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Influences of the company culture in succession consulting

Effects of succession on company culture in SMEs often take critical forms

A company succession brings with it a variety of challenges for the entrepreneur, the successor and the employees. Financial aspects and inheritance issues can be dealt with in a targeted manner with the tax advisor and the notary. However, the company often also presents the successor with problems that are difficult to overcome and different in nature. Mr Wanner has been looking after company successions in a wide variety of sectors in trade and industry since 2013 and can report on a wide range of issues that must be solved by the successors. Because these do not only bring inefficiencies with them. They can also lead to the departure of skilled workers and managers who are hard to find today. This can lead to a loss of margins or earnings, to a loss of know-how and even to economically threatening situations.

The company culture

Explicit reference should be made to a central topic today – the company culture! It is not relevant whether the succession is solved by means of an internal, an external or a family-internal successor. In consulting, one finds that the company leaders leaving today in medium-sized companies have tended to represent a patriarchal management style in the past. Their successors, however, usually live a team- and/or results-oriented management style.

As a result of this rather seemingly unimportant fact, there are serious implications

In the “old days”, employees were addressed directly by the owner and told in no uncertain terms what they had to do and how. It was also clear to each employee that a violation of the rules would result in restrictions. Thus, each employee was a direct “vicarious agent” of the owner and was clearly, directly and unambiguously told what was required. The employee typically had less creativity and initiative to show and in the end he hardly had to make any decisions.

The new era of company culture

In today’s world, however, there are team-oriented bosses who pursue a different leadership strategy. With this different company culture, the following phenomena can typically occur:

  • The employees feel left alone by the boss and not properly informed. This is because he gives them more freedom and also demands independence.
  • They don’t really know what to do and how and are insecure and frustrated.
  • Employees with high self-confidence can overreact by deciding things that are risky and not within their competence. Damage is pre-programmed.
  • The vacuum that is created in the employee will typically not only trigger insecurity, but also the feeling that nothing can or should be moved because the guidelines are missing. Although in reality it could be exactly the other way round.
  • Ultimately, this leads to dismissals and loss of know-how.
  • The new boss often does not feel taken seriously by the employees, because they expect direct and clear instructions and not the new freedom that they cannot fill in this way from experience. And so the employees signal this need, which the new boss usually does not meet.
  • He does not understand why the employees do not know how to do what, although they have often been doing it for decades.
  • The boss is confronted with issues such as lack of information, loss of staff and sometimes insinuations of lack of competence, although this is usually not the case.
  • The new boss does not understand why defined division or department heads do not actively decide and ultimately do not do their job, but wait for him to become active.
    He wonders if he has to do everything himself, even though he pays for expensive ladder functions.

How can this problem be solved?

Just to paint a few pictures of what can happen in real life or what has happened in Wanner GmbH projects. Seen from a certain distance, the situation is clear. But when you are diligently turning the wheel in the hamster wheel of the company, you can hardly understand these well-worn paths and the new negative developments. It becomes necessary to actively deal with the issue strategically and in an overview with the executives. Either the new company leader has the overview and the moderation skills, or he brings in this function from outside. The earlier these mechanisms are understood and actively resolved, the better it is for the company culture and the healthy progress of the company. The longer the phenomena described spread in the company, the more damage is done. This leads to an increasingly difficult state for a coaching process that attempts to resolve the issue.