Succession Management
Succession planning
As every family – and its business – is unique, so is every succession plan. However, the following checklist covers the main issues that every family will want to consider:
- Long-term family goals: should the business be kept in the family, sold, or taken public?
- Management philosophy: should the business be run in the best interests of the family, the business, or a combination of the two? Should the board of directors include people from outside the family?
- The family’s role: if family members are to enter the business, establish criteria for their roles, including performance standards and pay – together with share-ownership parameters for those not involved.
- Management succession: it is critical to agree criteria for the next leader – and a timeline for transition. The founder should use this opportunity to define the role that he or she plans to play after relinquishing control.
- Relationships within the family: to enhance mutual respect and support, create a network for family members not involved in the business.
Communications
Effective communications will be an important element in succession planning. A family council is a useful way of facilitating this.
An organised forum that allows family members to participate in policy making, the family council enables them to establish ground rules for their ownership of and involvement in the business.
The council is helpful even if family members do not agree on every succession issue. It provides each member with a voice in the process – and a structured means to assess possible solutions, re-think problem situations, and focus on difficult issues.
