The following article originally appeared in the July newsletter to clients of Kiley Advisors, now a part of FMI Corporation. Reprinted with permission.
In this second article in our series on succession, we will continue the discussion of the internal transfer of responsibility and ownership, the most common method for construction companies. It does bear repeating that self-performing contractors, not required to bond, can usually be sold, as can established general contractors with a strong brand franchise and a reliable client base, especially in preferred growth markets. Still, most construction firms transfer ownership and control internally.
Many construction companies will face the need to transfer leadership and ownership internally in the coming decade, perhaps sooner as baby boomers (now 55-75 years old) retire. This challenge becomes a major strategic priority, requiring intense time and focus, as there are not enough Gen-X’ers, (now 35-55 years old), to replace them. This reality is forcing companies to accelerate the development of millennials, the oldest in their early 30s. This fact fractures the traditional leadership development model in construction and pushes senior leadership teams way out of their comfort zone. However, since this need is so pervasive, many tools and programs have been created that help educate, expose, and season these younger high potentials. These consist of aptitude and psychological assessments, 360-degree feedback instruments, and experiential education that helps people truly understand who they are – essential for senior leadership responsibilities. There are also tools and software to help the company truly implement a talent or human capital development function. These aids and programs have all been validated, especially if selected and implemented with experienced consulting advice.
In his powerful book Good to Great, researcher and teacher Jim Collins found that great companies develop successors from within, a preference of most construction companies. These organizations wound up with leaders who had two distinguishing characteristics – professional will (an unwavering focus on results) and personal humility (sharing successes with their team and taking personal responsibility for failure). Both are highly recognizable hallmarks of successful contractor leaders. There is reason to be optimistic that these future leaders can be developed from within the current pool of high potentials in most construction companies. Many people attracted to construction have these attributes in embryonic form, and they become visible in people early on when they are estimators, project managers, or superintendents. These qualities can be nurtured and expanded. The leadership skill set can be trained, refined and observed.
Consistent, value-based decisiveness that reflects the company culture will become highly evident. Thoughtful, analytical risk analysis, acceptance, and management will be clear and measurable. The desire to be a leader and owner will be reflected by the willingness to write a check and to put “skin in the game.” With proper focus and time, and the judicial use of external resources, construction companies can ensure successful transitions in the CEO and other senior management roles.
