By Deborah Jeanne Sergeant
If you have your eye on retiring from your small business, you will need to find someone to take the helm and fill other leadership roles before you go, if you want the business to continue.
Finding a successor and support staff—like filling any role within the organization—means recruiting outside people or promoting from within.
John R. Halleron, advanced certified senior business adviser with the Small Business Development Center, sees some merit in the latter.
“Rather than focus on bringing in new workers, efforts should be made to retain those who have actually stayed and are already trained,” he said.
Promoting from within to fill leadership roles may not always be possible and sometimes new blood may be the right choice. The current employees may not be ready for leading and if your retirement looms, an outside hire may make more sense.
Tom Barkley, professor of finance practice at Syracuse University, said that which way you go — promotion or new hire — depends on what your company needs.
“New employees often bring new ideas, better ways to run a business, different perspectives on how to grow the business and reach customers because they have experience from other places,” he said. “Sometimes, bringing in new employees is better than promoting from within because that typically perpetuates the same ideas. If that leads to not performing as well, having new employees could be a better approach.”
On the other hand, promoting from within may lead to better acceptance of new leaders if they have already developed a following. The experience they have can make the transition smoother. They know their way around. They have history with the company.
“Long-term employees have a better feel for what will work, what won’t work, what the culture of the company is like, are the bosses very demanding or micromanagers or is it more relaxed and casual in approach,” Barkley said. “The existing employees have a good feel for costs and benefits and values the company holds. Promoting within can be an advantage over someone who’s new.”
Promoting existing employees should not be a subjective decision or a “gut feeling.” It is easy to let emotions trump discernment, especially if yours is a small, family-operated business and you want to promote a family member. Avoid allowing your feelings to weigh heavily in the decision. Rather, look at candidates objectively.
Barkley encourages business owners to look for employees with proven leadership skills, including the willingness of other employees to follow them.
“Good leaders often involve humility, being willing to listen, and the ability to aggregate information from across all parties,” Barkley said. “That takes time and it means people will act slowly. But good leaders are willing to make tough decisions that might involve firing people, cutting back on certain areas that some people think of as sacrosanct.”
The size or frequency of group leadership is less a measure of leadership skills than the profitability of the division. Examine metrics such as completing projects on time and finishing them within the budget. Look for those who inspire others to achieve goals.
Barkley also said that leaders think of those they lead more than they think of themselves.
“Good leadership skills include sensitivity to diversity, equity and inclusion,” Barkley said. “We want to make sure employees feel comfortable where they work and they’re not harassed. Make sure that there aren’t gender or racist incidences or any other discriminatory things.”
