how to execute a smooth, graceful transition.
by august j. aquila
what makes a great partnership
one of the most difficult events that a firm faces is the transition of power from one managing partner to another, especially when it’s the first time. knowing when to pass the baton and how to pass it are critical decisions every firm will have to make.
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the most important thing you can do at this point is to plan, plan and plan some more for the transition. the sooner you lay out your plan, the easier it will be for you to achieve it.
you might want to get an outside board of advisors, a former managing partner or a consultant to help you in the process. all three can help keep emotions under control and provide an objective opinion.
true succession planning is really a lifelong process. its primary purpose is to ensure the continuity of the practice from one generation of leaders to another. ultimately it’s the founder admitting and accepting that he or she won’t live forever. that’s a very difficult and emotional fact to come to accept, especially after spending a lifetime building and running a practice.
for the managing partner who is thinking about succession, there are four primary goals that he or she should be working on during the next few years. each of these issues needs to be discussed with your founding partner.
- what is the best way to safeguard the long-term health of the practice?
- has the founding partner planned for his/her personal retirement security?
- how will the firm prepare for and install a successor?
- how will the founder let go of a business that he/she spent a lifetime building?
the next area to address is whether the current managing partner plans to remain with the firm. if so, there are several issues that you should consider.
- will he/she continue to have any management responsibility?
- how comfortable do you feel that he/she will give you free rein rather than second-guessing your actions/decisions?
- what role does the current managing partner want to play in the future?
- what is current relationship between the managing partner and the successor?
once you get some answers to these questions, then it’s time to start focusing on the successor and his/her goals for the future of the firm.
- has the successor identified the key issues facing the firm in the next two years?
- will partner goals, compensation and roles need to be addressed or changed?
- are there developmental areas that the successor needs in order to be an effective firm leader?
- are there groups of partners who did not vote or will not for the successor?
while there are many other areas that need to be considered, let me just end by mentioning a 10-step process that you may want to consider. as with any undertaking of this importance, work with someone who has done it before – either an outside consultant or even a retired managing partner from another firm in your market.
- lay the groundwork by developing a strategic plan for the practice. what will the practice need to do to be successful in the future? what skills should the new leader have?
- the current managing partner needs to have a personal retirement plan in place. he/she should work with a financial planner in the area to do this. unless the current managing partner feels financially secure, he/she really won’t want to leave the firm.
- install outside board of directors or advisory board (applicable for larger firms only) to help in the process. for smaller firms, look for a consultant, lawyer or family business advisor to help out.
- determine whether the successor should come from within or from outside the practice.
- develop the successor’s personal and professional development plan.
- changing leadership usually changes the current organizational structure of the firm. make sure you lay out career paths for other key members of the firm.
- have a specific timetable for passing the baton and communicate it to your firm. unless you get down on paper a specific date and announce it, the transition may never take place.
- cope with the transition. things will be different because you now have a different leader.
- communicate the pending change to everyone in the practice. keep communications open so the rumor mill does not take over.
- the retiring managing partner needs to let go and enjoy his/her new life.