Prepare the Next Generation
Originally published: 08.01.14 by
8 key steps to an effective succession process
David, a dapper looking 60-something company founder asked
if I’d spend some time talking to him about the future of his business. David has two
sons and two daughters, all of who are working in the company. He married late
in life and his children are still fairly young, ranging from 18 to 30.
children have all different personalities and skills and he’s not sure which,
if any of them, should run his company some day.
is the oldest. She likes working in the company, but is quiet and shy and would
hate to manage people or make some of the tough decisions. Jerry is a hard
worker, but he’s aggressive and tough, and really hasn’t earned the respect of
his co-workers, which David fears could drive some of their key people away.
also not sure what his youngest, Sid and Kari, will be like as they mature. He
simply doesn’t know what to do.
and/or identifying the appropriate successors in a family-owned business can be
both challenging and exciting — and, in some cases, a source of conflict and
frustration. Many parents are understandably fearful of creating a rift by
choosing one child over another, or admitting none of their children are right
avoid the negative aspects that can lead to confusion and disharmony, effective
succession planning should consider a number of key components, such as
planning for the future of the business, planning for the retirement of the
owners and planning to train and mentor the next generation of leaders.
first step in developing an effective succession plan is the development of a
short and simple vision for the future. This should include a discussion on the
long-term potential of the company, identification of the business goals and,
in parallel, development of the desired roles and financial goals of the
process should begin about 10 to 15 years prior to the desired succession date.
This way, the family can develop financial and estate plans to support their
needs and help realize their dreams. In addition, they can build a business
capable of succeeding after they’ve moved on.
well-managed succession is a nonevent — so well planned and implemented it’s
not a diversion from normal operations. It’s an evolutionary process that
occurs over time and is designed to enable the business to meet its strategic
families will carefully groom an existing family member for this role and
others will choose to hire senior expertise from outside of the company — it
all depends on the needs of the business and the skills available within.
the basic strategic plan (the vision and goals) is complete, a small business
can use this as the foundation for one of the most important discussions that
will ever take place in a family-owned or closely held business: deciding what
key skills and attributes are needed in the future leaders for the company is
to meet its strategic goals.
the following steps as you design your own plan:
- Discuss the importance of ensuring the leader, or leaders, in the company
possess the necessary skills for success, rather than simply passing the reins
to family members. The earlier you have this conversation with your
children, the easier it will be discuss a variety of options for future
- Focus on the skills needed in the future, which are not necessarily the
skills required today. Dad may have been a whiz at making widgets, but that
might not be necessary in the future. Perhaps the new leader should have sales
experience or outstanding people skills.
- Determine whether or not family members or employees
possess the appropriate skills and/or can acquire them. Focus on skills, not
family membership, age or status.
- Consider providing the potential successor with
experience outside the family business to hone their skills, learn new
management techniques and build their network of mentors and advisors.
- Create a personal development plan with input from the potential successor to
ensure the on-going attention to skill development and continuous improvement.
Identify potential mentors or coaches who can add value to the process.
- Consider forming a Board of Directors and/or Advisory
Board to provide a broader management perspective.
- Develop an agreed policy for reviewing the performance and compensation of the
successor well before it becomes an issue. Remember, it’s best to deal with
emotional issues before emotion becomes the issue.
- Develop a document that clearly describes the changing roles and responsibilities
of the current leader and the evolving roles and responsibilities of the
the next generation of leaders need to possess many of the key attributes that
made the company successful in the first place — passion, commitment, curiosity
and a willingness to learn on the job — they’ll also need to recreate
entrepreneurial wonder while inspiring others to build a successful business.
simply can’t be left entirely to family members, but instead must focus on
finding and grooming the right person based on skills rather than bloodline.
Lisë Stewart is founder and director of Galliard Group, a training and
consulting firm specializing in family-owned and closely held businesses. She
is a nationally recognized author and speaker who draws on more than 25 years
of experience to share practical advice for ensuring sustainability of family
businesses. You can reach Lisë at email@example.com.
Articles by Lisë Stewart
Develop Leaders in a Small Company
Once you’ve taken the time to list the important skills and the types of knowledge needed to execute your plan, move toward activities that provide your team members with multiple opportunities to grow.
Forget Succession Planning — Plan for Success Instead
Succession planning means planning for the long-term success of the business.
Time for a Difficult, but Necessary Conversation
An important aspect of both business and personal planning is to explore your values concerning money, and the values of your spouse and/or business partners.
Breathe Life Into Your Strategic Plan
A strategic plan should be a living document — with a solid foundation in the form of a clear vision for the future and short list of the core values that drive decision-making in the company.
A New Way To Do Performance Evaluations
Helping people work together to improve the overall performance of the company can be a rewarding and exciting conversation. Many employees don’t really understand what is expected of them, and aren’t sure what to do to get the results their manager expects.