Thursday, June 13, 2024

How to put a succession plan in place for your team

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Whether the business is being passed from one generation to another or a successor is rising through the ranks, it’s important to have a plan in place for continuing the leadership of your business after you’ve retired. Michael Zaransky offers a gameplan for thinking through your process and priorities.

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Retirement is not something that is on my radar. Obviously, the day will come when I step down from my position. But that day is not yet on the horizon.

I still have the same zest for the business I had when I took over for my father, David, as a 23-year-old fresh out of law school in 1979, and still enjoy working alongside my son Brad, who will one day succeed me.

I’m in no rush to leave, though.

For that reason, it might seem difficult for me to give advice about business succession plans, but I would beg to differ. Whether you’re talking about your own flesh and blood or another associate, there has to be a level of trust with the candidate who is rising up the org chart. There has to be an understanding of what that candidate is about, and whether he or she is up to the task.

I’d like to think I have that with Brad, who has been part of MZ Capital Partners since 2008. While I expect that we will continue working together for the foreseeable future — and while I know he’s content with the current arrangement — I know he’s perfectly capable of assuming command.

Certainly, he will make his own imprint on the firm. Certainly, he will have his own unique way of doing things. But I also believe the transition will be seamless — that deals will continue to get done, and the wins will continue to accumulate.

This is not to say I have no regard for succession plans. Certainly, I do. One of them, by a leadership and organizational development professional named Genevieve Roberts, emphasized that such plans should involve the following:

  • An understanding of the role (or roles) that might need to be filled, and what traits the ideal candidate (or candidates) might possess;
  • Inclusion of various stakeholders in the process;
  • Long-term vision – i.e., anticipation of retirement plans, turnover trends, engagement trends, etc.;
  • Incentivization of leadership candidates;
  • An understanding that there is technology available to help secure viable candidates;
  • A need to provide employees with feedback and regular assessments.

Perhaps her most interesting point is an emphasis on communications, because in her words, “transparency builds trust.” She added that it is important for the senior management team and human resources professionals in every organization to do the following:

Involve all stakeholders along the way and encourage openness in one-on-one conversations with your employees. Tell people where they are and speak to realistic career goals, share career path opportunities, and most importantly, celebrate successes and promotions.

It is not a label that you are giving someone; rather it is an opportunity to engage in a dialogue that will encourage those who are high potentials to stay and those with more opportunities to work more purposefully toward reaching their goals.

Granted, the real estate business and ownership of individual real estate assets differ greatly from the operations of a typical business. Even the largest firms get passed on from generation to generation with a customer base and the like. Each has set its own value and its own buy. That’s just the way it goes.

When I succeeded my father in 1979, no formal succession plan had been spelled out ahead of time. There was no closed-door meeting that marked the transfer of power. No paperwork was signed to commemorate the occasion. There was just an understanding that I had grown up in the business, having worked in it beginning in high school, and that, eventually, I would take over.

When the time finally came, there wasn’t much to do. It wasn’t like anybody transferred any assets or anything. The moment I started running the business, new deals were going forward with whatever structure I decided to employ.

That has continued to be the case over the last four decades-plus. Our firm has grown and adapted as technology has become a bigger part of the equation, but the satisfaction of making deals and seeing a project through to completion remain much the same.

From my standpoint, I enjoy the fact that it is not a typical business — that no two days are alike. I enjoy going to an office and engaging with colleagues; it keeps me sharp. I like the idea of pursuing new deals and new opportunities, spotting trends and consummating a deal for people that meets today’s needs. Aside from the financial rewards, it’s extremely rewarding to do something that I think is creative and has a purpose.

Finding someone who sees the industry in a similar light is critical to a smooth transition. That’s a matter of familiarity, communication and understanding how they go about their business. There are various ways of determining all that. And while it is a near certainty that they will handle the job differently than their predecessor, they must always have the same North Star in mind. That’s the bottom line.

Michael H. Zaransky is the founder and managing principal of MZ Capital Partners in Northbrook, Illinois. Founded in 2005, the company deals in multifamily properties.

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