Working on a family business without a succession plan can cause confusion, conflict and jeopardize a company's ability to compete in the future. When a business is owned or managed by a family, the topic of succession raises a host of difficult and sensitive issues for everyone involved, including those who aren't employees. A series of papers have been published to address these challenges.
What to Consider When Planning for Business Succession?
Careful and thoughtful planning is essential for a successful business transition, and the goal of this brief document is to list a few of the most critical issues.
Build Company Familiarity
The most effective succession handoffs are frequently years in the making, providing the necessary time for staff to prepare for this move. Indeed, prior to hiring non-family staff, organizations should open discussion regarding the family's succession plans. According to research, job prospects have opposed working for family firms. By informing prospective employees about the company's aims and goals, you can avoid future dissatisfaction.
Current employees should also be introduced to possible successors early in the process. Familiarity fosters confidence and collaboration, as employees require time to adjust to a successor. Due to these contacts, the relationship capital between the successor and employees can play a critical role in establishing acceptance for family succession long before the handoff.
Set A Standard
Nonfamily employees frequently get the impression that family members are less accountable or responsible than they are. To mitigate the negative consequences of such perceptions, prospective successors should exhibit competence and serve as role models for accountability. Credentials such as schooling or outside experience might allay non-family employees that the successor is the product of nepotism.
Such demonstrations of leadership ability can help secure buy-in from worried nonfamily employees. Similarly, family businesses should demand a higher performance standard from prospective heirs. Increased hours and more difficult assignments throughout the transition can instill confidence in the successor's dedication among nonfamily personnel. This can assist in assuring staff that a family successor is the best candidate for the job.
Train Potential Successors
Many family businesses place the primary responsibility for training the next generation squarely on the shoulders of the family leader. This strategy overlooks a critical chance to garner buy-in from non-family employees. Experienced nonfamily personnel contributes significantly to the next generation's preparation, but incorporating nonfamily members in this process demonstrates that they are valued contributors to the firm's success. Such participatory cultures result in a more devoted and loyal staff.
Future successors who demonstrate humility and a desire to learn from more experienced personnel might strengthen nonfamily members' commitments by earning their confidence and respect.
Prepare Transition Plan
The most important thing above all is to prepare your transition plan. This transition plan will be your roadmap towards a successful business succession. It involves legal accounting and audit, assessing legal papers, setting of obligations, and signing contracts. Many family company executives strive to transmit the baton to the next generation successfully. Additionally, it might be a prudent commercial move if the proper processes are done. By conveying family succession goals, establishing strong relational relationships, and demonstrating the fitness of next-generation leaders, family businesses can gain buy-in from non-family staff.
Not only will this facilitate a smooth leadership transition, but it also has the potential to improve nonfamily identification with both the family and the business, resulting in a more productive and contented staff that will propel the business for years to come.
The time of transition can be difficult for many families, but it doesn't have to feel like a burden. Take advantage our services and book an in-depth consultation with one or more sessions that best suit your needs today!