“Succession planning doesn’t have to be complicated”
We all know we need one, but why is it so hard to prepare a succession plan? One of the most common reasons is the difficulty in just getting the process started.
Good news. You may have already started without even knowing it. Try using an existing company organization chart with some modifications as a starting point. More…
“In real-life, few family businesses really formally prepare the next generation for leadership”
As the younger generation takes on a more active role in the family business we need to better define their job positions and responsibilities to avoid conflict. In real-life, few family businesses really formally prepare the next generation for leadership, because it’s a little like succession planning where it’s often treated as a process you need but don’t want to work on. Avoiding the discussions increases the likelihood of future job role confusion and conflict and having a higher number of family members entering the company than the business can support.
What risks are there to DOING it?
- Spark up family conflict
- Create unhealthy competition between family members vying for increased responsibility
- Potential for compensation discrepancy issues between family members
What risks are there to NOT DOING it?
- No real strategic direction for the leadership of the company
- Not financially viable without having the right people in the wings to manage and grow the family business successfully
- Risk not having next leadership prepared for taking over in an orderly way
- Create concern for outside lenders with no clear founder succession plan
- Might create the unplanned need for an interim CEO
- Risk over-hiring family members and having to grow the business faster than desired to absorb higher payroll or worse have to terminate family members and “prune the tree”
Five Takeaways to make the transition work
- Identify Future Top Job Positions – Create a Future Organization Chart
- Determine the Best Job Candidates – Family and non-family Members-Be objective
- Anticipate Potential Trouble Spots – Sibling conflict, compensation inequalities, role competition
- Prepare Comprehensive Development Plans for Incoming Generation-Skill, education and experience gaps
- Gain Acceptance from Related Parties-Family members, employees, suppliers, customers, advisors