The government’s decision to avoid further conflict on the debt crisis by putting off key budget reform until next year, reminds me of family businesses who put off succession planning until it reaches a crisis.
Many family businesses avoid succession planning discussions and allow it to just happen. However, unlike the budget, succession planning does eventually happen in one way or another.
The biggest reason we avoid succession planning is it forces us to discuss the most sensitive issues and make even more difficult decisions. This often leads to increased tension and hurts relationships within the family. The perception is that the business consequences of avoiding the issue aren’t worth the personal consequences.
There are other reasons firms avoid discussing succession:
- the founders sense of immortality
- the burden of the process
- the relevance of an event that happens too far in the future
Unfortunately it usually takes a crisis to get everyone’s attention. One way to demonstrate the seriousness of not having a succession plan is to conduct an exercise with your family to see what would happen in the event of a crisis to the founder in your family business.
In our exercise, we analyzed a case study with business roundtables.
- Each roundtable appointed a spokesperson to report on the group’s findings.
- Towards the end of the case study discussion the spokesperson was pulled from the group and asked to leave the room just before giving their report.
- The group was then asked to appoint a replacement spokesperson to report their findings.
- Most groups got anxious and panicked because they had relied on the spokesperson to keep notes. Many hadn’t been actively listening and weren’t prepared to share the group’s discussion.
The exercise demonstrated in a simplistic way the importance of preparing others to take over in a crisis. Or, in family business terms, the importance of preparing the next generation to take over in the event of the loss of the founder. This pulls the succession planning discussion into a more immediate, more relevant time frame that helps to get the process kick-started.
So I’m wondering … who will complete it first, the government passing the budget or family businesses creating their succession plans? The betting windows are open.