It’s vital for every family-owned business to have an official succession plan in place. Simply put, succession planning in the context of family business involves preparing the business for transition into the hands of the next generation. The succession plan maintains continuity and ensures that the family’s legacy remains successfully intact, even when critical positions within the company open up unexpectedly.
Succession planning requires a company-wide purposeful course of action that identifies and develops human resources from within the company; those who have the potential to step into critical positions as and when required.
The process is easiest when a Succession Planning Manager is appointed to compile and take ownership of the business’ succession plan from the start. Ideally a member of Senior Management, this person should be able to connect the succession plan to the long-term goals, as well as the values, vision, and future of the family-owned firm.
The image below, courtesy of the official state web portal of Colorado, illustrates a typical succession planning procedure. It depicts the steps involved in identifying and assessing candidates for succession and an effective rollout for the process.
Workforce planning focuses on the right people in the right jobs, ensuring that staffing levels and competencies match up to the number of people and skills needed to meet the family business’ long-term objectives. Managers will strategically identify staffing needs and the actions that need to be taken to maintain an effective workforce.
Workforce planning can be a useful tool in determining long-term strategic objectives, retirement forecasts, turnover rates, expected vacancies, and identifying critical positions.
Critical positions are those roles that are indispensable for the effective functioning of the business, and when left vacant, negatively impact the business’ ability to achieve its strategic objectives. These can be expected (retirement) or unexpected (resignation) vacancies.
In order to identify these roles, you might want to ask:
A critical position is usually difficult to fill because it requires specialised expertise and experience, and the responsibilities of this role are usually unique to that specific job. That’s why it’s best to start planning early.
Every role in a family business has certain expectations attached to it – in terms of required knowledge, skill set and ability. These ‘competencies’ are crucial to recruiting because candidates will be measured against these requirements in order to fill a position.
The Succession Planning Manager needs to formally assess the aptitude and skills levels of each department in the firm and the internal talent already available in order to identify their readiness and competency to fill the gaps left by departing staff members in critical positions.
It’s also important to review current job descriptions, and employees who would have a good understanding of their current position and the competencies most relevant and/or critical to their job. The Succession Planning Manager should interview supervisors and team leaders in order to explore the skills and strengths that a potential candidate would need in order for promotion into a critical position to be viable.
Determining key competencies sets out minimum requirements, and a benchmark against which to measure potential candidates.
Communication is key to the effective rollout of the succession plan. The Succession Plan Manager will need to work with Human Resources to design and implement development programme options, strategies, and activities, and thus it’s important to have executive management’s support and the buy-in of a Succession Planning committee or board of directors.