In the advisory business, a couple of events typically cause a rush of exhilaration: landing a big new client and hiring a great new talent. While the loss of a client can create the opposite emotion—dejection—the loss of a key colleague has a way of bursting one’s balloon completely, especially when that individual played an important role in your succession plan.
Countless sorry examples reveal business leaders who groomed a successor only to have that person choose to leave the company. The process of transitioning a firm to new leadership is difficult; enacting a successful and sustainable succession plan is the elusive holy grail of firm management.
When I was still a consultant, a mid-sized advisory firm asked for my help on their succession plan. The firm included three founding partners and six partners-in-waiting—or at least that’s what the owners thought. I met with the nine of them together and asked the non-partners, “How many of you would like to be an owner of this firm?” Not one of them said yes. Imagine the shock of the three original partners! When I probed further, the six explained that they enjoyed their current work-life balance, they did not relish the risk of being a partner and they did not have any ambition to take on that role.
While their thoughtful reasoning differs from an outright defection, it reflects the mindset of many key employees in an entrepreneurial environment. Your valuable employees may view their work as a job, while you view it as a career. As a result, whether voluntarily or involuntarily, your firm will experience turnover. This fallout is the flotsam and jetsam of business life. Seasoned managers have seen many one-time employees float by in different careers and with different companies. The coming and going of employees and partners is as natural as the sun rising and setting.
As a firm leader, you must discover which employees have a strong commitment to both the firm’s mission and their own progression so that you can invest in them with the expectation of getting a return. Your next challenge is to identify those who can deal with ambiguity, who can perform regardless of pressure and who can stay focused in the face of distractions so that you don’t find yourself pouring your wisdom, time, money and energy down a rat hole.
The task of attracting and keeping good people can seem like a chemistry experiment, often risky and with unknown results. Chemistry involves the study of matter and energy and the interactions between them. Matter is anything that has mass and takes up space—in this case, talent. Energy is power translated into motion, overcoming resistance or effecting change—in this case, the ability to work effectively. Understanding how these two elements interact to produce dynamic growth (for the individual and for the firm) will help you become a more effective human capital manager.
People join companies for many different reasons but seem to leave their jobs for just a few: culture, mismanagement, pay or a true desire to do something else somewhere else. This is where the chemistry comes in. For years now, I have preached the belief that if you provide each employee with a compelling future, opportunities for growth, a positive environment and a fair reward, you will ensure your legacy through the individuals you hire. For the most part, these four ingredients are under your control as firm leader.
The elements outside of your control reside within each individual employee. It’s hard to know if they feel suited to the job or if they feel appreciated and valued, even when you think you are going out of your way to acknowledge them. It’s also hard to know about family pressures such as marital discord, struggling children or anxiety over personal finances.