By Emily Livorsi and Lauren Ramsay
To be most effective, succession planning requires foundational groundwork that includes preparing the organization for effective leadership transitions and ownership transfer, focusing on change readiness, clarifying a vision for the future, and creating roles that drive organizational success and market differentiation.
In many cases, those leaders who rally around the “transactional” side of succession management (and the ownership transfer itself) overlook the need for the large, fundamental shifts that come along with such big organizational changes. The good news is that by understanding resistance, understanding loss, acting with intentionality around change, building a change mindset, and taking other steps to ensure an effective transition, E&C companies can overcome these issues and move onto their next chapters.
Here are six ways to make this happen:
Organizations typically see resistance when they make major changes. Examples of resistance that we notice in FMI client organizations around succession management include:
At the organizational level:
At the functional level:
At the group level:
At the individual level:
Understanding where resistance is likely to come from will help you face those obstacles head-on, share information about the real benefits of specific changes, and manage change readiness.
When you begin to talk about or implement an organizational change as part of ownership transfer and succession management (OTSM), people pay attention to the things they will lose. Some of the actual or perceived losses we hear about at FMI include:
Since these shifts are felt as losses, people grieve in a way that parallels stages of personal loss, albeit on a different level. They may be in denial about the change, get angry, try to engage in bargaining, feel depressed, or move more quickly to acceptance. Understanding what individuals stand to lose will help you to plan for and potentially remedy those losses and to manage change readiness.
By increasing intentionality about change at all levels, you can help ensure a successful transition. Organizations can leverage what they know about change to support ownership transfer and succession management. Success rates on organizational change initiatives are low and do not appear to be improving.(1) Succession management and ownership transfer can involve tremendous change, and having your organization respond positively is crucial. Setting your organization up for responsiveness requires assessing and priming organizational change readiness.
Help your organization understand why you are making succession management or ownership transfer plans. A few of the recent change drivers that you can discuss include:
Fully understanding why you need to make changes will help your organization articulate the need for change. Doing so will help in the “unfreezing”(2) of the organization, an important step in preparing for change. Research shows that clear communication on transformation objectives is effective in engaging employees in the organization’s transformation.
Have a change readiness mindset that places embracing change at the top of your organization’s priority list. To build a climate that supports a culture of embracing change, a combination of tactics might be implemented, including:
When an organization’s culture embraces change, employees are better-equipped to respond positively and the focus can move to the question, “How are we prepared to deal with change?”
Be explicit and clear about the change before it happens, during the transition itself and after it is complete. Appropriate change framing through effective organizational communication and support structures will build support and, with that, readiness for change. Research has shown that one characteristic of successful change efforts is that leadership communicated clearly about the change.
It’s not only communication of the change - but also the stakeholder buy-in regarding the change - that drives success. As such, the communication strategy should involve key stakeholders to map out key messaging, a timeline of activities to cascade the changes, and the establishment of avenues for employees and other involved parties to share their opinions. This allows the organization to be clear about the changes and its plans for implementation, and reinforces the willingness by the organization to hear feedback from employees and others who might be affected. Involvement also helps, so make sure you’ve thought through how you will retain key talent, especially where individuals have been looked over for promotion. And remember, human resources should be strategic partners and not an afterthought.
Lauren Ramsay, PhD, SHRM-SCP, is a consultant with FMI’s Center for Strategic Leadership. Lauren brings deep expertise in organizational research and contributes to FMI talent management thought leadership to drive client success. She can be reached at firstname.lastname@example.org.
Emily Livorsi, PhD, is a consultant with FMI’s Center for Strategic Leadership. Emily brings a solid understanding of leadership research and the latest talent development thinking to best serve a diverse group of firms in the construction industry. She can be reached at email@example.com.