Family Business Quick Tip: Succession Planning
KENNESAW, Ga. (Aug 6, 2015) — Family businesses have a number of company and family-related decisions to make in order to grow and thrive and create lasting success.
To help better navigate the journey, I share with you seven key questions through our “quick tip” series of articles, the first of which appears below.
Question: Who will lead the next generation of your family business?
Quick tip #1: Succession is arguably the most critical issue a family business has to face. It’s also one of the most difficult. Complicated family dynamics and the emotional connection that leaders and family members feel toward their companies can make addressing succession a minefield.
Nonetheless, it’s important for family businesses to start thinking about succession planning early on. Our recent global survey, conducted in partnership with Kennesaw State University’s Cox Family Enterprise Center, studied the views of 25 of the largest family businesses in each of the 21 top global markets to learn more about this issue.
Our survey results showed that to ensure a smooth transition you should:
Clearly define who has the responsibility for succession
More than 87% of the businesses we surveyed have clearly identified who is responsible for succession, implying that processes to handle traditional transitions as well as potential emergencies are well in place.
Work steadily to prepare the next generation for leadership
Leaders report that work ethic, leadership and entrepreneurship are the most important attributes to nurture in the younger generation. To help ensure they are tapping the right family members for the leadership pipeline, family businesses tend to require at least three years of outside management experience before family members are allowed to assume managerial positions.
In short, there’s no avoiding succession — embrace it instead. If a family intends the business to remain in family hands, succession must be considered a process, not an endpoint.
Tell us: What challenges are you facing as you develop a succession plan for your family business?