Succession Planning

A Plan for Succession

WE’VE ALL BEEN THERE. We’ve all felt the uncertainty at some point in our careers. What’s next for me? What happens if the company were to close? Who is taking over after our owner retires? There seems to be so much ambiguity and maybe even some assumptions. But it’s all speculation. Because no one is actually talking about it. It’s unclear and it’s frustrating. But you’re not alone. Companies every day struggle to put together a future picture. A plan for succession.

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Family Business Succession Planning

Succession planning is a process that every organization needs to be thinking about and working on throughout the lifecycle of the business. However, succession planning in a family-owned business has some unique challenges and considerations. More often than not, more than one family member is working in, invested in, or associated with the business. When your business associates are the same people you celebrate special occasions and holidays with, you need to be even more intentional about not damaging relationships in the process.

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We’re Leaves On A Vine

Think of the leaves on a vine as they grow up the side of a building. They’re beautiful. They blossom, they grow, and eventually, your entire building is covered with them. As the autumn season approaches, one by one, they start to turn colors. Some yellow, some red, some brown. So many leaves to admire, and every time we look at them, we think of the beauty they bring. Then they start to fall off. Until only a few are left. What will replace them? Naturally, new leaves blossom and grow in their place. They start out small and then repeat the cycle.

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Succession Connection

The moment we hear that business leaders and executives are working on (not just talking about) succession planning and building talent depth charts, we are ecstatic! Because the truth is, many talk about it, but don’t put any action behind the words. Sometime in the future, we’ll hear, “Yeah, we were talking about creating a succession plan for that role. We just never got around to it.”

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Family Business Matters

The family business is as American as apple pie and the Fourth of July parade. Companies such as Ford, Marriott and Wal-Mart are only a handful of family-owned, corporate giants that come to mind. And although there are more than 100 million family businesses in the United States, only about 30% of family businesses survive to the 2nd generation, and 12% to the third.

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Tough Decisions: The Next Generation of Leaders

I was recently asked this question by the owner of a family business with four sons working in the firm: “How do I choose which one will run the business?”

Wow! There are so many ways to answer this question. Family business succession can be complicated. My first response was to ask, “Who wants to?” To which the owner did not know the answer. So that is a good place to start; however, there is more running the family business than just who wants to.

When deciding who should be the next-generation CEO and who should play supporting roles, let’s take a look at a few of the tough decisions at play here.

The owner may be asking several questions: Who can run the business? Who wants to? Do we have the talent? Do we expect that they will want to?

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How To Create A Succession Plan

Stop and think… do you have someone to replace key employees if they suddenly left? A lot of companies don’t. When we have discussions with our partners, we’re often asked that magical question: How do we create a succession plan?

Finding the right person to fill key roles is one of the greatest challenges of leaders.  Please take note: a replacement plan is not the same as succession planning. It takes time to develop people; giving them experience and strong mentoring.

Succession planning – the act of identifying and developing candidates for key positions within your company – is vitally important responsibility of every manager, leader, and board member. The crazy truth is that leaders know this, and it may even keep them up at night, but very few do much about it. Is it for lack of time? Is it because they have higher priorities? Or is it because they don’t really know how to create a succession plan?

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Should the business stay in the family?

This is a question that most business founders must face at some point in their lives. Family business planning is the process of selecting and preparing the right person to lead the family firm into the future. The average life of a family-owned business is about 24 years, usually ending when the owner/founder retires or passes away. Reportedly, approximately 30 percent of family-owned businesses survive the succession from the first generation to the second. And only ten percent to the third generation. By 2019, the number of family-owned companies that will transfer from the first generation to the second will be the largest the world has ever seen.

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The future of your company is NOW!

You have a great management team. They’re well trained and provide great leadership to their direct reports. They make great decisions. They are passionate about what they do and there is very little coaching needed to help them reach the company goals. But wait…How many of them will be retiring or leaving your company in the next five years? Have you done any future planning?

Most companies have invested time and resources to develop the leadership team. It probably took years to find just the right mix of diverse thinking, skills, communication styles, and talents. It is an art to find just the right mix. But how long will it last?

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Weak Bench Strength

Working with businesses across the country, we hear a lot of talk about preparing companies for the exit of their most senior managers…but sometimes it comes with very little action. What’s up with that?

When you ask many company owners who will take over for them, they usually answer with, “I don’t know! I don’t know of anyone who is like me.” After conversations like this, the action is thinking and talking, but usually no change.

So here’s what you do…

Start hiring the right people.  Hire what you need, not replace who you have.

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