Assessing the Potential of your Leadership Team – as a Catalyst for Transformation

How Management Potential Analysis enables transformation in Family Businesses

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by Andreas von Specht & Susanne Lang

A Clear Recommendation

It started with an unexpected phone call. A designated Board Chair, preparing to take over from a long-serving Chairman, wanted to know how he could quickly gain a deeper understanding of the "inner workings" of the family business in Swabia he was about to oversee. He had already heard a fair amount about the company: an owner-managed, fast-growing enterprise – a “hidden champion.” However, the internal structures seemed complex. Apparently, there was a “quasi-CEO,” a shareholder who bore significant responsibility for the company’s operations but who had not been officially confirmed in this role by the Board. There also appeared to be a notable imbalance in operational power, as her brother, the second managing shareholder, was far less present and active in the business, occasionally leading to tensions between the two family shareholders. Additionally, there was a long-standing, non-family Managing Director whose area of responsibility – and competence – was in question.

The incoming Chair had already met these three key executives, but the other players in the company were still unknown to him. This left him with a pressing question: “How can I quickly gain a clear understanding of the company?”

At AvS Advisors, we gave him a clear recommendation: “initiate a ‘Management Potential Analysis’ (MPA). However, this will only make sense if both shareholder-managers are willing to take part in the process themselves.”

Agreement and Preparation: The Kick-Off for the MPA

The shareholders in Swabia agreed to our proposal. Just a few days after the initial call, we received confirmation, and the designated Chair, along with the two shareholders, approved not only the MPA project itself but also agreed—following discussions within the Supervisory Board—to participate in the process themselves, as we had recommended.

We agreed that in the first phase, the top 15 leaders would be included in the assessment. The official client for the study was the Supervisory Board, with its new Chair and the Personnel Committee acting as the group to which the results would be presented. It was decided that the Board Members themselves would not act as reference providers, nor would references from outside the company be collected. Instead, all participating leaders would also serve as reference providers and could each propose up to two additional referees, such as employees or colleagues from international locations.

A few weeks later, the entire process was introduced to the participants in a kick-off meeting conducted on-site by our consultants.

Open Questions and Initial Reactions from the Leadership Team

When it became known that the two managing shareholder-directors would also participate in the process, the perceived "buy-in" immediately increased. Particularly among the strong leaders – who later received excellent evaluations – the response to the project was notably positive. However, not everyone was immediately convinced. Some critical questions arose, particularly from participants who were perhaps hesitant to undergo such an external evaluation. One participant, for instance, asked: "Where do your consultants get the confidence to evaluate and assess a leader with 12 years of proven experience in just a three-hour interview?"

In response, the four AvS Advisors consultants involved provided a detailed explanation of the project, its objectives, their professional methodology, and their own credentials, answering all questions with the utmost transparency. It became clear that the evaluation would be conducted in an objective and fair manner by highly experienced consultants. This approach noticeably reduced the initial perception of the process as a "black box" in the eyes of the participants.

Conducting the Assessments: Structured & Confidential Interviews

Following the detailed information session, the interviews commenced, conducted by two teams of experienced partners. To prepare, participants had submitted their résumés, and where possible, the HR department provided additional position descriptions. The interviews were explicitly declared "airtight confidential" in advance. Later, the Supervisory Board received individual assessments identical to the reports shared with participants during their feedback sessions. However, it remained entirely anonymous who had made specific statements about the company, colleagues, the Supervisory Board, or themselves.

At first glance, the interviews appeared relaxed and individualized, but they followed a carefully designed structure. The consultants adhered to a clearly defined framework and focused on specific competency areas they systematically addressed. This ensured that each conversation was organized methodically, and all relevant aspects were explored professionally and thoroughly. This approach created a comprehensive picture that went beyond the dynamics of the discussion itself, capturing the participants' actual abilities and future potential.

More Than Just Competencies: Evaluating Leadership Potential

The consultants aimed not only to assess the candidates’ current competencies but also to evaluate their future potential. How do candidates respond to new, unforeseen challenges? Are they able to recognize and simplify complex relationships? In addition to intellectual curiosity, the focus was on attributes such as resilience, inner clarity, and the ability to respond flexibly – even in difficult situations. Another key aspect was assessing whether they could build individual relationships, engage others, and inspire and motivate larger groups.

To explore these areas in depth, the consultants took the necessary time to understand the candidates’ experiences and attitudes, asking targeted questions about specific examples. To ensure fairness, candidates who might not perform at their best on the interview day were not disadvantaged, nor were those who excelled at self-presentation unfairly favoured. To balance these dynamics, the consultants conducted additional, strictly confidential, reference taking. These references were also competency-based and went beyond simply asking whether someone was “good or bad.” Instead, they focused on specific examples: how has the individual driven or hindered change within the company? How do they organize their leadership and motivate teams to achieve exceptional results? How do they handle significant resistance?

The Analysis Phase: Evaluation and Thematic Consolidation

After the interviews, our consultants draft “Confidential Reports” based on their notes and gathered insights. These preliminary drafts are then meticulously calibrated within the full team of participating consultants. During this process, the consultants not only consolidate their impressions of individual candidates but also compile everything they’ve learned about various aspects of the company.

This often includes themes such as corporate culture, communication, the nature and quality of interdepartmental collaboration, or the overall morale and motivation of employees. It’s impossible to predict at the start of a project which of these topics will surface during the process. The goal is to condense the gathered information, calibrate individual observations, and separate politically motivated statements to assign them appropriate weight. The consultants also find it insightful to evaluate whether reference providers – who are often simultaneously candidates themselves – are capable of offering nuanced, balanced, and well-considered references.

Positive Aspects and Critical Insights: Focus on the Company

In this specific project in Swabia, many positive aspects became evident: the company boasts several key drivers and “entrepreneurs within the enterprise.” There is a strong willingness to make independent decisions and take responsibility. The ambition to win is clearly palpable, as is the high level of commitment across the leadership team.

However, there were also developmental insights for individuals and for the organization. The two equal-ranking family shareholders/siblings are not only very different in their personalities but also view each other – and their respective leadership teams – with a critical eye. One sibling carries significantly more responsibility for the company’s positive development, which leads to tensions. Across the organization, there is a noticeable pride in the company's pragmatic, action-oriented ethos. However, this mindset also fosters the perception that strategic planning belongs more to large corporations and could hinder the company’s “hands-on” SME mentality.

Final Presentation: Results and Discussions with the Board and Leadership Team

All individual reports, an overall summary of the leadership team, and additional themes identified by the consultants are compiled into a comprehensive final presentation. To ensure alignment, a preparatory meeting is held with the new Chair before the final presentation. The results are then presented to the entire Supervisory Board, followed by an in-depth discussion of the findings and insights.

Feedback sessions with the evaluated leaders, including the two managing shareholders, are promptly coordinated. These begin with a meeting to review the individual reports. Approximately two weeks later, once the information has had time to settle, a longer and more personal discussion focuses on career development and future perspectives.

Strategic Realignment: Decisions and Restructuring

The Supervisory Board used the time to thoroughly reflect on and discuss the insights gained. Ultimately, it officially appointed the previously equal-ranking “quasi-CEO” as CEO. In addition, a comprehensive strategic process was launched to prepare the company for its next growth phase and greater international expansion.

Organizational restructuring was also decided upon, resulting in an expanded management team and a reassignment of functional areas. A COO role for production, supply chain, and IT was created and successfully filled. Both the CFO and CHRO positions were replaced, with the new appointments finalized within a few months. An onboarding programme was developed for the new leadership team, and the Supervisory Board was supported in managing the succession of an NED retiring due to age.

Conclusion: The MPA as a Catalyst for Growth and Transformation

In the end, the Management Potential Analysis proved to be more than just an assessment of leadership capabilities – it became a catalyst for strategic realignment and comprehensive transformation. It enabled the new Chair to better understand and navigate the complex structures that had initially preoccupied him, paving the way for meaningful improvements.

The company gained clarity about its strengths and weaknesses, and found the courage to break free from entrenched patterns. The appointment of the new CEO and the restructuring of the leadership team provided the foundation needed for the next phase of growth. A newly-initiated strategic process laid the groundwork to position the "hidden champion" for further international expansion and success.

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