Hugh Rice has fielded dozens of phone calls from panicked business owners staring at retirement with no successor in line.
Rice is senior vice president at Denver-based FMI Corp., the management consulting firm that helped Jerry Welty solve a similar problem.
According to Rice, only one company in three in the construction industry will make it to the next generation, largely because of a lack of planning. “My advice is that if you haven’t started succession planning by the time you’re 50, it’s too late,” Rice says.
In construction, one in three executives plans to turn the company over to family, while nearly half look to non-family employees, as Welty did.
One of FMI’s services is to identify that non-family successor.
The process involves sending a team of FMI consultants into the company to interview each employee and management. FMI looks at the skills of various employees and the company culture to narrow a field of possible successors. One of the questions posed to employees is who they think is qualified to take over.
While that bottom-line question isn’t rocket science, Rice says most companies need an outsider to meet individually with employees because workers “probably will not be very forthcoming to their boss.”
The most important characteristic is leadership.
“Leadership is one of those funny things. It takes followers to have leaders. It’s nice to know ahead of time whether the employees believe in the person.”
Once a field of candidates is identified, FMI conducts skills assessments and personality tests. “There is a certain personality style that is generally held by the people who run these kinds of businesses,” he says.
“We assume basic qualities like honesty, integrity and understanding the industry,” Rice says. “We look for being results-oriented and aggressive and having good people skills. It’s relatively easy to summarize.”
