Lessons from the Best: No Shame in Early Succession Planning
By Fred Leeb, Leeb Partners, LLC
Many CEO’s of family businesses have worked so hard to surmount obstacles and nurture their businesses that they believe that nobody else has their knowledge and expertise. They believe they can’t admit they’re human or ever have any potential weaknesses. But, this could jeopardize their entire organization and become a self-fulfilling prophecy. If nothing is done, well in advance, to develop a feasible transition process there eventually will be a crisis; the organization will be set up to fail. I have seen many times how a sudden illness, death, cash crunch or buy/sell opportunity can throw the business and all its carefully built-up value into family infighting and chaos.
J.W. Marriott, the Chairman of Marriott International, and Andrew Keyt, a professor at Loyola, have provided a great example of how succession planning should be done in their article “Succession Planning in a Family Firm” in The Wall Street Journal on May 10, 2017.
To paraphrase them, the key points are as follows:
- Identify top performers and give them enough time to prove themselves in a variety of progressively more challenging situations.
- Enable top candidates to gain experience and strengthen themselves in a number of key competencies (e.g., operations, HR, finance, etc.) to enable them to be successful senior managers.
- Start family members at the bottom of the organization to know the business and appreciate the skills of others.
- Discuss potential career paths with family members to try to come to a consensus on what they would enjoy and commit to. Allow them to be part of the decision-making process on how to handle the organization and their own futures.
- Set expectations with relatives early on so they know that the choice for the next CEO will include non-family members–the goal will be simply to pick the best leader for the organization.
- “Many families fail at succession planning because the next generation isn’t prepared. They aren’t qualified because parents don’t make space for them or give them feedback. Families also often fail to develop a pool of talent. It isn’t about having one possible successor; it’s about having a pool of talent to draw on.”
- The best time to start succession planning is today.
Click on the following link for the full article from The Wall Street Journal.
Call Fred Leeb at Leeb Partners, LLC now at 248-514-3262 for a free initial meeting to begin to discuss how to implement operational succession planning at your organization. The meeting will be completely confidential and without further obligation.