How to transition leadership within your architecture firm, Part 2

Close to retiring? Without a plan for leadership transition, you might not foster candidates who will be capable of taking over the reins, says Whitehorn Financial's Steve Whitehorn.

August 28, 2015 |
Whitehorn Financial Group blog
How to transition leadership within your architecture firm, Part 2

Lyons Architects office. Photo: Peter Bennets/Wikimedia Commons

As we covered in Part One, 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. 

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.

Start by determining how G1 and G2 individuals are using their time and effort:

  • Who creates and maintains relationships? Who gets the new business?
  • Who manages the projects?
  • Who has responsibility for the daily operations?

When you have an idea of who does what and how much time it takes them to do it you can now define clear lines of responsibility. All of the generations should have a focus on effective time and resource management. Often you may require the services of an outside party to evaluate from a fresh perspective, and assist you with making sure you have covered all of your bases while creating your transition plan.

G1 needs a willingness to share sensitive information and give up some control. You may be concerned that if invest you in your employees, then they will only take all your training and secrets and leave. You must, however, also consider that if you do nothing to develop your employees, the good people will quickly outgrow your firm and leave anyway.

While you can’t stop people from leaving the firm, you can do some things to incentivize them to stay.  Give them a clear career path, increase trust and responsibility, and show them you are investing in them to become future leaders.  In the words of Virgin founder, Richard Branson, “Train people well enough so they can leave. Treat them well enough so they don't want to.”

Paul Lurie, a partner in Schiff Hardin LLP's Construction Law Group with more than 40 years of experience as counsel for design and architecture firms made the following observations in an article titled “Twenty Ownership Transition Planning Mistakes” which appeared in Design Intelligence

  • Key employees are not allowed to gain ownership until they are in their forties. As a result, talent may not be bonded to the firm and may leave for other firms where the possibility of an ownership position occurs earlier in life.
  • Ownership interests are distributed as compensation perks rather than to encourage key players to participate in management.
  • Planning occurs too close to the retirement of the key principals who manage the firm, leaving insufficient time to train successors.
  • Firms fail to recognize the potential of existing employees to transition into management and business development. As a result, the firm may be dissolved or sold for a fraction of its value during its prime.
  • Ownership transition planning is delayed because owners don’t want to allow employees to look at financial records.

In summary, take the generational approach:

Identify and develop the qualities of leadership in your G2 employees. To engage and grow the future leaders, G1 should help G2 to build and maintain client and community relationships and engage G2 in developing business. G1 also needs to teach G2 how to manage the firm from a financial perspective.

Develop G2 to take on new responsibilities and roles. The challenges faced by the second generation will likely be the most difficult as they are in the position to be stretched both up to G1 roles and down to teach G3 their new responsibilities.  Your G2 leaders need to be open to development from above while also acting as mentors to those working under them.  For many who have been acting in the role of operations or project managers, mentoring may be a brand new skill that you will need to help them develop.

Foster G3 so that they are able to step up and accept increasing responsibility. They should also be willing to help both G2 and G1 acclimate to new trends in design, business practice, and emerging technology. They must also be ready to accept a mentorship role for the oncoming G4 and so on.

Leadership transition planning is a long-term process; the longer term the better.  Just like learning to run a relay race each of the younger generations will benefit from a period of “running in place” before they are actually running at full speed and handed the baton. Start by creating your plan of action now – don’t wait until race day when there could be no one willing or able to accept the torch.

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.

Whitehorn Financial Group blog | Whitehorn Financial Group

Steve Whitehorn is Managing Principal of Whitehorn Financial Group, Inc., a risk management consultant and business strategist for architects and engineers. For more, visit http://whitehornfinancial.com/our-people.

Related Blogs

Images courtesy Whitehorn Financial

June 28, 2016 | Architects | Whitehorn Financial GroupSteve Whitehorn

Whitehorn Financial Managing Principal Steve Whitehorn offers effective ways to recoup lost revenue, includ...

Managing risk when building in challenging locations

Crane in Cuba's Havana Harbor. Photo courtesy Whitehorn Financial.

June 02, 2016 | Building Team | Whitehorn Financial GroupSteve Whitehorn

AEC firms recognize the upsides of exploring new, emerging markets. Whitehorn Financial's Steve Whitehorn o...

How to manage the process and limit the risk of value engineering

Photo: Pixabay

March 10, 2016 | Architects | Whitehorn Financial GroupSteve Whitehorn

AEC consultant Steve Whitehorn shares several ways in which architects can be more effective managers of va...

Developing a strategy for getting paid on time

Photo: Pixabay

February 17, 2016 | Architects | Whitehorn Financial GroupSteve Whitehorn

Though talking about money can be difficult, creating and following a clear plan for getting paid is essent...

How to transition leadership within your architecture firm, part 1

Photo: Hariri Pontarini Architects' office, Jason Paris/Creative Commons

August 27, 2015 | Architects | Whitehorn Financial GroupSteve Whitehorn

In order for your firm to thrive and preserve your legacy after retirement, it is essential that you create...

Harness the connection between managing risk and increasing profitability, Part 2

It’s always a good idea to discuss any concerns you may have about your liability or risk exposure with your professional liability advisor and project owner, but it’s also important that you develop your own procedures that will help you take control of the flow of information on a project.

May 10, 2015 | Architects | Whitehorn Financial GroupSteve Whitehorn

In Part 1, we covered taking control of the submittals schedule and managing RFIs. Let’s move on to properl...

Harness the connection between managing risk and increasing profitability, Part 1

By controlling the flow of information and communication during construction, AE firms can better control their costs and risk exposure, and increase their profitability.

May 10, 2015 | Architects | Whitehorn Financial GroupSteve Whitehorn

AE firms need to protect themselves against vague contractual and procedural situations during all phases o...

Overlay Init