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One source of destructive conflict among partners, especially between founding partners and more junior partners is a succession planning time-line that is not definitive. In our experience a remarkable number of founders refer to a “five-year” plan. However, many admit that they have had this vague five-year plan for a least three years, but it remains a five year horizon. This uncertainly can cause great tension with successors who become frustrated but feel they have little leverage.
For some founders, failure to commit to a plan is based on the inability to answer the fundamental question: do I want this firm to survive me? But even for those who have decided that they want to build a business that survives them, the transition can be difficult. The extension of succession plan timelines can cause very serious conflict not only with those who are already equity owners and being groomed to take over, but younger staff who are observing career paths. In the worst cases, the legacy that the founders hoped to create is threatened by defections and stagnant growth.
Even before embarking on a formal plan, a simple but effective starting point is to discuss the transition in terms of specific dates, not relative time. Saying, “by June 2016” sets a firmer stake than “next year.“ It is then important to meet even minor delegation benchmarks, despite economic or market conditions, client demands, staff changes and other short term events that can be seen as reasons to postpone.
The hesitancy of some founders to formulate and then stick to a defined succession plan is understandable. A 2008 study at University of California at San Francisco showed that high-achievers are especially reluctant to retire. In the study, only 6% of high-achievers reported wanting to fully retire, more than 50% planned to “partially’ retire. Partial retirement is an area rife with conflict concerning succession timelines, management decisions, and allocation of resources and it is critical that successors are involved in defining what that looks like, specifically. Communication regarding succession issues are some of the most difficult conversations a firm’s leaders can have, and outside help can prove critical in mooring the rolling five-year succession plan.