Recently, we talked about how important it is to implement replacement planning in your family-owned business.
So you should have skilled, trained back-ups in place in case you or any one of your senior management team is absent (whether for the short-term or long-term), your next step should be to start thinking about succession – that is, who is going to take over the reins when you’re no longer around.
Building up your company has been a lifelong labour of love. You may not have gone into business with the goal of leaving a legacy, but now that you have a successful family enterprise, that’s exactly what you should consider.
The last thing you want to see after all those years of blood, sweat and tears is seeing all your hard work unravel. In fact, as Jack Welch, business guru and former CEO of General Electric, points out, choosing a successor is the most important business decision you’ll make.
Unfortunately however, second-generation business failure is an all too familiar scenario amongst family businesses which fail to take succession planning seriously. Let’s consider what will unfold, assuming you have no CEO succession plan in place:
It’s clear that not having a CEO successor in mind leads to an unnecessarily lengthy and complicated transition phase, which impacts significantly on your family business. To ensure a smooth changing of the guard then, take these steps:
Talk about it. Don’t let succession be the elephant in the room; nothing creates uncertainty and destroys trust more than being kept in the dark about the future.
Listen. Get the thoughts of family members – what role do they see themselves playing going forward? Hearing what non-family staff members have to say can also be illuminating.
Watch. Who impresses you with their skills, knowledge and attitude, and who doesn’t?
Select. Once you’ve identified your candidates, invest in their development and training.
Prepare. Have your successor work alongside you for as long as possible.
Delegate. Don’t hold onto all the power; slowly start delegating more responsibilities to your successor.
Support. Stand by your choice; be a sounding board for their hopes and fears, guide their decisions and don’t undermine their efforts.
Take care of the paperwork. Ensure that all legal, financial and organisational issues have been properly attended to.
Step aside. Set a time frame for your eventual exit and, when the time comes, depart with grace.
Worst case scenario – you’re struck by lightning on the golf course. What now? Even family businesses should have an emergency CEO succession plan in place.