Succession may be one of the most critical times in the life cycle of a family business. Thoughtful business owners realize they have a responsibility to the employees and stakeholders of the business and their family to make sure they do succession planning right.
Most business founders and entrepreneurs have a high level of confidence given their track record of success. Owners might be doing their family a disservice to enter into the succession process if they’re feeling overly confident. However, they can help themselves by stepping back and giving it more thought.
After working with numerous transitions over the past 20 years of family business coaching, I’ve found three steps that are invaluable to achieving success:
Give yourself enough time
Be transparent and outline expectations
Put together a process
Give Yourself Enough Time
The first mistake so many clients make is to think that they can make the succession process happen in a short amount of time. A succession plan done well takes a significant amount of time.
Additionally, and perhaps more importantly, is to give yourself enough room to have a hiccup or mistake.
Case in Point: I had a client who had been in the succession process for a few years. They thought they had their successor identified, trained and in place. There was a major breakdown in the new leader’s results. Unfortunately for the client, they had to go back to square one and start over. It was an important lesson that I have tried to share with every client. Leave yourself enough room for a hiccup.
If you think your goal is to have a successor in place in five years, get started and perhaps have the successor in place in 3 1/2 or 4 years. This will give you a year-and-a-half to make sure you chose the right leader.
Be Transparent and Outline Expectations
One of the most important things is to outline expectations. Many people think they should be considered a successor. When a good, clear set of expectations is laid out it might become more evident that some people are not qualified.
Also, don’t forget that what was needed in the role of president for the company 15 or 20 years ago might be entirely different now.
Many of the businesses I work with have become larger and more sophisticated. The requirements of the CEO have become more demanding as well.
The company leaders should sit back and put together a realistic set of expectations in terms of experience, skill, temperament, etc. to fill the role of the successor.
Put Together a Process and Consider Getting Outside Help
It’s important to put together a process for several reasons. Most founders or owners have little or no experience putting together a succession process. You wouldn’t try to build an addition on your home without plans or getting experienced professional help. Succession in your family business may be one of the most important moments in the business. You don’t want to make rookie mistakes or try to do it without leaning on the experience of outside professionals.
Having been involved in many transitions, one of the things that the successors want is a timeline and a process. Without a timeline and a process, even the most qualified and dedicated potential successors could become disenchanted, unmotivated or a flight risk.
You owe it to good, talented and dedicated people to give them a timeline and process.
Coaches Insight: Put your ego aside and make sure you don’t shoot from the hip on one of the most important moments of your business career and your family’s future. Start early and find a trusted professional who can help shepherd you and your family through the process. Succession planning is one of the exercises in our Family Business Playbook.
Pete Walsh is a demanding, courageous and playful Master Coach in Phoenix, Arizona. He is the founder of Peak Workout Business Coaching and the Family Business Performance Center. He can be reached at email@example.com.