Succession Planning
Essential stages in creating a succession plan
A family enterprise is always striving to achieve a balance among the different interests of owners, the enterprise itself, and a number of individuals, couples, nuclear families as well as an extended family. It therefore has to make innumerable adaptations to cope with changes that occur to all these interests; for example, individuals aging, entering and leaving relationships, changing their roles in the enterprise and the growth, or decline, of the overall enterprise itself.
This process of incremental and adaptive change may suffice for several years, even a generation, but it will not cope with succession when a major change occurs in the overall structures and practices that hold the entire system together. Succession planning works well when this reality is accepted and the opportunity is grasped to seek more effective mechanisms, structures and ways of functioning that will satisfy the future needs of the different interests that are bound up in the enterprise.
The FBS Succession Planning service is based on research that shows that each major transition must pass through distinct stages. If any stage is ignored or not managed well, the transition will either falter or be unsuccessful. The stages are Preparation, Disengagement, Exploration, Choice and Implementation. The tasks in each stage are summarised below.
Preparation Stage
- Accept that big system change is inevitable.
- Identify the events that will trigger the start of the transition process; for example retirement of leaders, celebration of an important anniversary; the need to hire fresh talent to cope with new challenges.
- Avoid denial (“we’ve got plenty time to think about these things”) and over-eagerness (“we need an answer NOW”).
Disengagement phase
- Guide everyone into the Exploration Stage while keeping everything ticking along.
- Plan the next stages to help manage the uncertainty that is inevitable during transition when you are exploring different options for the future.
- Invest in education of the key players to create acceptance and understanding of what’s happening and the work that’s needed.
Exploration stage
- Keep a focus on the future.
- Raise everyone’s tolerance for a time of relative uncertainty.
- Identify and test the feasibility of all the alternatives rather than trying to replicate the past.
- Avoid premature choice. Take your time and do the job thoroughly.
Choice Stage
- Compromise on what is the best possible outcome in all the circumstances
- Avoid prolonging Exploration if it is simply to avoid making a Choice.
- Mourn the alternatives not taken and the costs of abandoning them.
Implementation Stage
- Create a timetable for the transition.
- Create an incentive structure for the change.
- Design an announcement strategy.
- Work on “letting go” of the past and focus on new beginnings.
