We’re frequently asked, “When should we start planning for leadership succession?” Our answer is one word: “Now.” The potential for conflict in the transfer of leadership from one generation to the next is too great to leave planning to the last minute.
What stops senior leaders from laying the groundwork for this transition? Most often, they won’t hand off responsibility because they’re not confident the upcoming generation is properly prepared to take up the reins. Others fear a loss of identity, or of becoming irrelevant. They’ve been in control all their lives and they’re defined by what they do, so no matter how much they wish to exit, they will not do so until they feel they have something of comparable importance to do. Additionally, our experience shows that seniors won’t let go until they’re assured their financial needs are going to be met.
For their parts, potential successors need to accept that having the right last name is not a criterion for leadership, and recognize that like their entry, the succession of leadership is neither an entitlement nor an obligation, but an opportunity to be earned. We increasingly see family businesses considering hiring nonfamily CEOs, some on an interim basis, charged with mentoring the next generation while running the business.
Position the next generation to succeed by exploring their strengths and limitations. A 360 Performance Appraisal may be appropriate. Looking at the needs of the business and comparing them with the attributes of leadership of the younger generation and emerging leaders is a valuable tool to help emerging leaders understand what they need to learn in terms of competencies to assure a smooth transition.
When we joined forces to create our family enterprise, we agreed we needed to truly be partners in this venture. Consequently, we structured our roles and responsibilities to be those of partners. We’re strongly positioned for the long term, because we did it methodically, we did it over time, and we did it together, conscious also that we had to model for our clients the right way to go about it.
As you structure the framework around your leadership transition, remember that the next generation family members need to be included in the process as much as possible, because they are the ones who will have to live with the choices made.