Sean Riley: So with all the fancy introductions out of the way, welcome to the podcast, Richard.
Richard Bryan: Yeah, nice to be here, Sean.
Sean Riley: The pleasure is all ours. You gave a wonderful presentation at PMMI's Executive Leadership Conference, and you opened your presentation with a really powerful question that I think goes a long way in succession planning, which is what we're talking about today, and that is, what is the end of the story? How can leaders start with the end in mind when thinking about succession planning?
Richard Bryan: Yeah, that's a great question to get us going. I like my clients, who are typically CEOs of privately owned and family businesses, to think about their desired future outcome. They may not be thinking about retiring yet or transitioning to the next generation or even selling the business, but if they can connect to what their ideal outcome is in 5 or even 10 years’ time, then what does that look like? Because once you get clarity around this vision of the future, it's much easier to get the appropriate advice and to actually hire the right people so that you can move towards that.
Sean Riley: You mentioned that 65% of US businesses don't have a succession plan, which to me blows my mind. Why do you think the number's so high and what's at stake for companies that don't have a plan and that are delaying it?
Richard Bryan: Yes, I know it's a shocking number, isn't it?
Sean Riley: Yeah, it really is.
Richard Bryan: I think a number of things. It can be as simple as just avoiding difficult conversations. So succession planning forces owners to confront uncomfortable topics like mortality, retirement or leadership gaps, and many delays simply because it feels uncomfortable or awkward. They've spent their entire career getting to where they are, they like what they're doing, and they don't really want to think about it. I think overconfidence in continuity in terms of just assuming that the right person will step up at the right time, whether that's a family business or whether it's an executive within the company already. But I think one of the biggest things is the focus on short-term priorities. Everyone knows that succession planning is important, but it's not urgent, and there's a lot of things on the to-do list that are urgent that take priority, and it is very easy as a business owner to push off the succession planning and think, oh, I'll get round to it and just never get there.
Sean Riley: Would you say those are the roadblocks that you just listed that are preventing leaders from tackling succession planning early?
Richard Bryan: There's a final one, which I think is a big one, particularly in family business, which is emotional attachments. Sometimes owners are worried about conflict or rivalry, so they avoid planning for that reason, and they also have an emotional attachment to the business themselves. My father worked for the family business for 45 years, and he only really stepped down due to ill health. He certainly didn't want to, and it's so much a part of their identity that it becomes a real barrier to succession planning.
Sean Riley: I could see that being something you would want to avoid.
Richard Bryan: Yes. It's like doing your will. No one wants to think about it, but it's always a relief once you've done it.
, and they might not be prepared for that role, and that's when you make hiring mistakesSean Riley: Yeah, exactly. No, that's a great example. A thing you suggested that you're a big fan of are scorecards. Could you explain what you mean by that?
Richard Bryan: Job description says what you do in the role. A job scorecard says or outlines very clearly what a player performance looks like in the role, and it takes out a lot of bias because you are outlining that position and then you can assess people against it, either internal candidates who you are considering as possible successors or future leaders or external candidates when you're hiring, because a scorecard typically has three elements. It has a mission—for example, if it were a sales role, the mission would be to drive business growth by building and coaching a high-performing sales team. So that's the mission, and you would typically have some numbers in it as well. So it's to go from here to here in a specific timeframe. Then, there are the specific objectives of how you're going to do that. And then, there's the core competencies. The core competencies are really the things that you are looking for that are essential to the role. And I always like to say to people, hire for competencies that you can't easily teach. You can teach technical skills, and it's much harder to teach things like grit, emotional intelligence, or critical thinking. Certainly in the short term, you've either got it or you haven't. That's why I like scorecards to start with, and I like to get people to brainstorm 10 to 12 competencies and then narrow it down to 5 to 8, which are absolutely critical for the role. And then, you can assess people against that. So it's much easier than just looking at who we have and trying to shoehorn them into the role because they might not be a good fit and they might not be prepared for that role, and that's when you make hiring mistakes and that's when you get turnover.
Sean Riley: Who should come up with the core competencies?
Richard Bryan: That's a great question. I think it's a combination of the hiring manager or direct supervisor because they understand the role on a day-to-day basis and what behaviors and skills are non-negotiable for that role. But then, I think you always want a senior leader or the business owner to review because you want to make sure that the core competencies connect to the company's culture, core values, and long-term strategy because you want to have consistency in that, particularly across the leadership team, there should be some commonality in terms of the strategy and where you're going. If you're a bigger company and you've got HR, then I would have HR have a look at it just to make sure, again, that there's similar language being used for similar roles across the company. But I think the key from a succession planning point of view is that it's not just about what the job requires today—you've got to think about the future needs as the business grows and develops.
Sean Riley: Interesting. You presented four options that are out there. You have an internal promotion, you have an external hire, you have an interim leader, or you have sold the business entirely. What key indicators do you suggest help determine which path is right for a particular business?
Richard Bryan: Looking to sell is one option, but I think there are a number of things. Leadership bench strength is obviously a key thing, so if you have strong internal talent, then you have more options in terms of promoting someone internally. I think if you don't have that in place, then you're probably looking at either hiring an external candidate who can help stabilize the business or grow the business for you. A big thing, especially for privately-owned businesses and family businesses, is the leaders’ or the family's own goals, objectives, and timeframe. If they want to preserve their legacy, you'd expect them to want to pass it on within the family, which says internal candidate as long as you've got someone who's prepared, or even an ESOP, an employee share ownership program can do that, where you're selling part of the business. If there's urgency, then obviously a trade sale comes into focus if the owner has health issues or there is no succession. And if there's a desire for a gradual transition, then I think an interim leader can be a good stopgap while you figure out what the long-term strategy is for the business. The other thing that's crucial is the financial health of the business. Is it strong, and is it well-placed in the market? And what are the market dynamics and competitive pressure? What does that look like? Because all of that will have a bearing on the best route for you.
Sean Riley: Okay. And when you hire an interim leader, do you bring them in with an end in mind, or do they just end up being an interim leader?
Richard Bryan: I think it's better if you've got a specific brief. I hired a guy called Frank who helped me turn the business around, and the initial brief was 12 months, and it ended up being 2 years because I realized that actually as well as helping me turn it around, he was also mentoring me and helping prepare me, so we extended it for another year. So he was with me for two years, but he was very clear about what his brief was and how he was being rewarded for that. Best money I ever spent, as it turns out. I think having a clear brief so that there's no misunderstanding or confusion, particularly for the employees, as to why this person is here and what their long-term role is.
Sean Riley: A lot of our members are family-owned businesses, and we touched a little bit on some of the difficulties with succession planning, with family-owned businesses, mom and pop startups, that type of thing. Do you have any practical tips that these businesses can take without feeling overwhelmed, without being tied to the emotional element? What advice can you give to them?
Richard Bryan: Yeah. I love this question because it gets to the heart of why so many businesses never have a succession plan. They just don't get started. They feel like it's too big or too messy a project, and they don't want to touch it. I would say, particularly for a family business, just start with a simple conversation. So, assemble the relevant leadership team or family and focus on one question: where do we see the business in 5 to 10 years, and then who will be leading it? It's just an open dialogue to flesh out the aspirations of the family or the leadership team and focus on the vision for the future. And I think that's a really great starting point because if you try to do too much too soon, it's not going to work. Break it down into bite-sized chunks. Just start that dialogue and have a meeting that is purely to discuss succession planning to get it going. Once you've got it going, you can add it as a quarterly discussion point about the progress you're making along the way. I like to have people list three to five of the most critical leadership roles within the organization. For example, the CEO, operations manager, and sales director could be examples. And then, you can examine who you've got and focus on the function first with the scorecards, and then look at your own existing talent before you look outside. Honestly, assess your talent pool. Don't kid yourself if you don't have the right people. If you do have someone who you think is high potential, create a plan around how you are going to get them from where they are today to where they're ready, and that could be a three to five-year plan to give them the necessary training and development. It could even involve them going and working somewhere else to get that perspective on your own business. There are lots of simple things you can do. You are going to need professional advice from your CPA, your lawyer, your financial advisor, particularly if there's a change of ownership involved, but I think you can start simple. There's a lot you can do by yourself. Before you go and get any professional advice, be very clear about what your end goal is, because if you can give that to your advisors, then they can help you come up with the best way to get there. But if you are unclear about what your ideal future looks like, it's going to be a mess.
Sean Riley: Yeah, that's great advice. What would you have given as advice to your younger self when you first started managing leadership transitions? What piece of advice could you have used?
Richard Bryan: I could have used lots of advice, but I think just make a start on your plan. It's not as bad as you think it's going to be, and actually, a well-thought-out plan is a competitive advantage because it gives you confidence about your future and the future of the business.
Sean Riley: Perfect. I love that. That's a great button to put on the end of this conversation. I want to thank you, Richard, for taking time out of your day to come on here with us.
Richard Bryan: Sean, great to meet you. Thank you.
