Manifestation of power, authority, control, and influence (*PACI) among shareholders and employees in closely held businesses serve as leading indicators for the likelihood of success at points of significant transition. While these attributes are observable, they can be tough to pin point. Here are a few underlying symptoms to look for:
A lack of trust or transparency(artificial harmony may dominate)
Ineffective or inefficient decision-making
Lack of role clarity
Absence of a formal budget orstrategy
Excuses substituting forresults
Lack of accountability
Non-productive conflict
Strained relationships
Absence of a documentedsuccession plan for senior leaders and owners
Significantly slowed, plateaued, or declining annual revenue growth.
When PACI is properly diffused through theorganization shareholders have controls in place that give them visibility andcontrol over their investment, while freeing employees to drive more profit tothe bottom line. The process ofovercoming barriers to scale, engaging in a transition, or executing a familysuccession forces the business into the uncertainty of liminal space (the spacein between leaving what was and moving toward the future state). Moving through liminal space requires peopleto let go of old ways of being and doing and adopt new ways. When PACI issues exist in the culture,transitioning through the liminal experience will be difficult, if notimpossible.
Solving PACI issues requires carefulobservation of symptoms and identification of the root cause(s) to properlyframe the problem. Unfortunately, thisis where things tend to go awry. Themost common approach is to address the symptoms – lack of role clarity, write ajob description; lack of trust, hold a communication training; declininggrowth, work harder. Operating in theseenvironments feels like being a rat on a treadmill running faster and gettingnowhere. People begin to argue about allsorts of issues without having a clue what they are really wrestling with.
When PACI issues exist driving through atransition requires owners and business leaders engage in transforming longheld patterns that served to satiate their essential psychological needs. This process introduces a threat topsychological security – this is the fundamental cause and major pitfall oftransition.
The fundamental solution – properly frame the challenge:
Discover: What is the currentreality for PACI in the system (shareholders, managers, influencers)? How might (or is) this reality impacting thetransition?
Explore transition goals: Whatis the vision for the transition? Whatare the expectations for owners and managers?
Design the approach: Align theorganizational structure, roles, responsibilities, governance and managementdecision-making that will support the organizational strategy and a successfultransition. This must include establishing new channels for control, authority,influence, and power that are explicitly managed.
Implement: Incorporate thesedynamics into the transition strategy and action-planning so that all partieshave visibility, shared understanding, and can effectively coordinate.
Iterate: No transition goesexactly as planned. Having clear pointsof evaluation and refinement are essential. This also helps build a culture of adaptability and shared learning.
For advisors and owners more inclined toward strategic and execution phases of transition this approach may seem esoteric, unnecessary, or next to impossible. Admittedly, fundamental solutions are a much bigger investment of resource than the quick fix. However, the quick fix always leads to more and more investment (think death by a thousand cuts). The pay off on a fundamental solution will have a far greater rate of return, driving profit to the bottom line, and making transition success much more likely. It is a case of "going slow so that you can go fast successfully".
*PACI defined
Control: is subdivided into two spheres, control over self and control over others. Control over self is the ability to direct and influence the course of one’s own life. Control over others is the ability to exercise power that enhances or impinges upon the autonomy of others.
Authority: a legal or formal right to direct the activities of others for the purpose of achieving organizational goals and to expect subordinates will respond appropriately. Authority most often comes from position or role in a company. It is power that is recognized or accepted by others.
Influence: the ability to shape the cognitions or behaviors of others without using authority or control.
Power: the possession of authority, control and/or influence over others that can be used directly or indirectly to achieve a desired outcome. Power may come through positional authority or by use of influence. It is not tied to a role or position and results from expert knowledge and/or charisma.