Creating a legacy is more important than ever, but it doesn’t mean what you think

Creating a legacy is more important than ever, but it doesn’t mean what you think

David Fort, managing director at Haines Watts Manchester, writes for Accountancy Age

Business has changed, and so has what it means to create a valuable legacy.

In the past, most legacies were created by promoting the owner as a figurehead and showing off their achievements. Control would then pass to a new leader, who would be responsible for continuing to keep everything on the right course.

But this model is old-fashioned and ineffective in today’s business environment. It cannot sustain continual long-term growth. Even more disconcertingly, it often hits short-term results as well. So, what does it mean to leave a legacy in business today?

A legacy of loyalty

Consumers care more about supporting businesses that are a force for good. Success is no longer based just on who makes the most money, and good leadership is no longer about telling people what to do.

This means that modern legacies are built on treating people well. What people expect from their employers has changed in recent decades; they want their work to have meaning, and to feel appreciated by their organisation.

By giving people autonomy, flexibility, and making sure they know that their contribution is valued, businesses create a high-performance culture that becomes self-perpetuating.

This isn’t just important when making sure that the business continues to thrive under leadership in the future; it affects profits here and now.

Attracting and retaining talent is a key challenge in most industries, and helping people enjoy work is an important way of achieving this. Leaders cannot afford to be complacent if they want to hold on to top quality talent—failing to recruit properly will quickly hit the bottom line.

No trust equals more tax

A happy team boosts profitability now, but it can also pay off later down the line for business owners.

With a loyal and motivated team who care about the business, owners have more attractive options open to them when they decide to sell. Making a company into a shared ownership trust – where shares in the business are owned by employees – is the only way of passing it on without paying tax.

But this option is impossible unless owners have already built their legacy through a solid structure of good people, ethos and management style. It requires team members who are loyal to the business, not just to their paycheck.

Bumps in the road

Building a legacy through trust and employee empowerment may sound easy in theory, but it can be difficult to put into practice. Sometimes leaders feel frustrated with their team or want more from them. How can they stop this response sabotaging the legacy they have built?

In these circumstances, it’s key to differentiate between working in the business and working on the business. When things go wrong owners often jump in and try to fix them rather than taking a step back and allowing empowered team members to resolve the problem.

In this situation, owners need to step back to consider the issue and how it impacts the big picture and resist getting bogged down in day-to-day concerns.

This is easier said than done, and it isn’t an instant fix. In fact, many business leaders need to retrain in a different way when working to manage it.

Mentors and business coaches can be invaluable for refining leadership skills and getting perspective on how to go about creating a legacy – but their importance is often overlooked. This is a deeply misguided and shortsighted view. We take for granted the fact that top sportspeople will work with coaches for their whole careers to continue being successful, but most leaders have never ever considered being coached in how to run a business.

A legacy for today, and for tomorrow

In today’s business environment, legacy is about caring what happens next—to the business, to the team, and to the clients. Leaders and businesses are increasingly respected, not because of the amount of wealth they have, but because of how they treat people and the opinion that their customers, employees, and partners have of them.

Leaving a legacy must begin now. Cultivating respect and a positive business culture will tackle some of the biggest challenges facing businesses today. Employee loyalty shores up a company against many disruptors, and it has a big positive impact on retaining talented people. This, in turn, will increase the value of a business today, as well as in the future.

With the right culture in place, a leader’s legacy quickly becomes self-perpetuating. It will empower and inspire people to continue working according to the business’s ethos, and ensure that it continues to be a profitable, positive place to work long after it has been sold.

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