental growth goals.
The timetable for transitioning a top leader of an organization might require up to three years. The first year involves planning and preparation. The second year is focused on process and selection. The third year is for seamless execution of the leadership transition. New leaders often find coaching by trained experts during the first year in their new role to be beneficial. Regarding internal communication, periodic reporting to staff about the overall process, with discretion where appropriate, engenders confidence, trust, and loyalty.
Promoting from within sends a positive message to everyone in the organization. People take comfort in knowing that their contributions are valued and that they, too, might aspire to the greater levels of leadership. However, in some situations there may not be a suitable internal candidate because the needs of the firm point to a change in leadership direction that cannot be met from within. When external candidates are considered, cultural fit is of utmost importance. Over time, leaders often tend to hire people like themselves. As a result, and to its detriment, an organization’s culture can lack needed diversity. Organizations should explore their openness to alternative leadership styles and whether new styles will inject necessary vitality into the enterprise. Leaders brought in from the outside must be adept at understanding the culture of their new organization and they must possess the skills to navigate a potential minefield of obstacles.
Leadership and Ownership
While ownership in a design firm is not always in direct proportion to leadership, there should be a correlation between the two. While leadership transition can happen relatively quickly, the process of internal ownership transition takes longer and it must commence early if it is to be successful. When leadership transition ultimately occurs, sufficient ownership should have been transferred so that new leaders have a genuine stake in the business that engenders responsible actions, particularly in decisions that involve risk. Yet, ownership has its limitations; while some design professionals may correlate ownership with power, the real power in an organization rests among those who have the ability to lead and inspire others.
Continued Contributions by Former Leaders
While much of the focus of leadership transition is on new leaders, it is important to remember that those stepping down from the daily stress of top leadership roles have a lifetime of experience to contribute to their organizations. With the anticipated shortage of design professionals that our industry will soon face, many of the skills for which senior leaders were originally trained remain beneficial to our firms. While technology has impacted how we practice, the fundamentals for successfully conducting business are unchanged. It is important that former leaders give their successors adequate freedom and space to lead. Yet, their wisdom can be helpful in areas such as networking, business development, and coaching emerging professionals. The importance of legacy cannot be underestimated in this era of increasing commoditization of design services. Accordingly, former leaders are excellent ambassadors for sharing values, traditions, and stories that have made their organizations special and that will propel their firms to new levels of success.
Stephen Fiskum is a principal with Hammel, Green, and Abrahamson, Inc. where he also served as chief operating officer for 15 years and was responsible for implementing the firm’s design and business strategies. The 680-person design firm serves clients in higher education, healthcare, corporate, and government through eight office locations. He received his Master in Architecture degree from Harvard University and his Bachelor of Architecture degree from the University of Minnesota. His inventive processes and methods enable architects to have greater influence, to practice more profitably, and to achieve higher levels of design excellence. Fiskum is a senior fellow of the Design Futures Council.