A smooth and successful transition from one generation or family member to another is the goal of family business succession planning. While it’s the goal, there are a lot of factors that can get in the way. Having worked in family business and succession planning for many years, we are sharing the three most important steps for a successful transition.
One of the best ways to view succession planning is by using the metaphor for passing the baton in a relay race. Each team member is ready in their assigned location, and the baton is passed to another. They make it look easy, but we know that a lot of intention, time, consideration, and practice went into making that transition seamless.
Successful succession planning for a family business doesn’t just happen. It requires intentional groundwork to be laid, sometimes years in advance of the actual transition.
What are the three most important steps for family business succession planning?
Step 1: Prepare For The Transition
Preparation for the transition includes a lot of thoughtful conversations. This step includes answering questions such as:
What is our objective for the upcoming transition?
What do we want to achieve? The obvious answer is passing the business from one generation to the next, but what does this mean?
How long will our transition take?
What roles will people play?
How will decisions be made, and even more importantly, how will they be communicated?
What are our limitations and boundaries during the transition?
Relay teams have a plan before they start the race. They know who will be running each part of the race, they have figured out who works best together for difficult hand-offs, and they know what leg of the race each racer will be best at. Relay races begin with preparation, and so does succession planning.
Step 2: Identify The Roles and Responsibilities
This step might seem obvious and easy to skip, but many people need and want to be a part of the process as succession plans unfold. The more clarity there is at the beginning, the easier it is as things start to get a little sticky, which is natural and to be expected during a transition.
Questions in this step include:
Who are the key players in our succession planning?
Predecessor (who needs to pass their responsibilities)
Potential Successor(s) (Who are candidates to begin to take on new roles and responsibilities as the business moves through succession planning?)
Other Stakeholders: Who has a vested interest in a successful leadership succession plan?
On a track, there is a coach who oversees the baton pass. They aren’t involved but can see the whole process. Genysys consultants often serve this role with family businesses. Learn more about our consultants...
Step 3: Make A Plan
Successful succession planning doesn’t happen overnight. It can take three to five years to initiate and implement the right pace after the transition.
This step includes outlining a process and time-frames, initiating conversations with every person playing a role, and often beginning to work with a consultant (coach in our relay model) to be a neutral third-party advisor.
Many leaders assume they know the answer to these questions. Don’t make this mistake. Give yourself several months before beginning to sit with these questions. Successful baton passes don’t happen by accident or without preparation.
A successful transition of your business from one generation to the next is possible, but it won’t just happen.