When an employee follows in the boss’s footsteps
Thomas Deininger could have sold his personnel consulting firm for a good price. But he wanted to arrange the succession differently. By Inga Janović
The next few years will bring plenty of opportunities for those looking to realize the dream of owning their own business – without having to found a startup. According to calculations by the Institut für Mittelstandsforschung (IfM) in Cologne [sic], a generational change is coming up at 14,600 businesses in the state of Hesse in the next four years.
And yet, according to a survey by the Hessian ministry of economics, more than one-third of business owners (39 percent) don’t know how the step is supposed to go. That is a substantial number that is causing experts and business associations to sit up and take notice, since passing the reins at a company takes five years on average. They caution that if people don’t start thinking about the future early enough, they run the risk of the business failing, even if it is doing well – especially since demographic trends haven’t made the succession issue any easier. Ideally, that will also hold true for Joy Edwin Thanarajah (34), who has some big shoes to fill, as he says himself. At the start of this month, his former boss, Thomas Deininger, officially turned over responsibility for Deininger Consulting, a personnel consulting firm with 120 employees that is headquartered in Frankfurt and operates branches in Berlin, New Delhi, Düsseldorf, London, Mumbai, Shanghai, and Warsaw.
The two men are a rarity of sorts in matters of corporate succession: According to the survey, only five percent of respondents can imagine one of their employees buying the business and continuing to operate it. That means this option is considered even less often than selling the business (eight percent). Still, Thomas Deininger views it as the best route to ensure that not only does the company live on as a legal and economic construct, but so does the culture with which customers are familiar: “I definitely wanted to arrange for the succession internally,” he says. He had always turned down any acquisition offers he received. Since 1981, Deininger has been placing employees for the upper levels of the management in particular with his clients. Banks in particular, but also construction companies, automakers, and hidden champions from the medium-sized business sector come to him for support when they are looking for skilled workers and executive staff. The transition will not come as a surprise to Deininger’s clients, either. Thanarajah and Deininger, who was born in 1944, have been laying the groundwork for this step for several years now, with the junior manager having joined the company’s executive management in 2020.
Before naming one of his employees as his desired successor, Deininger scrutinized Thanarajah, who was born in Sri Lanka and grew up in central Hesse, going on to study business and economics. He had joined Deininger Consulting some 15 years before. A succession decision isn’t something you make “right away,” the senior manager says. But over the years, he came to feel more and more that Thanarajah embraced the company’s culture with the same seriousness as Deininger himself. “Passing the reins to the next generation in this way means I am giving my company a long-term perspective,” says Deininger, who notes that he no longer holds any stake in the company. But he doesn’t want to stop working entirely. “In this industry, you can’t just drop everything and go.” Still, he will be stepping back from the operational business. “Now I just need to think of the successful step for the next 20 years,” says Thanarajah, summing up his job. As he moves forward, he will certainly be building on Deininger’s preliminary work on digitalization, where he himself played a role as well. Starting in 2010, the newly minted entrepreneur was in charge of the Research Center, the consulting firm’s research arm. Deininger turned to the Internet and databases well before others, hiring more than 20 people specifically for online search and contact activities and, over the years, building up a substantial collection of digital information encompassing profiles, contacts, and corporate knowledge. It is a collection that now guarantees, in a way, that Deininger can place executives or engineers who fit the target company, not just with their qualifications, but also by nature.
Deininger is also careful to point out that computer knowledge can never trump a consultant’s knowledge of people. The human factor remains crucial, he says.