Choosing the right successor is so essential to the long-term success of a family business that all three layers of governance should be involved: family, board, and CEO. The owners let the board know if they want the next CEO to be a family member; they also make sure that the family values are transmitted to the next generation. The board will review competence, screen CVs, interview the candidates, and at times act as mentors. The current CEO and the executive committee will groom the potential successors.
Grooming the next CEO is an important task of the CEO and the executive committee, not only because of its impact, but also because of the length of the process – another way in which family businesses differ from non-family businesses. In family businesses, it is frequent to see potential successors being groomed for a period of time, in excess of then or even 15 years. In family businesses, because the number of potential candidates is much lower, the process is more obvious to the entire organization and the heirs are more visible earlier in the process.
Having a clear established process during the long grooming time helps. Here are a few points to consider:
To read more about the details of preparing the next CEP, consider: Governance in Family Enterprises – Maximizing Economic and Emotional Success, by Alexander Koeberle-Schmid, Denise Kenyon-Rouvinez and Ernesto J. Poza, Palgrave Macmillan, ISBN 978-1-137-29389-3, http://www.palgrave.com/products/title.aspx?pid=649676, entitled to a 20% discount with the promotional code WORLDPALGRAVE20 if ordered through http://www.palgrave.com.