How to transition leadership within your architecture firm, Part 1

If you’re an architect of the baby-boomer generation, retirement planning is likely one of your primary concerns even if you plan to work into your 70’s. It’s important to remember that, no matter what age you plan to retire, the earlier you begin planning the leadership transition for your firm, the better. In order for your firm to thrive and preserve your legacy after retirement, it is essential that you create a strategic plan to not only transition ownership of your firm but its leadership as well.

Many principals think of firm transition solely in terms of financial ownership. Who will buy the firm, and how will it continue to flourish after you’ve gone? By focusing only on the financial aspects of the transition, you’re only planning for part of the transition. As principal, you first need to consider how to effectively transfer leadership in order to ensure that you establish a sound transition, financially as well as professionally.

Without a road map for leadership transition, you risk the possibility that you will not foster candidates from within your firm who will be in the financial – or professional – position to take over the reins. Your firm could succumb to a less-than-desired buyout, or worse yet, you and your principals may have to continue to support the firm long past the time by which you initially wanted to retire.  In a worst-case scenario, you’d be forced to close the practice altogether. Furthermore, in such cases where a merger or acquisition is desired, a firm may have trouble attracting an appropriate suitor, if there is no evidence of broad-based leadership transition plans.

You can’t wait until you have the “right” people in place – that special time may never actually come.  You have to make it happen.  It is up to you to recognize and develop the right people from within your current staff. Current leadership must learn to recognize leadership qualities in existing staff, and have a willingness to foster them. This requires both the investment of time and resources, and the very difficult task of letting go of some control by allowing employees to take greater responsibility, and, sometimes, make mistakes.

Image courtesy Whitehorn Financial Group

Think of planning for leadership transition in terms of training for a relay race. Runners aren’t simply given a baton and told to run and pass it on. Runners have a complex set of drills to practice passing the baton to each other: first while running in place, then in line, then in time, then while stepping back to meet the on-coming runner, then fine-tuning the timing.  Passing the baton is not as easy as it looks – it takes time and precise planning to learn to do it right.

A good place to begin the process of leadership transition planning is to look at the current ownership of the firm in terms of generations.

The first generation (G1) consists of you and your partners, the leaders who built the firm. You are the entrepreneurs – those who had the ideas, concepts, and fortitude to make your vision a reality. G1 must instill this vision and confidence in the next generation in order to continue its legacy.

The second generation (G2) is typically made up of your managers. These are the people running your firm’s day-to-day operations. They must learn to delegate many of these tasks, while also developing their own entrepreneurial spirit and vision. Many firms have not adequately prepared the G2 with the entrepreneurial skills or network of relationships needed to take over ownership of their firms. Without encouragement and development of appropriate skills, there will be a lack of potential future leaders who are able or inclined to take over your firm when you are ready to retire.

The third generation (G3) is the future lifeblood of the firm – they must be carefully groomed to take the reigns as future managers. They are also a very important part of any leadership transition plan as they can help guide the G1 and G2 in terms of new cultural, practice, and technology trends that will be essential for your firm to survive in the future.

Leadership transition planning is a long-term process.  Now that we’ve defined the different generations within your firm, in our next post, tomorrow we’ll provide you with some practical tips for how to make the transitioning process an effective and successful one.

About the Author: Steve Whitehorn is the author of the upcoming book, Ensuring Your Firm’s Legacy, and Managing Principal of Whitehorn Financial Group, Inc.  The firm is the creator of The A/E Empowerment Program®, a three-step process that helps firms create a more significant legacy and empowers them to achieve greater impact on their projects, relationships, and communities.