Key issues in succession planning GroupMap -ed! Tips from the Family Business Guy.
What happens when a business needs to choose a new leader?
Unfortunately, sending contenders to tackle Sampson-like challenges – displaying feats of valour to win title to the throne – is simply not an option. Besides… we don’t have a steady supply of cyclops.So who taps the shoulder and continues the dance? As businesses transition between CEO’s, management and ownership, those tasked with following the lead will face moments of uncertainty, however brief. They need to adjust to the new style and techniques of the new person in charge. When we asked 20 entrepreneurship students to tell us what issues should be considered, their top issues were leadership capability, culture, shared vision and timing. (See their GroupMap) Now we are not talking just about multi-national firms like Apple with transitions from Steve Jobs to Tim Cook. Many of the ideas were raised by people in family businesses and could be potential successors.
The results of what were considered to be key issues was derived by each of the 20 participants individually creating and sharing responses, which was then aggregated using an online brainstorming and group response tool.
Ideas were collected anonymously and individual maps were used to remove edit wars. The relative size of each issue is proportionate to the number of respondents with a similar view.
We invited John Broons, better known as the Family Business Guy, Chair on a chapter of The Executive Connection and advisor to Family Business Australia to give us his top tips on the issues. Here’s what he had to say…
Expertise isn’t necessarily in the blood, although obviously it can be nurtured at a young age. Getting the technical ability and industry knowledge gives confidence to staff as well as customers Certainly a good strategy is to send successors “out” of the company to demonstrate their ability to get a job, get promoted, lead and learn externally and then return with innovative thinking, a greater appreciation and a good network.
Culture ( trust and communication)
The current culture serves as a pretty good indicator of what is talked about in terms of succession planning. Are there open frank conversations about equity splits, fairness between siblings and current management staff and structured family charters? Or is it a taboo subject clouded further by misconceptions, consipiracies and hearsay.
Will the successor share the same values, believes and vision as the founder or previous owner. Does this matter or is a change inevitable, necessary and strategic? What’s certainly needed is a shared vision between the staff and management and the new leader. Much of this relies on both the current incumbent and the new successor taking every stakeholder on that journey.
Ideally, you want to start early , have a structured pathway and have an identified timeframe for exits and transition. When’s the right time to start? Probably now.
Something that stood out was certainly if they aren’t out by 70, they are never out!
These factors can certainly be tricky if they are further complicated by the paternalistic nature of family run businesses. The formalities of the actual transition however, may offer some respite, at least in the structured considerations and the conversations that should occur. Issues like tax arrangements, business valuations, share transfers, and risk planning puts a slightly colder perspective on conversations which may otherwise be close to the heart. (See more things to think about here)
As it happens, this author has previously worked in 3 family controlled busineses ranging from a small consulting firm through to a billionaire couple, all of who faced some succession planning issues. Walking the line between the business professional and tribal loyalist mindset during this time requires a good dose of emotional quotient and a few mental lines in the sand. Looking at the ways succession planning occurs (or does not occur) in these organisations certainly leaves room for improvement. The conversation needs to happen, so the question is what triggers this for each company.
Think you have some good ideas about how to better handle succession planning issues in your organisation? Share them here.