Succession is a term used by many people for many different things. Here we look at what succession is all about, some of the challenges and some of the myths too!
Can you really create a list of dos and do nots for successful succession planning? And precisely what IS succession planning? So many people have a perception of what that means to them and even then only 4% of respondents in our 2015 research actually had fully communicated and documented plans for the future.
To be controversial we try to avoid the term and focus on designing and building robust future proofing strategies – for the family, individual and business. But here’s a few of the ‘myths’ we come up against in working with family and owner managed enterprises when exploring the “succession dilemma”
Succession is tomorrow’s problem.
Putting the subject on the back burner believing we don’t need to worry about it because there are years to plan is dangerous. You risk the unexpected catching you out – in extreme cases the key family and business person being taken seriously ill or passing away. The majority of family enterprises are owner managed and extremely hands on dealing with the day to day challenges of the business.
It is vital to always be considering the “what if…” question and scenarios. All business leaders, even as a 30 something founder of a new business, have a responsibility to think about this from day one. It’s vital to take time to work on the business as well as in it.
Succession is about appointing the next leader.
Succession is not about passing the business to one person but considering holistic future planning and protection. It’s vital to consider ownership, business, individual, family and wealth needs and wants. The best succession strategies look at skills, market conditions, opportunities, investment, R & D, evolving society, technology etc as well as the family role and the wishes of those impacted by the business. We would rather have people focus on future proofing and transitioning
Succession = one in and one out
We would also ban the term retirement, it no longer means “pipe, slippers and death”. Transitioning is about having a developing strategy to carefully evolve the roles played for new and existing people at all levels of the organisation. Successful processes ensure that there is room for the incumbent generation as well as the future generation – both are as vital. Designing the strategy allows everyone to influence and understand their next phase and it should be gradual and done with support for all and open communication.
Succession is a big deal with a plan
No. Succession is a living breathing process of transferring knowledge, experience, values and much more – not just to a newer generation but also up to the incumbent generation. We should never stop learning and it’s not about creating a one off plan.
It’s a process with supporting strategy which should be reviewed and developed on a continual basis. From founding generation to multiple generation, each should be adding value as they pass it on and this should be part of the discussion.
Succession is something I’ll decide on and let other know about when I’m ready
It’s rare that one person deciding on a how the future will be, especially when they won’t be part of it, works well. It is very much an inclusive process that should involve all those that influence and are influenced by the business and future decisions.
It’s vital to have buy-in from everyone or at least involve them in the process as this is a huge opportunity to consider ideas you’d not thought of and also to share the burden and responsibility. This approach allows relationships to be strengthened rather than undermined and opportunities to be seized.
Succession is a family only matter
No. Traditionally family enterprises would keep plans to themselves. Employees aren’t daft, they know that the MD or CEO is 80 and nothing has been done to ensure longevity and the future – and so guess what… they’re looking for new jobs. The best businesses with successful transitioning strategies involve their often loyal employees and certainly keep them informed to reassure them.
Succession is something we will sort ourselves
We work with many families and businesses who have been trying to work on a strategy themselves for up to 10 years without success and spiralled into toxic situations as a result. Some do involve their professional advisers but are trying to fix issues that they don’t really understand and don’t really want to face.
When you’re within the process it’s very difficult to overcome the dynamics and emotions and see the complete picture. Even those that believe that they have created a great strategy usually head in the wrong direction because the process was flawed. Using specialised neutral support can save time, money, frustrations and relationships as well as giving piece of mind. Family enterprises very often internalise and are the wrong people to “solve the succession dilemma” themselves.
To ensure a successful process, plan and outcome using neutral support is usually the very best way.
Succession strategies are good enough
We always recommend that any future planning and strategic development is supported by suitable protection such as a family charter or constitution and Shareholders Agreement. Creating the rules to play by is simple when everyone is sharing the vision and onboard. When things go awry or take you unawares, that’s when documents and protection can be so useful. Believe me, we see so many examples of this happening even for the closest most loving families.
Succession is just for family businesses
There are many things that family enterprises can teach us and the importance of future proofing your organisation and building a robust transitioning strategy is one. We see professional firms, public companies, schools, public sector organisations and more all struggling with precisely this.
What ever you think ‘succession’ looks like, have you really considered the future for you, your family and your organisation?