It’s Never Too Early to Plan Your Business’s Succession Strategy
The previous 12 months and the next 12 months will bring more significant shifts in leadership in the residential real estate brokerage industry than ever before. The CEO posts — at high-profile places like Coldwell Banker, RE/MAX, and Keller Williams, to name a few — are being vacated mostly by Baby Boomers and executives with multiple decades of leadership under their belts.
No move symbolizes this transition more than the retirement of National Association of Realtors CEO Dale Stinton, who after 36 years of service — and 12 as CEO — will step down from what is the largest trade association in the world.
Stinton’s move away from the top spot is one of many for the residential real estate landscape, a seasoned industry with many a Baby Boomer holding executive posts for long tenures. Though no set retirement age exists in the residential real estate industry, executives tend to scale back duties around the age of 70, opening up key leadership positions for Gen Xers who have been patiently been waiting decades for these top positions to become available.
This isn’t an issue specific to real estate, either. All industries struggle with plans of succession, though the difficult task now is finding the right successor — be it a younger Boomer or a Gen Xer.
Planning for Successors
Preparation well in advance gives companies ample time to size up what they need and to plan for smooth changeovers. Here are five tips that can help you prepare your succession plan:
- Build succession into onboarding.
While leadership sometimes likens a succession plan to requiring all passengers to wear life vests before boarding a ship, it’s still one of the most important responsibilities a board of directors has.
Make it standard practice to plan for succession during the onboarding of new executives, and encourage boards to take the lead in the recruiting process. The last thing you need is for outgoing executives to play favorites in choosing their replacements.
- Groom internally, but monitor externally.
No organization should go without a pool of internal candidates across various levels of the organizational chart. Establish a process to evaluate and identify potential successors in legal, finance, marketing, customer service, etc. Then, involve ideal candidates in senior leadership-training programs.
But not all positions can be filled internally. Challenge the board and executives to tag outside candidates and cultivate relationships with those best suited for certain roles. Though you can’t beat institutional knowledge, a solid succession plan shouldn’t require you to go with an “insider.”
- Look at candidate partnerships. By now, you know relationships are critical to business. The question is: What relationships do potential candidates bring to the table? Ensure internal candidates have strong relationships with key stakeholders, advisors, and other industry leaders. And consider the depth of external candidates’ relationships with outside industry leaders and stakeholders within your industry.
- Keep boards involved. When outside recruiters take charge of the top executive selection process, internal needs can sometimes take a back seat. Ask the board to carefully choose a selection committee of strong, ethical leaders to set expectations for recruiters and closely monitor the recruitment process. This will help ensure the best (and not necessarily most popular) candidate always wins out.
- Prioritize experienced, credible leadership. Clear experience and credibility in your industry are key traits to look for in your next leaders. Rotate internal candidates through various departments to provide a 360-degree view of your organization; allow ample time for external hires to learn the ropes before taking on the full responsibilities of their roles.
Though leadership change is as normal in a company as change in any other position, the impact is usually much more severe. Losing a long-term experienced leader can often leave a huge void, one that advanced planning can easily prevent.