Through a special arrangement, presented here for discussion is a summary of an article from Convenience Store Decisions magazine.
When it comes to family business succession planning, most don't plan for it, don't do it well, or wait until it's too late.
While the CEO longevity in non-family businesses averages six years, family-owned businesses' CEOs tend to stay for 20-25 years. That long tenure contributes to stability and consistency, but can also fuel flat growth, narrow business focus, and decreased leadership drive. It also creates a high level of frustration in the next generation that is ready to charge forward.
We commonly think about the top five to eight key positions for a written, structured succession plan. Here area few succession tips to keep in mind:
Think beyond seniority. Many family business executives choose their future leaders based on seniority. This "easy" choice can backfire if the adult child or the one with the most seniority has not gained respect from other family members and employees.
Embrace a more professional vetting process (skill evaluations, performance assessments, and career review). Succession readiness calls for a written transition plan and an individual development plan for the future CEO within three years of the planned succession date. It may involve identifying other executive team members with succession needs, building a coaching plan, and providing stretch assignments in different functional areas of the company.
Rank possible successors. Consider creating a list of all the possible successors and rank them, from 1-10 (with 10 being high), in each of the following areas:
- Past work experience and advancement history
- Education
- Geographic mobility, if appropriate
- Learning agility
- Prior leadership positions
- Advancement potential
- Advancement desire
- Interpersonal skills
- Alignment withcompany values
- Past performance ratings
- Ability to take risks
- Decision-making ability
- Problem-solving ability
Groom the next generation. Once you have a successor in mind, offer him/her additional development through such things as job rotations, stretch assignments, additional profit and loss responsibility, and additional exposure to board members and customers. The more prepping, the smoother the transition.
Consider a non-family leader. A non-family CEO frequently brings diverse, in-depth experience to drive business growth, bringing professional alliances, partnerships, and strategy opportunities.
Keep emotions under control. Sibling rivalries often ensue. When you add to the equation parents (and even living grandparents) still owning and operating the family business, the stakes become alarmingly high.