By Sabine Hoover, Content Director with FMI Corporation
How E&C firms can use shared leadership strategies to transfer their businesses to the next generation of leaders.
In today’s engineering and construction (E&C) environment, 66% of companies are owned by baby boomers—a generation that is expected to retire in the next 10 years. While there may be few clear options for ownership transfer between the current and next generation, the business of transitioning leadership to the next generation is highly complex.
To solve this problem, some firms are transferring enterprise-level leadership responsibilities to a group of people—rather than to a single individual. Here’s how they’re doing it:
1) Select the right candidates. While structure and titles can differ across organizations, FMI’s emerging definition of shared leadership in this context is “a group of two or more leaders with a common purpose to lead and oversee the business, and shared influence to do so.” In this approach, a select group of executives work collaboratively and bring their diverse perspectives and skills to their new leadership roles.
2) Combine less formal structure with clarity and transparency. Organizations pursuing a shared leadership structure generally place less emphasis on titles and traditional hierarchies. Instead, leaders emphasize roles that play to their individual strengths or competencies versus a specific title or functional role. For this reason, an overly rigid and formal structure can impede the shared leadership model. Leading in today’s environment requires agility and quick responses to challenges. And while role clarity is essential, rigidly following those role descriptions or titles is unrealistic.
3) Seek out interdependent leaders. The shared leadership model requires high levels of interdependence, fewer silos, and a focus on functional areas and expertise. When transitioning to a shared leadership model, one group of executives was struggling to identify who was fundamentally responsible for strategic planning (i.e., who would do it, who would be involved, who would “own it”). Other executives pointed to the leader who had deep internal operational roots, while another suggested the named president.
4) Don’t fall into the “unicorn effect” trap. Some CEOs set unrealistic expectations for their future leaders—a phenomenon we fondly refer to as the “unicorn effect.” When searching for the next CEO, current leadership may lay out unrealistic skills and capabilities (e.g., the need for college degrees and desired experience levels), in the name of finding the perfect fit for the role. By determining the fundamental differentiating leadership competencies, organizations can simplify the selection process and find a succeeding generation of leaders that can take them to the next level.
5) Leverage shared leadership to offset the skilled talent gap.
It’s no secret that E&C firms are struggling to recruit and retain talent. The shared leadership structure is one way to address these retention issues, and especially with the younger generation. In “Debunking Millennial Myths
,” FMI noted that younger workers come from a “connected” generation that values collaboration, teamwork, and social opportunities. A shared leadership approach certainly speaks to these values.
Right now, E&C companies that are leveraging shared leadership models at the executive level are in the midst of rapid growth. They’re expanding into new markets, diversifying their project portfolios and staying on the cutting edge of new technology adoption. These organizations and their leadership teams view shared leadership as an innovative approach to the challenges of today’s E&C industries.
Sabine Huynen Hoover is Content Director with FMI, the leading management consulting, investment banking and people development firm dedicated exclusively to the engineering and construction industry. FMI professionals serve all sectors of the industry and combine more than 60-plus years of industry context and leading insights to achieve transformational outcomes for their clients.