When you're starting to plan your exit strategy, a lot of emotions come into play and not all of them are positive. While you might think about your life after your exit with hopes for new business ventures or amazing travel plans, there are realities in the planning that can be difficult, especially where other people are concerned. Turning over the running of a large business means the transfer of power. You might be surprised how often that dynamic leads to hurt feelings, underlying greed, and mistrust in the hierarchy of your venture.
Your business may have multiple principals or more than one executive and the shift in power impacts everyone. People are keenly aware of how this transfer may impact their future with the company and you can expect some vying for that power. All of these emotional factors have a very real impact on the future success of the business.
Your business exit strategy has a lot of moving parts. You might prioritize your value drivers, especially if your exit strategy involves selling the business. You might concentrate on building a bridge to monetization. You likely have a lot of highly paid lawyers and accountants giving you advice on how to structure your exit. The process looks different for every business. The sad fact is that almost all business leaders overlook the impact of Emotional Intelligence (EQ) in their decision making.
I can't tell you how big of a mistake this is. You've built a thriving business that matters to you. Your exit strategy, realistically, is the most impactful pivot of your entire life. It's moving from the business that you painstakingly built to a new future that looks completely different. You want to leave your legacy in the best hands. You need to make sure that your employees reap the benefits of that thriving business. This means choosing a succession strategy that will honor the work you've done and build on it in exciting ways.
You cannot overlook EQ in this equation. If you do, you'll be leaving your business susceptible to the negative emotions that a transfer of power can mean to the hierarchy left behind.
What Is Emotional Intelligence?
Emotional Intelligence (EQ) is a relatively newer science, but it's become a key indicator in business leadership. EQ is more highly prized by employers than IQ or talent. Of course, that doesn't mean you would hire someone who didn't have the basic skill set to handle the responsibilities, but it does mean that you'll look for someone with a higher EQ out of the qualified applicants. You would even be wise to choose someone with lower professional proficiencies but higher EQ for leadership roles. A strong leader knows when to delegate tasks to the most talented team member.
What is EQ in practice?
Emotional Intelligence is a measure of core components in the way a person understands their own personality and interact with those around them. The tricky thing with EQ is that most people believe that they are excellent in all of the categories. It's very difficult to assess yourself on these subjects. In truth, high EQ is quite a rare quality to develop without working on it. The best business leaders exhibit an excellent grasp of all of the criteria.
There are several categories that makeup EQ. They include social awareness, relationship management, self-awareness, and self-management. All of these characteristics are important in building a team environment, meeting employee needs, and offering leadership that cultivates success.
"An unexamined life is not worth living." - Socrates
This great quote is something to think about here. You should examine life but the first step starts with your own honest introspection and self-awareness. When we look at your business through the lens of EQ, we realize that without an honest assessment of yourself, your relationships, and the perspectives of the people you impact, the company culture is liable to be less than desirable indeed.
How EQ Impacts Your Business Exit
EQ is relatively new to the boardroom. It's really only become a commonplace indicator of success in the last decade or two. With your exit strategy, it becomes even more important. The human factors involved in running a business are pushed to extremes during upheavals or shifts in leadership. This happens in large corporations and small family-owned businesses alike.
With different players vying for advancement, filling the void in leadership can be tumultuous. There are significant emotional attachments involved in these changes. You'll have long-term employees and even family members who need to be considered within the succession.
At Clear Advice Business, we work with Mind Share EQ to provide EQ assessments for our clients when developing their exit strategy. These assessments help each team member focus on identifying their deficiencies and strengths. They remove any bias from the process and allow a scientific look at the EQ for each member of the current team. This allows for better teamwork building and communication. Your business benefits from heightened clarity in the decision-making process to ensure that your final succession plans are in the best interest of the company and all staff members.
For example, we worked recently with a family business. The majority owner was 75 and looking to exit. There were four minority owners in this business and one of those was the majority owner's son. There was a lot of dysfunction in this business. The father couldn't exit but wasn't certain where the tension came from. We advised that all the principals should take the EQ assessments to get a clearer picture of the inner workings and dynamics. The results were definitive. The son's personality and leadership style were counterintuitive to what the business needed to thrive in his father's absence.
This situation was an extreme one. But it was decided that the son would be bought out and resign his position so that the other minority partners could run the business at his father's exit. In the end, the solution worked out best for the business and every member of leadership.
For most business owners looking to exit, the question of what happens to their enterprise after they've retired is a big one. An EQ assessment is an excellent way to give you solid projections of the success of the leadership you put in place to continue the work of the company.