Confronting the succession challenge

A 1996 ACEC survey entitled “Succession Planning Within Consulting Engineering Firms” overwhelmingly identified succession as a major challenge facing the industry. Survey respondents expressed concerns that senior engineers within their firms did not seem to have the desire, confidence, or requisite skills to take over the firm. The beliefs that “the cream will rise to the top” and that “someone will pick up the ball and run with it” have not translated into actual practice. The outcome has been that owners and major shareholders are increasingly anxious about whether they will realize full value for years of hard work upon retirement.

Largely, the problem has been viewed as the owners’ over valuation of the firm, and potential buyers either not having the capital and/or being unwilling to purchase at what is viewed as an inflated rate. The study further indicated that only three out of 22 firms interviewed had developed a formal plan for succession. Small to medium sized firms added that it was difficult to find potential successors who had the necessary managerial abilities and leadership skills. This problem exists across all professional service industries.

The professional service engineering firms characteristically have not developed the leadership and management skills of their employees. Lack of delegation and ineffective coaching and mentoring have ensured that very few engineers are either ready or confident to take on leadership within the firm. Furthermore, the industry tends to promote engineers based on technical competence. Individuals who demonstrate excellence as engineers are rewarded by being promoted to managerial and leadership positions, with little training or coaching.

A recent management study explored the question, “What differentiates successful engineers from less successful engineers?” Surprisingly, the results indicated that technical competency has little to do with this differentiation. It would seem that technical competency was viewed as a starting point. The single most significant factor that determined success was interpersonal skills. Regardless of how success was defined, those engineers who demonstrated significant career advancement were individuals rated as having excellent interpersonal skills.

Consulting engineering firms understandably tend to focus on the technical skill development of their employees. Yet, in the areas that are most likely to lead to career advancement and leadership development, feedback is either very general or not forthcoming. The outcome is an industry with insufficient leadership in the next generation to take over the firms.

In order to address this complex problem, one western based consulting engineering and planning firm, ND LEA Enterprises, has begun a systematic 360 assessment and action planning process. Thirty individuals in the firm, including senior executives, business unit/sector leaders and project managers, have been rated on numerous leadership competencies and effectiveness outcome measures. These individual assessments were compared to norms for cross industry standards. Presently there are no norms specific to the industry. If consulting engineering norms did exist, the feedback to executives and potential leaders would have been of even greater value. ACEC would like your feedback as to your interest in participating in such a study.

Using the cross industry norms, each individual within ND LEA is presently working on the competencies that will enhance their performance as well as the performance of the people whom they lead. The overall results have enabled the organization to determine common competency weaknesses within their leaders and managers and subsequently to develop an organizational plan to address these shortcomings.

The bottom line to effective succession planning involves more than methods for transfer of shares. However, if firms fail to develop effective methods of enacting the recommendations of the 1996 report, they will continue to focus on share transfer. The ND LEA program ensures that potential succession candidates are enacting action plans that include the opportunity to undertake challenging jobs, mentoring and training. Unless firms begin the process of targeting and developing their managers and leaders, succession will continue to be a growing concern within the industry.

Dr. Meltzer, is President of the SyntecGroup, a management consulting firm specializing in organizational development and change. He works extensively within the consulting engineering industry. He has been engaged for projects by ACEC and the Consulting Engineers of Manitoba as well as various engineering firms, including ND LEA.