Background
Succession planning invariably involves a challenge with change, whether it be the need to change habits, behaviours, opinions, thinking or whatever:-

• Technology
• Age
• Business competition
• Tired with not enough energy
• Not having anybody who understands
• Making way for younger people
• The need to accept other people's ideas
• Too much stress
• Unable to keep up with the pace of change
• Health
• Difficulty with the new language or technical terminology
• Afraid of having one's precious baby handed over to somebody else
• Seeing mistakes being made and having no control
• Implementing other people's changes
• Dependent upon others for your financial well being
• Seeing one's children in control
• Different values being implemented
• Completely different priorities on the agenda
• Retirement looming
• Family quarrels

All of the above generate huge emotions that we are never taught about at school, College, University, home or in our business careers to handle. Towards the end of their working life we ask, and sometimes tell our elders, betters and invariably dominant owner entrepreneurs to stand aside and let others take over just like that. No ifs, buts or understanding to smooth the path of succession.

This is where Business Life Coaching and Mentoring comes into its own as an external third-party facilitator with no axe to grind except to assist all parties communicate through the emotional battles and turbulent discussions to create logical business propositions acceptable to all.

What you mean by succession planning?
Succession planning is the process whereby the managing of a family business is passed from one generation to the next in a planned and orderly fashion. This is to ensure:-

• the protection of the investment made by the present owners of the business during their retirement
• the well-being of all members of the family
• the continuing success of the commercial interests of the business
• the security of the employees jobs

Why is it necessary?
There are a great many reasons from a planned and orderly passage of the management administration of a family business, which become more and more important in our rapidly changing commercial world.

It is not necessary to tell anybody that business continues to become more and more competitive due to the aggressiveness of the global economy. The massive downturn in the UK manufacturing sector during the past 10 to 15 years is a sign of the things to come, and it is expected that this will continue as unit costs continue to be driven down by exceedingly cheap oriental labour, working for a fraction of a UK salary.

The only way to survive in this environment is to be very focused, very efficient, very aware of your company’s uniqueness and fully involved with driving your business on. From experience this can only be achieved if there is harmony in the boardroom and all the family are striving in unison in the same direction for a common goal.

Poor or non-existent communication, squabbling, tantrums, silence, bad behaviour, childishness, etc are exactly what your competitors hope for be they in the UK, the Philippines or China.

It is thus imperative that succession planning is started way before the actual retirement, be it planned or unplanned, takes place, with all members of the family and key employees.

How do you start dealing with it?
The start is to be aware of the necessity to plan for succession. Awareness happens on a variety of levels:-

• Mental - the way and what people think
• Environmental - what's going on around you
• Behavioural - the way and how people behave
• Knowledge - the information that is used to make decisions
• Values and attitudes - the inner set of core motivators and drivers that we all have, which started to be created at conception and continued right through life
• Beliefs – those internal principles and convictions that we all have and often related to self-confidence and self-esteem
• Spirit - the spark or energy of a related to determination and get up and go

Awareness, on one or all of the above levels, has to go through the process of understanding, questioning, clarification, acceptance and external communication before it goes to the next stage.

Note. It is important to note that the above steps are different for everyone who will have different agendas, different ages, different behaviours and different goals. Awareness can often involve a never ending succession of vicious circles that invariably can only be broken into by an external facilitator.

What is the process

1. Discuss desired outcomes
Family or Commercial rules
Emotional and logical ties to running business
Long term goals – sell or retain
Influence of family merit
Influence of non-family management

2. Agree Timetable

3. Build Management capacity
Delegate
Hire
Buy

4. Decide on Shareholding
Retain Family Ownership
Create Family Charter
values, ethics, commitment, management structure, responsibilities,
authority, feedback, remuneration, dividends, benefits, voting powers,
sleeping partners, recruitment of non-family staff, dispute settlement,
meeting format, retirement policies
Formalise Business strategy,
Decide upon Family Managing Director
Choose successor – merit v family, age, gender
Groom successor – external and inside training
Train successor – DMS, MBA, B Tech
Move successor in – increasing responsibilities
Move existing MD out - decreasing responsibilities
Decide upon External Managing Director
Draw up Job Description, if not already have one
Create required Values and Skill matrix
Recruit
Move successor in
Move existing MD out - decreasing responsibilities

Sell some or all of the shares
Prepare the company for sale
Decide on personal objectives
Adopt best legal framework
Build the management team
Create valuable customer database
Formalise business processes
Make it an attractive proposition - marketing
Create Sales Memorandum
Company Description
Background History
Management structure and Staff
Description of Products and Services
Market
Profitability
Assets
Hire professional agent – accountants, solicitors, agents
Get valuation – discuss variables
Agree marketing strategy and timescales
Levels of responsibilities
Points of contact

5. Achieve agreement

6. Work out a plan of action
Description
Person responsible
Timescales
Criticality
Risk factor
Steps
Feed back process

© William Barron
Creating Insight
October 2004
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