Succession planning, keeping the dream alive.
This article was originally featured in The Driving Force for the Detroit Metropolitan Apartment Association- November 2017
If you fail to plan, you plan to fail.
Succession planning is strategy with a purpose. Different from some strategies that have a beginning and an end date, a succession plan is something that a business starts on day one and continues to infinity, or the life of the business, at least. By definition, a succession plan is a strategy for identifying and developing people within your organization who can move up if a key employee suddenly leaves. The succession planning process addresses the inevitable changes that occur when leaders resign, retire, are fired, get sick, or die. Succession planning ensures that the business will continue to run smoothly by identifying and training high-potential employees for key management roles. How does this apply to our small businesses and the apartment communities that we administer?
In the case of my business, Smart Apartment Solutions, a single-member Limited Liability Corporation (LLC), succession planning can have a dual meaning, i.e. how do I transfer ownership interest to family and/or another party? and how do I do it without financially crippling the surviving business? This type of succession plan can get complex. It will involve complicated business appraisals, financial vehicles and careful planning to provide the earned retirement the current business owner will require, while still allowing those assuming the ownership roles in the business the fluidity, cash and control they will need to carry on such a legacy. I strongly recommended an estate and tax attorney be involved to guide all parties through a mutually beneficial plan.
In most instances, you will not be involved with the complexity of the transference of business ownership. This complex issue is becoming more commonplace, as visionaries and property management professionals responsible for driving results are retiring in record numbers; a 2013 Georgetown University study finds that once the nation’s baby boomers retire, 31 million jobs will open by 2020 and the estimate is that 10,000 Baby Boomers are retiring daily. What you need to concern yourselves with is a succession plan for your leadership team. One of the buzz words recently given life to is sustainability, if you are hoping to give your business, or your apartment community sustainability by insuring leadership is prepared for the unexpected, then you need to give succession planning some thought. And in thought, I mean more than a fleeting second… as we delve into some of the finer points for beginning an actionable succession plan.
- Succession planning is a process and cannot be an afterthought.
One might say that recruitment could be a reactive response to a business event, especially if the recruitment process is something that begins after the reveal of a business vacancy. Succession planning is strategy with a purpose. Recruiting and hiring for future vacancies, sometimes positions that will not be available for many years, identifying the talent and a package that talent will find attractive are some key elements to a successful succession plan. As with any successful plan, the team and strategies attached to this team will take time to gel, so be prepared to invest the time, development and support needed so at the given moment, the inner workings of your leadership team have been tried and tested. Remembering the words from Theodore Roosevelt, “Nobody cares how much you know, until they know how much you care“, the support for tomorrow’s success falls squarely on the shoulders of today’s leadership. These strategies and behaviors will not take on any relevancy until today’s leadership commit and execute the strategies for succession in leadership with integrity, decisiveness and transparency.
- Succession planning is not a one and done strategy.
The great Henry Ford was quoted back in 1922 as saying “The short successes that can be gained in a brief time and without difficulty, are not worth much.” Succession planning is hard. In this fast-paced business climate that we exist in today, managing site teams with smaller numbers of staff, less trained staff and with tighter financial constraints, you will often wonder if your succession strategy will ever gain traction. One must remember with every teachable moment and opportunity for an individual’s professional growth, you are one-step closer to keeping the dream alive. It will be these teachable moments that will instill the core values of your organization into the very being of your successorship team but these principals and ethics are learned, developed and honed over time. Investing in on-going education, such as the CAM or CAMT or other professional designations will give the “dream team” you have identified the insights into the inner-workings of the business climate you are expecting them to compete, but also the technical skill foundation to navigate through more complex, critical thinking situations as they present themselves.
- The person should fit the position, do not make the position fit the person.
We have all been there, known that ingénue, well connected, charismatic individual, and we have watched as that person advances up the corporate ladder but then scratch our head along the way because something does not add up. The something that does not add up is the numbers, meaning the long-term success. While there is worthy discussion about hiring for the passion and teaching the skill, make sure you are identifying the correct passion within someone you are considering in this successorship investment role. Is this person relatable, hardworking, ethical, loyal, and a team player? Where will this person be if the lime light isn’t shining brightly at all times? At least worth considering is that hard-working property accountant that watches every expenditure, always has the reports ready on time and pitches in delivering renewal notices when we are on a deadline. Are those not worthy traits of a future CFO? These very traits are indicative of leadership by example and naturally leading others by those “soft” skills that we work so hard at developing within our teams. My point being, identify the integrity issues early on and don’t be too easily consumed with the sparkle as we all know all that glitters is not gold. You should not have to dig to deep to find your diamond in the rough if you know what “sparkly” element you are searching for in your future leadership. Once you have found your diamond in the rough, seek out mentors and coaches outside of your own wheelhouse and enlist their input into the development of the additional technical skills identified as key to the success of the particular role that individual will assume.
- Change people or change people – Author unknown
Those of you who attended the 2017 GLAStar education session, enjoyed the delivery of this message and while this message demonstrates has come to love (or hate!), it is that black and white matter that sometimes just is what it is. It is simple, forthright but not devoid of emotion one might think. Once you have formulated your plan, put development strategies in place, and initiated your investment process, you must always be open to the possibility that sometimes we turned left and should have turned right. If you find yourself in that situation, good business sense would tell you to back up and right your course. You have the right strategy, you just misjudged one of the road signs along the way. While you have perhaps lost some time, what you have gained overall is new perspective and an opportunity to get back on course. Remember, sometimes we might throw the baby out with the bathwater. While you may have experienced a business hiccup in one regard, perhaps you have better insights into the strengths and weakness of this individual that might help identify whether they are a good fit for a different position on the successorship team or in all to important supporting role.
“Only Thing We Have to Fear Is Fear Itself” Franklin D. Roosevelt
At first nothing about a succession planning process will feel comfortable, nor should it. Many variables will play in to the crafting and execution of the plan, egos, insecurities, status quo, all will be alive and well during this process. The thing to remember is people naturally fear change; if you are the person driving the plan, this will be especially true as this is the beginning of the process of letting go. Identify those “must have” items that are essential for you and the business to take away from this process and keep those “must haves” as the focus throughout the succession process. This is another time that if you can keep your eye on the ball, the pain is worth the gain. Knowing your plan will fulfill long-term, big picture objectives is like having a road map on a cross country trip.
Unless you as the driver of change can be transparent and actually buy into the change as what is best for the business, best for the longevity and legacy of your life work, those that you are leading will sense it and be fearful of the change. People need solid leadership and the manner in which the succession plan is communicated needs to be thoughtful and thorough. Communicating the specifics of the plan will be essential.
- “Don’t find fault, find a solution”. Dawn Ford
Another one of the “dawn fordisms” the Smart Team has heard probably until their ears bleed is “don’t find fault, find a solution. I wanted to take the closing part of this article to share some of the strategies we have put into play as part of our solution, our successorship plan, here at Smart Apartment Solutions.
- We have identified and cultivated talent. Smart Guys Cal and Eric started with Smart as interns in high school and worked with Smart throughout their college years; both graduated with degrees in Economics from Michigan State University. Today, both Cal and Eric are ownership participants in different parts of the Smart umbrella of businesses. While creating a corporate structure that supported their continued professional growth and knowledge of the apartment business, they are actively working in growing their unique segments of the business from the ground up while continuing to cultivate the leadership skills in directing and maintaining a stabilized business, working side by side with today’s ownership team.
According to Smart Guy Cal Wise “having an eye on the future has always helped in keeping Smart Apartment Solutions one step ahead of the game and has lead to tremendous growth. Smart has created a vision that the entire executive team has bought into and while we certainly hit growing pains, we take every opportunity we can to check and adjust, so that “next time” it is that much easier for everyone”. This strategy allowed for the investment of time, talent, passion and commitment allowing the new talent the opportunity to watch a company gain traction, year after year, for over 10 years.
“The corporate structure that is implemented, creates long-term commitment and drive for the success of SAS. It enables talent to be organic with a clear direction towards the future.” – Eric Domino, Property Manager and Sales Associate with Smart Moves LLC.
- Those of you who have had the pleasure of working with Smart Girl Megan know she is a dynamo and a powerhouse in more ways than one! With the investment of additional training and time working one on one with me, her Mother, over the last five years (or she might say I have droned on her for her whole life), and the plan will continue for the next 10 years, until Megan has been exposed to different disciplines that she will need to feel comfortable when it comes to her taking on the reigns of Smart. We have invested the time in identifying her strengths and weaknesses and have a realistic plan to gain Megan skills in those areas where she does not yet feel comfortable.
“It is helpful for me to observe my leaders and mentors navigate through the hiccups and readjustments. The opportunities give me foresight and teaches me to think big picture”. Megan Orser
- Each year, I schedule one on one development time with each of the members of my executive team. Sometimes it is traveling together, attending a “soft skill” workshop or working closely together on a committee assignment or planning an event that is giving that one-on-one time for professional development that we have found so essential and beneficial. These opportunities give both parties terrific insights into the emotional make-up of both individuals, allowing for modeling of behaviors and understanding unique perspectives, all making for a robust, thoughtful succession plan.
“You don’t lead by hitting people over the head—that’s assault, not leadership.” –Dwight Eisenhower
Lead by example, develop and execute a strategy with purpose. Doing so will make for committed and vetted key players, delivering your businesses future, keeping the dream alive.