Don't Drag Your Feet on Employee Succession

We all hear things differently. Let me illustrate by using an interchange during an employee interview. You’re in person, face to face, across a conference room table. The person across from you is a big time hire. It’ll stretch you and your compensation budget, but—if successful—this person will take your firm to the next level.

The Fateful Interview

They are currently working at a bigger, more well-known firm, and it’ll be tough to snag them. During the conversation, they confess that they’ve thought about starting their own firm.

Candidate: “What are your personal plans in running the firm? How many more years do you see yourself doing this?”

You: “Oh, I’m loving this. Especially if we can fill this role [silly smirk]. We’re growing, we’ve adding a really valuable service offering recently, and we’re finally kicking into high gear. But we’re hungry for more, which is why I’m talking to you!”

Candidate: “If I’ve got this right, you’re a 100% owner, right? No partners?”

You: “That’s right. We’ve had a lot of great people here, and one of the things I’m most proud of is the culture…and the fact that the team—especially the management team—really thinks like owners, and I try to share the benefits with them, where I can.”

Candidate: “Are you open to having a partner some day? Even a minority one? I just want to be honest with you that I want to own a firm, or at least part of a firm, some day. I’m not afraid of the risk and I can be patient about it, but one of the criteria in my search is at least the possibility that this might be considered, down the road.”

You (in your head): “No way in hell would I promise this, and especially now. I don’t even know what it’ll be like to work with this person! I suppose some day I might consider it, but….”

You (out loud): “Anything is possible, really, and I’m sometimes jealous of my other colleagues who do have partners. They can share the good and the bad times together, help commiserate, and so on. So I wouldn’t rule it out, but it’s not something I’ve thought too much about. I think it’s important to make sure partners share the same values and collaborate well. So I’m open to the possibility if it makes sense at some point.”

How The Paths Later Diverge

Okay, that’s the end of this pretend conversation, but let me tell you how the Candidate just heard that last statement: “He wants to work together for a year, max, and then he’s open to exploring a partnership. And from what I know now, there’s no reason why it won’t happen. But if it doesn’t, I’ll probably leave for another firm that will actually do it, or I’ll just start my own. But instead of starting my own right now, this seems like a better plan for me since it’s a definite option.”

Having seen the inside of at least four dozen of these situations over the years, I can assure you that people hear things very differently. That key employee you have is going to assume some things that might surprise you.

Here’s another example. You are attracted to someone and start dating. Things go great and “marriage” becomes a topic that you explore. From that point on, you’re either going to get married, and probably within the foreseeable future, or you are going to break up. Starting that conversation crosses a bridge, and you aren’t turning around and going back across it.

Broach the idea of partnership, or even be open to it without slapping it down, and you’re either going to have a partner, and soon, or that person is going to leave. That’s the point of this article. Once you start the discussion, keep it moving along. You can do it very cautiously, but you need to keep it moving. (By the way, I’m not describing a symbolic 2% partnership, for example, but real partnership that ends up at 20% or more.)

Starting That Partnership Discussion

Here are a few steps that you might follow:

  1. Decide if it’ll be an added partner…or someone who will buy the entire firm for you. In other words, is this your succession plan or just an expanded partnership? The difference between how you manage the process is wildly different.
  2. Bring them into decision making, in part to see if you are compatible, but also to see if you want to listen to this person’s perspectives.
  3. Check your seriousness by asking yourself if you’re willing to publicly disclose to people that this person is on a special track. At some point you should be proud of this and not try to hide it. If it’s the latter, it’s a bad idea, and/or you’re afraid someone else’s feeling will be hurt when they are not on the same track.
  4. Share financials, and I mean everything, including what you make. If you can’t trust them with this information, then you shouldn’t be considering any serious partnership. This also includes what other people make.
  5. Put them in charge of a special project, having 6-8 people report to them, and really, really share the load.
  6. Hire a professional firm that does this for a living (that would be us) to do it well, explore all the options, answer all the questions, and protect you from all the eventualities.

And the main points are these:

  • Don’t leave any unfair assumptions in the other person’s mind.
  • Once you do begin the process, move it along.
  • That person will be a partner, or they will leave. There’s no going back.

There is very little middle ground in partnerships: they are either fantastic or a drain on your life. The same is true about the path to partnership: it’s moving along or it’s not going to happen.

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