The Best of Intentions: Implementing Your Succession PlanBondBeebe
Posting by Geoffrey D. Brown, CPA
The New York Times’ You’re the Boss blog recently shared an insightful post on businesses that had no succession plan, and how the children coped when they inherited these businesses. The second generation of leadership has a lot to say about how these situations have affected their own approach to succession planning.
Many of these leaders are determined to transition more effectively to the next generation. One comment in particular struck a chord with me:
Jessica Johnson inherited Johnson Security Bureau, which both her grandmother and her father had run. Neither left a succession plan, contributing to some unresolved challenges that Ms. Johnson cannot discuss. However, she said, “It’s one thing to have a succession plan,” and another to follow it. Questions of interpretation may also arise, she said. “You can have the best intentions and put that on paper, and then how do you make sure it comes to fruition?” she asked. “That’s one of the major challenges of succession planning.”
You may think that you will encounter few, if any, succession challenges because you have put a plan in place. A plan is necessary, but it’s not sufficient. Effective succession planning must be approached from several different angles and requires ongoing planning and review.
Open communication is where good succession planning begins. It’s important to start succession conversations early to determine your children’s interest and choose a course that is right for your kids and for your business. Once your plan is developed, you also want to make sure that the proper parties know the plan and none of the major players are taken by surprise when the transition occurs.
Leadership skills are more often learned than they are inherited; it is essential to ensure your successor has the skills and degrees he/she needs to succeed. Implement training and mentoring programs for the next generation and consider establishing clear standards that all family members must meet (e.g. – a certain level of education, a number of years working in a non-family-owned company) in order to take on leadership roles.
When planning for succession, many of the conversations you will need to have will be tense, and there are bound to be situations that trigger significant conflict. Preparing yourself with conflict resolution tools and structuring open and honest conversations will be key as your family and your business look to make this significant transition.
Unfortunately, simply recording your succession wishes on paper will not necessarily bring them to fruition. To learn concrete strategies for successfully managing a leadership transition in your family business, I invite you join me on July 23 for an informative webinar. I’ll be hosting a conversation with David Gage of BMC Associates and we’ll discuss actionable tactics for initiating those difficult conversations that so often come with succession planning, and also address how to identify and diffuse tension.
Don’t just simply plan for succession; communicate with your family, train your successor, and utilize conflict management skills to ensure an effective leadership transition for your family-owned enterprise.