Architects & Engineers Articles -Cover Your Bases - Succession Planning For Your A/E Firm

Transitioning leadership from one generation or principal to the next takes more time than most firms realize, especially if principals partners will be retiring in a short period — a situation many firms are beginning to face as baby boomers start entering their 60s. To ensure that your firm continues to operate as seamlessly as possible, it’s important that your succession plan address areas such as leadership preparation, client retention and compensation. Without such a plan your firm’s future is open to question, forcing you to make last-minute decisions.

Leadership

Planning for retirement can be a sensitive matter for aging principals who aren’t yet ready to hand over the reins. Some firms have mandatory retirement for partners, this in of itself is not a succession plan that addresses how to transfer leadership when principals are ready to retire.

Associates and younger principals want assurances that your firm will train, develop and groom potential leaders to take the helm when the time comes. Passing the torch can take several years, so it’s wise to identify early on those employees who demonstrate the skill, ability and personality to become effective managers.

It’s also critical to prepare qualified associates and principals for leadership roles. You can do so by:

• Involving them in significant management decisions,
• Allowing them to head certain committees or projects,
• Sharing detailed information about operating costs and expenses,
• Assigning them to oversee support staff, and
• Including them in client meetings.

Also, be sure to ask this next generation of leaders about what areas they want to be involved in or skills they want to develop.

Client Retention

Firm succession also affects your clients. You can help ease this transition for them by introducing younger principals and associates early on. Also, ensure clients that the retiring principal will be available for a specified period of time during the transition to nurture the relationship and monitor service.

You can encourage retiring leaders to stay involved in this process by offering incentives, such as paying membership dues for professional associations. If even after retirement these partners occasionally attend lunches, seminars and social events involving their former clients, it will reiterate to clients that they’re in capable hands and demonstrate your firm’s continued appreciation for its retired leaders.

To determine how well your clients’ needs are being met, solicit feedback regularly.

Compensation Agreement

For a retiring principal, you’ll want to create a detailed transition plan that includes a proposed workload reduction and a compensation agreement that breaks down the percentages of time that the, retiring principal and new team leader will receive during the transition.

The retiring individual’s compensation typically is reduced according to the proposed workload reduction. The firm should start working on a plan with the principal in advance of retirement to ensure the transition is complete when the they leave the firm.

Also, determine whether the partner will perform work after retirement. If so, compensation will need to be negotiated.

Business Development

As baby boomers retire, many organizations could suffer from the loss of knowledge that will accompany those exiting the workforce. Before leaders in this group retire, ensure they pass along historical information about your company and the expertise they possess in one or more of their specialized areas.

Develop formal training and development programs, including mentoring for younger associates, and discuss coaching techniques and group teaching methods. Informal meetings over coffee and lunch should also be viewed as opportunities to impart important company information.

For instance, if the retiring principal is one of your firm’s rainmakers, be sure he or she imparts to associates and younger leaders the wisdom necessary to cultivate key relationships and win new business. The principal should provide a list of referral sources and other key contacts.

You may not be able to completely replace the retiring rainmaker’s skills and talent, but you can develop these abilities in associates and younger leaders through business development training and by encouraging them to hone their own style and techniques.

Ensuring Success

Every A/E firm has to deal with partners retiring. Having a documented succession plan in place and implementing it now helps ensure your firm’s success when the transition occurs.

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