Business owners and executives will almost universally say having a robust plan to create tomorrow’s leaders, today, AKA, a ‘succession plan,’ is crucial to an organization’s long-term success.
Why? Because if you proactively plan to have the right people, in the right roles, at the right time, your company stands a great shot at protecting the value of your business for the future. Put another way, you are planning for future success in your culture, employee and customer experience, and ongoing profitability if you get succession planning right.
Passing the baton is particularly pertinent to the AEC sector, where many firms are employee-owned, and there is a strong desire to hand the reins to the next generation. To that end, the ACEC Research Institute found only 15% of AEC owners seek to sell their firm to a third party.
But statistically, AEC does not do succession planning well or frequently enough.
Consulting firm Wipfli LLP surveyed nearly 400 construction company owners and C-suite executives. A mammoth 66% listed succession planning as a top internal business concern. Moreover, research from FMI Corporation shows less than 50% of construction firm owners have a succession plan.
These executives and owners are concerned for a good reason. The AEC sector is undergoing transformative change. This is mainly due to the rapid rise of digital technologies and new design, fabrication, and visualization tools, along with the growing demands of sustainability, health & safety, and environmental stewardship. Another fundamental challenge is the significant talent shortage – especially among women.
But it isn’t all doom and gloom. Succession planning will empower you to build up and find top-notch leaders with a brilliant mix of stellar technical skills and business savvy to drive your organization forward.
It is, therefore, my pleasure to share with you a smart process for finding and fostering future AEC leaders today.
Step 1. Know the big picture
Because succession planning is a strategic initiative, it must start by looking at the company’s strategic plan and taking a helicopter view of the broader AEC landscape. Alongside doing that, answer the following key questions:
- What’s the state of the competition, both in terms of their talent and business viability?
- Who are your clients going to be tomorrow?
- What will your customers need in 4-5 years, and how will they want you to provide it?
- Are you measuring your organization’s culture and managing it effectively?
- What do you foresee as emerging technologies and organizational values required to deliver all the above?
Step 2. Identify people for mission-critical roles
Mission-critical roles are the positions that have the most significant impact on the organization’s progress. In general, these are C-suite roles. So, a fundamental second step in succession planning is identifying who in the org you view as having high potential to take on C-suite roles 3-5 years later. This exercise must factor in DEI considerations and requires in-depth conversations with senior managers and talent experts who can help scout or spot super talent-in-the-making.
It’s important to distinguish between “high potential” and “high performing” individual. For instance, you can have an excellent, super confident salesperson who brings in an exponential number of new clients for AEC firms, but that doesn’t mean this person will be the best VP of Sales. You must strategically scour your company to find people who demonstrate the key competencies to be a venerable leader. This will be explored in the next step.
Also, it’s possible future successors for some, or even several C-suite roles are not currently present within your company. Therefore, looking externally is an integral option outlined in step 4.
Step 3. Assess Leadership/Strategic Competencies
Future successors are those exceptionally talented people with strategic competencies that every leader needs to shine. For step 3, you need to develop profiles of leadership roles and then match those roles with strategic competencies. Let’s use a potential future CHRO in AEC as an example.
A potential CHRO successor will showcase stellar strategic thinking and the ability to drive a strategy through to implementation. They will have excellent interpersonal skills – understanding and relating well to others.
“The most effective leaders are… those who are good at reading others…who understand their colleagues and can see how to get the best from them,” says Gordon Mackenzie, a leadership coach for architects and engineers, in an interview Architecture.com.
In addition, they will excel at coaching and teambuilding.
“No feat of engineering is completed alone, so as a leader in the field, it’s essential to know how to foster a team or department that works together,” explains the Case School of Engineering “(Leaders) need to be able to engage colleagues to work toward goals thoughtfully.”
CHROs and other potential successors in AEC will also be astute at managing complexity. “Simplifying complex tasks is a hallmark of an effective engineering leader,” says Kyle Cheerangie, a professional engineer who prepares engineers for executive positions. “Being able to simplify the complex means you can teach those below you and inform those above you succinctly.”
Step 4. Develop leaders internally or find highly developed leaders externally
Last but not least is constituting in-depth and formalized development plans. I want to point out that all employees should have their own unique development plans, and this is not just an exercise for the rock stars you see heading for the C-suite.
Putting development plans into action, according to TRANSEARCH leadership advisor John O. Burdett, requires “pushing people to the edge of their comfort zones (so) they are constantly learning.”
Mary Barra of General Motors is a world-famous CEO who was repeatedly pushed to the edge. Barra started to work at GM straight out of high school and later graduated from General Motors Institute (now Kettering University) before becoming an electrical engineer.
Over time, she worked in virtually every company division, from R&D to HR, to manufacturing, taking 30 years of development, coaching, and mentoring before rising to the top.
While her success is remarkable, especially in a male-dominated industry, if it takes 30 years to develop each of your C-suite successors, these individuals and perhaps your organization will be long gone before the 30 years are up!
What’s critical is for your talent succession pipeline to be purposefully mentored and coached. The coaching process will encompass a blend of advice and guidance, leading by example and inspiring people to maximize their talents: the earlier coaching and mentoring starts, the better.
“Seasoned construction workers can be a wealth of knowledge for the future workforce,” notes Supply chain firm the Border States.
“Experienced staff can tell stories, share best practices, and highlight key career goals. Leaning on these workers is also a cost-effective way to personalize your (leadership development) approach.”
As we see from the data, succession planning is not a core organization competency in many AEC firms. For businesses in this situation, forming a strategic partnership with an executive search firm or third-party expert can be invaluable to finding the missing links to your future executive leadership chain.
These experts will learn about your emerging culture, assess the mission-critical roles you will need in the future, and focus their work on finding the very best of the best who are the right fit for your AEC business.
Succession planning is an exercise in risk management because the costs of grooming or hiring the right executive are immense.
According to CBS News, replacing an executive-level employee can cost companies an average of 213% of their annual salary.
Similar research from CareerBuilder found bad hiring decisions lowered productivity levels by 39%, and employee morale was negatively affected by 33%, there were 11% fewer sales, and led to a 9% increase in legal issues.
Suppose you follow all the critical steps outlined here and develop a practical, comprehensive, and strategic approach to succession planning. In that case, your organization will be well set up for long-term productivity, high levels of engagement, and a vibrant company culture that evolves with these rapidly changing times.
To learn more about succession planning, please click here.