Strong-rooted La Crosse business named finalist for manufacturing award
Getting modern tools into the hands of today’s learners
February 10, 2025
There has been much written about the largest wealth transfer from the Baby Boomer generation to their children/family – an estimated $30 trillion.
Never in the history of the United States has such a vast amount of wealth moved through the hands of generations.
However, there is another large transfer taking place that we have heard very little about.
And that is the transfer of leadership in many companies to the next generation.
A clear plan
Ten thousand Baby Boomers hit retirement age every day.
As more of them move toward retirement, they are looking to transition out of their roles smoothly and let the next generation of leaders take it from there.
Our own metrics show this as well.
We continue to see an increase in calls from leaders wanting more information on the leadership transition/succession process.
What jumped out to me about these conversations is that the leaders have a clear plan for the transition of the ownership of the company, but there is less clarity on how the transition to the next generation of leaders will happen.
Without a clear plan to transition to the next leader and/or leadership team, the company often gets stuck.
The outgoing generation of leaders wishes the next generation would just step up and take charge.
Wondering what the next generation is waiting for, they can get concerned about the transition as they want to leave the company in a great place and solidify their legacy in the history of the organization.
However, the incoming generation, out of respect for their predecessors and what they have built, may hesitate to assert their leadership and not step on any toes to risk a negative impact on the relationship.
Incoming leaders often struggle to understand what their leader is thinking regarding the transition.
There may have been some comments about them running the show in the future, but there is not a documented plan that both generations have clarity of.
In this together
Here are three steps that outgoing leaders and incoming generations can take together to create total clarity for all on how the company will transition to the next generation of leaders:
- Complete team development exercise
- Create a three-year strategic and financial vision for the business
- Create the three-year leadership team talent plan
First step
The first step involves bringing together the outgoing and incoming leaders for a team development exercise.
This exercise fosters a deep understanding of each other and how to effectively communicate and work together.
The process establishes a foundation of trust, enabling candid and vulnerable conversations needed to work through the most sensitive issues of the leadership transition process.
Building and maintaining healthy relationships across the team are essential to a successful transition.
Second step
The second step is defining a shared vision for the organization.
What does the outgoing and incoming leadership team want the organization to look like in three years?
The strategic vision creates alignment and clarity, serving as a target for all decisions, especially people decisions.
It provides the incoming leaders with the guardrails to take action and lead the organization with confidence.
It provides the outgoing leaders with the comfort to continue to back away from the business as long as the company is on track to achieve the vision.
Third step
With the strategic vision in place, organizations can now develop a leadership team talent plan, which can help define strategies and actions to develop the team from where it is today to where it needs to be to achieve the three-year vision.
The talent plan includes the succession/transition plans with timetable, promotions, new hires and high performers.
The outgoing leaders’ exit strategy is an essential component of this plan, ensuring they leave on their own terms while passing the baton to the incoming leaders.
The leadership team talent plan also includes the development plans for all leaders.
The development plans for the incoming leaders are focused on the growth areas to help them effectively lead in their new roles.
The development plans for the outgoing leaders include action plans to help them optimize their exit and live the life they want in retirement.
High role clarity reduces frustration and maintains healthy relationships, enabling the incoming leaders to tap into the experience of their predecessors.
Effective transition planning also helps outgoing leaders shape their legacy positively, leaving the organization in a strong position.
Ultimately, a smooth leadership transition can help enhance business value, share price and overall organizational performance.
As organizations navigate the largest transfer of wealth and leadership from the Baby Boomer generation to their successors, it is crucial to prioritize effective leadership transition planning.
By fostering open communication, establishing role clarity and developing a talent plan aligned with the organization’s strategic vision, businesses can ensure a successful transition.
