Why Succession Planning is a Must for Any AEC Firm — and How to Do It Right

Find out why succession planning is a must for any AEC firm, and get Tips for creating a proactive and flexible blueprint to ensure organizational continuity

As much time and brainpower as executives at architecture, engineering and construction (AEC) firms expend trying to run a business and manage risk amid factors largely out of their control — inflation, supply chain disruption, talent scarcity and a sagging economy, to name several — there’s one factor within their control that can have a huge impact on the short- and long-term success of a firm.

That factor: succession planning. Firms that do it proactively, and do it well, set themselves up for sustained success, while those that do it half-heartedly, reactively, or not at all, put themselves at a decided disadvantage when it comes to attracting and retaining top-tier talent, keeping valuable institutional knowledge in-house, sustaining a healthy organizational culture, and meeting diversity, equity and inclusion goals.

The What

A succession plan essentially serves as a firm’s talent blueprint over defined time horizons — typically the next one, three and five years. It identifies all the critical positions within the organization, from the C-suite to the heads of human resources, sales, and marketing, as well as general counsel, operational leads, and other positions deemed most vital to the company. That includes existing positions as well as positions firm leadership expects to create as part of the business’s growth strategy. So in that regard, a firm’s succession plan should be forward-looking and inextricably linked to its growth strategy.

The plan then goes deeper by defining the desired skills, experience and overall profile of each key position, and by identifying specific people from within the firm whom leaders want to keep in certain positions or advance into certain positions, along with individuals the firm may target externally to fill specific positions.

The Why        

Really, a succession plan is an insurance policy. It mitigates risk associated with talent retention, the loss of key personnel and poor hires, any of which can result in the loss of clients, revenue and profit. The goal with succession planning ultimately is to give the firm, its employees and its customers certainty and confidence that the right people will be in the right seats to lead the firm and execute its business strategy over time, to provide continuity to the business, and to ensure the firm remains resilient from a personnel perspective, so it can rise above issues like an unforeseen departure, retirement, illness or performance drop-off. Good succession planning is a critical step in minimizing disruption and maintaining focus on managing the business day to day.

As long as the two of us have been in the AEC business, we’ve gotten pretty good at spotting firms that excel at succession planning. They’re more likely to enjoy profitable and sustainable growth. They remain true to their strategic plan and vision, even amid disruption. They’re adept at attracting and keeping talent, and their business keeps chugging along when they do lose a key person. They make wise hiring decisions. They consistently capture and leverage institutional knowledge. Their people are engaged and productive in their work, and fulfilled in their career paths. And they project a strong sense of purpose, competence and strategic acumen to employees and customers alike.

In short, they’re the types of firms clients want to hire and talent wants to work for.

The How

Superior succession plans are the result of following a defined process and set of practices. Let’s dig into the nuts and bolts of developing a plan, divided into three phases:

Phase 1, assessment and laying the groundwork:

  • Know that succession planning is a fluid, flexible and ongoing process, not a one-time event. The plan you create should be a living, breathing document, developed and updated in a cadence similar to you firm’s annual business plan so it reflects changing circumstances within the firm and externally. This cadence helps a firm stay nimble.
  • Initiate the succession planning process proactively if possible, rather than in reaction to a development like the loss of a key leader. Decision-making tends to be better when a firm isn’t in crisis-management mode.
  • Start with the end in mind. Define where you envision the firm going in the next one, three and five years. Is the intent to expand geographically or via new service or business lines? Are mergers/acquisitions part of the plan? If so, which new positions might this activity entail?
  • Start at the top. Every member of the C-suite should be actively involved in the process, and employees should understand and be kept apprised at various stages of the process.
  • Build a succession planning team on which all the key stakeholders are represented. The process benefits from multiple perspectives and sources of input.
  • If the process seems daunting or you believe additional guidance would be helpful, enlist an outside succession planning expert. Some consultants specialize in supporting AEC firms in their succession planning.

Phase 2, due diligence and evaluation:

  • Evaluate and identify the positions and people to be part of the plan. Conduct a gap analysis, taking stock of what you have in terms of internal personnel assets, bench strength and skillsets. Who are the highest-priority people to retain and develop? What career trajectories do you have in mind for those people? What skills and expertise is your firm currently lacking, and how do you intend to fill those gaps? Whom externally might you want to recruit?
  • Avoid internal bias. Maintain objectiveness and open-mindedness in your personnel evaluations. The right answers in terms of personnel might come externally, from outside your organization. Plenty of succession plans have been undermined by firms over-valuing a person’s aptitude for a higher position within the organization based on past performance.
  • Create a hierarchy of candidates for all the positions encompassed by the plan — plans A, B and C.
  • View the plan through the lens of your firm’s diversity, equity and inclusion goals. DEI should be a core business priority.
  • Beware unintended consequences. You don’t want individual agendas to get in the way of what’s best for the business.

Phase 3, development and implementation:

  • Ensure timely, transparent communications with all stakeholders. Succession planning can involve delicate decisions about — and delicate discussions with — people you value. If during the succession planning process a person is not identified as a future firm leader, for example, current leaders will need to have an open, honest and tactful discussion with that person about the improvements they’ll need to make or the skills they’ll need to add to become part of the future leader mix.

With open communications, firms can avoid creating hard feelings that may damage morale and lead to the departure of a key person. Positioned the right way, succession planning can even create extra motivation for people to excel in their work.

  • Spell out how your firm captures, maintains and shares institutional knowledge, so the past informs the present and future of the firm. The last thing you want is for all the uniquely valuable subject-matter expertise and insight about business relationships, prior pursuits, past projects, etc., to irretrievably escape your firm.
  • Establish protocol for ensuring the succession plan is regularly revisited and updated as necessary, in a cadence similar to an annual business plan. Responsibility for ensuring the firm keeps its succession plan current ultimately should reside with the CEO, given its strategic importance.

Too often, firms turn to succession planning too late or lack the follow-through to complete a plan. So as for the “when” to begin succession planning, there’s no better time than the present to start the process if your firm currently lacks a plan, or to improve the plan it has in place if it warrants an upgrade, or to revisit (and if needed, revise) an already solid plan. Because in a business full of so many unknowns, proactive succession planning is one of the most effective ways for an AEC firm to control its own destiny.

Dennis Cornick has worked in the AEC business for over 40 years. He recently retired after 33 years with Gilbane, a 153-year-old global provider of facilities and construction services with an annual volume exceeding $6 billion. During his tenure there, Dennis led strategic and tactical initiatives, resulting in consistent sales, revenue, and profit growth. Akshay Mahajan is general Executive Vice President, AEC, at Unanet.

Ready for more insight from Dennis and Akshay? Check out two of their recent blogs, one about recession-proofing your AEC firm and the other about managing capital project approval in today’s volatile economic landscape.