HOUSTON-Given the spate of high-profile, C-Suite turnovers the industry has seen in recent months, it would appear that succession planning is still a cutting-edge thought. While larger firms are starting to pick up on the need, there is still a vestigial go-it-alone cowboy mentality that threatens continuity.
“There’s a lot of truth in that,” Transwestern CEO Larry Heard tells GlobeSt.com. “Commercial real estate, just like the oil and gas industry, has leadership made up of people who are bold, innovative, risk takers. They also tend to see themselves as invincible. But as companies get larger it’s more realistic to recognize that there are a lot of people depending on you for discernment and strategic planning. You can’t leave succession to chance. You need to strategize on that as proactively as you would an important client relationship.”
The executive committee of Transwestern has done just that, and though Heard’s successor is not a name he shares, that person is in place. What the CEO did share were the traits he looks for, and he also enumerated the things other firms need to consider when crafting their own plans.
Heard said there are five key traits he looks for. The ideal candidates must be a self-confident team players. Yet they have to be independent thinkers in addition to being “excellent communicators.”
These four traits, while prized, are nothing out of the ordinary. But the fifth is a surprise. “They have to be servant leaders,” says Heard. “Leadership must be able to build a dynamic following. Those who have a true, committed followings are servant leaders who put the company and other individuals ahead of their own personal agendas.
“People see that and respect it,” he says, “and that’s what enables the very best leaders to be so powerful; they can mobilize an entire organization.” He counts himself fortunate to have senior people who are long-tenured at Transwestern and possess those qualities.
So what steps are necessary to build a bulletproof succession plan? Well, nothing is bulletproof, and flexibility and options are key. Someone, for example, could always up and leave, deciding to eschew real estate in order to adopt a life of quiet contemplation on the hills of Tibet. Even long-tenured employees can quit. “If you don’t have a deep bench you’re going to be caught off guard,” warns Heard.
So here are his recommendations:
1) “You need to build upon the vision that leadership has in regards to an organization’s potential,” he says.
2) “A successful plan is transparent to the company and to your clients.”
3) A good plan will also enhance your corporate culture and elevate your brand, he says, explaining that the culture consideration is “a very internal element while brand elevation is more of an external view.”
4) And both of those are different from “innovation. That’s a mindset. People can get complacent and simply continue along with those old tried and true practices. That can be fatal. A succession plan without innovation is sub optimal.
5) “The plan should infuse a sense of urgency to the entire organization to perform at a high level,” he continues. “Companies ought to realize that they’ll be watched very carefully—especially by clients—to see if everything they’re hearing about is going to play out as promised.”
6) Finally, says Heard, you have to “Tap people who are willing to accept significant responsibility. Not everyone does. It’s one of the things you should not take for granted.”
In terms of the relative benefits of growing your own as opposed to hiring from outside, Heard prefers what he calls a blended approach. “Going inside is not always the best,” he says. “It depends on the position, and we’ve found that if we bring someone from the outside with a whole different set of experiences, it can infuse the company with energy and new idea flow.”
On the other hand, growing your own strengthens the corporate culture and sends a good message throughout the firm. “But my experience has been it’s a blend of the two,” he says. “There are risks and benefits to both.”
A succession plan is a mixture of art and science, Heard believes. “That’s why I like the blended approach. It helps build a healthy, vibrant organization.”