Over the years our consulting firm has received many calls from second generation CEOs of advisory firms. They have recently taken over the helm of their firms, and usually tell us they “don’t know what to do” and need direction.
As we explore the details of each firm, we find that the advisory industry is doing a poor job of training the next generation of advisory firm leaders. From our perspective, most new CEOs and other firm executives haven’t been trained — at all.
We’ve also come to realize that this situation is not the fault of most firm owners. Training leaders is a challenge in most industries. And because most first generation advisory firm owners were never trained at leadership, they are at a disadvantage.
Here’s the Problem
Business school wisdom that many of today’s firm owners have gained has come primarily from the perspective of starting a business, as opposed to taking the leadership role in a successful, mature business. Consequently, training new leaders and relating to the challenges that they face as CEOs and other executives is hard for founding owners to wrap their brain around.
The crux of the problem is the skills required to launch and grow a business are different from those necessary to improve a successful business. Therefore, it’s difficult for most advisory business owners to train their new leaders as executives.
Here’s a common example: Due to the founding owner’s experience starting a firm from scratch, many of today’s leadership training programs tend to focus on business development and vision, mission, values and growth goals — because that’s what founding owners had to do to launch their firms.
But in mature businesses, bringing in new clients and setting goals is only one problem that needs solving. Other facets of the business need attention and balance, such as, employee management, financial strategy, allocating capital resources, operational process and sales strategy.
Further, the challenges many mature advisory firms face today revolve mostly around providing consistently and competitive high-quality client services and client experiences, while maintaining and growing profitably. To learn all these areas at once can be overwhelming for the next generation leaders.
Most founding owners teach new CEOs from their personal perspectives because it’s all that they know. And, when confronted with the suggestion that their next generation CEOs need different skills, they often respond: “that’s not the way I did it.” This isn’t the recipe for success in transitioning a company to new leadership.
Training Future Execs
So, how do you train the next generation leadership?
If you take the business school approach to training CEOs, it means training in the technical skills of business management: allocating capital, monitoring cashflow, quality control, management, etc. There’s much written about these skills and they can be learned with a library card.
But here’s the kicker: We have learned that starting a CEO’s training with technical skills often overwhelms them more. They become fully aware of what they don’t know and thus, get scared to make decisions in the business without the counsel of others. In other words, they feel they have to have validation to make any move on their growth goals.
Instead, start with interpersonal communication skills, which are critical for today’s young leaders. These new leaders have to be able to trust their decisions and also know that if a decision they make doesn’t turn out as well as hoped, they always can correct it.
Effective communication is often a new leader’s biggest problem. Technical skills can be learned along the way but get lost without good communication. Unfortunately, good communication is not something you can just Google and then go do on your own. It’s a skill you develop over your lifetime and it takes practice to hone. But to practice, you have to communicate with someone who communicates well.
Teaching communication skills requires spending time with new leaders, sharing stories, asking questions and truly listening. In doing so, you have to be careful not to judge them as they learn. It also takes a lot of patience.
Additionally, you should refrain from “giving them advice.” If you give them advice on what to do, they will never learn to trust their own judgements and decisions. This means you have to take the failures with the successes as they make decisions in the business. Instead, be there as a sounding board for them to work through the problems they face, and help them learn from each experience. In doing so, they learn to trust themselves and their decisions, no matter the outcome.
Of course, this is a serious commitment. You have to spend a considerable amount of time and energy working with younger leaders, and doing it in a way that does not create a dependence on you to give the answers and solutions.
The hardest work founding owners will do at the end of their career is teach someone how to run the business that they have run for years. To do it, they have to transition from being a boss to a being a teacher. Those who are not very good at teaching might think about who can help them teach. There is a reason we send our children off to school each day.
The key to helping someone else fill a leadership role is ensuring they have a great teacher; One who has experience, knows how and when to speak up and how and when to simply listen.
Great business leaders trust themselves. True trust is being able to listen to yourself, and the best way to learn that is having a good listener show you the way. Spending time and asking a lot of questions helps get a deeper understanding of what they are trying to do and how they trust themselves to do it.
We must emphasize that the easiest way to trust yourself is to trust someone else. That’s the place all emerging leaders have to start. And, for them to truly trust, those new leaders have to have a place where they can go that is free of judgments and expectations as they learn.
To do that, they need someone to serve them so they can serve the business.
Real leadership is not about “vision, mission, business development” etc. It is about serving others; your employees, your clients, your partners, your business, etc. A leaders’ job is to support and encourage her/his people to do the best job they can; by giving them the tools, resources, support and guidance to be successful. Because if they aren’t successful, the leader won’t be, either.
The key to successful transitions to next generation of leadership begins with interpersonal communication skills, not the technical. Which means, the founding owners have to have them too. Your new leaders cannot learn great communication if you are unable to lead them by your example.
Angie Herbers is Chief Executive at Herbers & Company, an independent growth consultancy for financial advisory firms. She can be reached at firstname.lastname@example.org.