Building up your company has been a lifelong labour of love. You may not have gone into business with the goal of leaving a legacy, but now that you have a successful family enterprise, that’s exactly what you should consider.
The last thing you want to see after all those years of blood, sweat and tears is seeing all your hard work unravel. In fact, as Jack Welch, business guru and former CEO of General Electric, points out, choosing a successor is the most important business decision you’ll make.
Second-generation business failure – familiar?
Unfortunately however, second-generation business failure is an all too familiar scenario amongst family businesses which fail to take succession planning seriously. Let’s consider what will unfold, assuming you have no CEO succession plan in place:
- Your exit suddenly plunges the business into crisis mode; with the familiar captain no longer at the helm, it’s panic stations for the crew
- Chaos ensues and confusion reigns, creating a climate of instability
- Your customers don’t get the service levels or quality they’ve come to expect from you throughout the years
- Organisational in-fighting intensifies as family members and other staff jockey for position and fight for the spoils
- Your competitors get whiff of the crisis and circle in like sharks, luring customers – and even key staff members – away from the business
- In the event of your death – and in the absence of provisions being made for it – legal and tax issues could prevent your family business from continuing trading
- Eventually, the business is wound up, sold, or liquidated.
Handing over the baton
It’s clear than not having a CEO successor in mind leads to an unnecessarily lengthy and complicated transition phase, which impacts significantly on your family business. To ensure a smooth changing of the guard then, take these steps…
Talk about it. Don’t let succession be the elephant in the room; nothing creates uncertainty and destroys trust more than being kept in the dark about the future.
Listen. Get the thoughts of family members – what role do they see themselves playing going forward? Hearing what non-family staff members have to say can also be illuminating.
Watch. Who impresses you with their skills, knowledge and attitude, and who doesn’t?
Select. Once you’ve identified your candidates, invest in their development and training.
Prepare. Have your successor work alongside you for as long as possible.
Delegate. Don’t hold onto all the power; slowly start delegating more responsibilities to your successor.
Support. Stand by your choice; be a sounding board for their hopes and fears, guide their decisions and don’t undermine their efforts.
Take care of the paperwork. Ensure that all legal, financial and organisational issues have been properly attended to.
Step aside. Set a time frame for your eventual exit and, when the time comes, depart with grace.
Emergency CEO succession planning
Worst case scenario – you’re struck by lightning on the golf course. What now? Even family businesses should have an emergency CEO succession plan in place.
- Identify the top five criteria for interim leadership of your family business.
- Identify who in your senior management team meets these top criteria.
- In the event of a crisis or emergency, nominate one (or perhaps two) people who will fulfill the leadership role(s) in the interim.
- Consider your CEO emergency succession plan as top secret and on a need-to-know-basis only.