More than half of all business owners will be retiring in the next decade. Are you grooming a successor?
The homebuilding industry is in a state of flux, experiencing changes in tastes and style, technology, and materials, as well as challenges in attracting and keeping a good workforce.
But the biggest challenge facing the industry is that Baby Boomer owners are beginning to retire. Estimates tell us that between 54% and 63% of all owners will be retiring over the next 10 years. The shifting construction business coupled with the pending wave of ownership transfers spells trouble for the industry if successors are poorly prepared to lead a company.
In order for a successor to successfully take ownership of a company and lead it into the future, he or she must transition through four stages of development. If a successor takes over a company and has only mastered the first two stages of development, they're doomed to fail, because they've only mastered the mechanics of the homebuilding business.
Stage One: Worker/Contributor
This is the stage where a successor learns the basics of the homebuilding business. Here, successors become good at getting the work done, gaining knowledge of how homebuilding is done. Competencies in this stage involve acquiring technical and industry knowledge, along with improving technical skills.
Stage Two: Manager
This is the stage where a successor learns how to get work done through others, overseeing projects and managing resources.
Stage Three: Leader/Executive
This is the stage where a successor learns to lead, rather than manage. People skills become more important than technical skills and industry knowledge. In order to be an effective leader, a successor must improve his or her communication skills and learn the art of influencing others in order to get buy-in for their plans and ideas.
Stage Four: C-Suite/Owner
This is the stage where a successor learns how to lead a homebuilding organization; where seeing the bigger picture becomes their job. A successor must hone his or her strategic thinking, moving beyond developing tactics to developing directions for the company that address fundamental problems or capitalize on opportunities. It requires sound judgment in order to make good decisions, as well as developing an owner's mindset.
Strategies for Successful Development
If leaders have spent any time learning the business, the chosen successor has probably mastered the first two stages of development. They've gained strong knowledge of the technical aspects of the industry, as well as experience in managing projects.
In order for a successor to master the second two stages, coaching and mentoring is essential. If you take on the task of coach, you'll need to lead like one. Ask questions, rather than give answers: This helps the person you're coaching develop the necessary leadership competencies, strengthen executive presence and improve an ability to think strategically.
Mentor the successor is also important. Charge that person with making increasingly difficult decisions, assisting them by guiding their thinking. It's the only way a successor's judgment can be honed. As judgment and thinking improve, your chosen successor should then start to participate in decisions that have greater impact. Finally, share the mistakes you've made in the past, as well as lessons you've learned.