Emotion is close to the surface in families. It’s why so many family businesses make a mess of succession planning.
If it’s a farm, it’s much more difficult as the family home, with all the memories associated with it, is almost part of the business.
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But whereas families are driven by love, a business is driven by logic and reason. Family decisions are, or should be, focused on maintaining harmony and securing the personal future of each family member.
By contrast, business decisions are aimed at building long-term profitability and growth. What’s good for the one, may not be good for the other.
Good succession planning is a prerequisite for business success, yet so many family leaders don’t get it right. I’ve often wondered why otherwise competent people ignore the need to prepare future leaders and managers to take the business forward when they’re no longer around.
In some cases, they’re so caught up in the frenetic day-to-day running of the business that they don’t stop to think about this, and become victims of the classic ‘giving priority to the urgent and not the important’ dilemma.
In other cases, it seems they simply don’t know how to deal with the task, and keep putting it off.
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Then there are those ‘hard cases’, in which the successful one-man band entrepreneurs believe that they’re indispensable and refuse to consider handing over the reins.
In most cases, I suspect it’s probably a mix of all of these, exacerbated by the fact that the owner can’t face the stress of choosing a successor and having to overlook others. This is always a wrenching decision for a family!
Yet there are examples of families who make a seamless transition from generation to generation. They don’t build businesses, they build dynasties, retaining control of the business.
They support and enable each family member to develop to their full potential in the field of their choice, whether in the family business or elsewhere. As I’ve said before, succession planning is not rocket science. There are well-established guidelines and principles for success.
A smooth succession
While there will be differences in emphasis in each of the following steps, families that have been successful in passing on the baton, as well as experts on family businesses, all agree these are essential to a smooth succession:
Talk about it
Make it a habit to talk frequently and openly about the need to plan carefully for succession in the business, so that no one worries about raising the issue. It’s particularly important for the family and business leaders to talk about the days when the latter will no longer be around.
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Keep business and family separate
Use every opportunity to emphasise the difference between the business and the family, and as far as possible, keep discussions about them apart.
Start the process early
Introduce family members to the subject no later than their early teens. They should realise that while they stand to inherit a right to ownership, they have no right to a job in the business.
Set up a formal ‘family forum’
Use this forum to discuss the subject of succession. Family members should be assured no one is obliged to take up a job in the family business, but if they do so, they’re guaranteed consideration for leadership positions. Also use the forum to ensure everyone understands the unique complexities of their situation.
Develop a succession plan and time frame, and stick to it
Take this step with the help of an outside adviser who carries no family baggage.
Develop criteria for a job in the business and then provide the necessary training and development
