The effectiveness of your succession plan for the next generation will rest heavily on your decisions in placing the right people in the right jobs with strong governance. Often these decisions are still made on the basis of family lineage and seniority with capability and character being assumed. But get these decisions wrong and a lifetime’s work, and wealth, can be quickly lost.
Active Knowledge Question:
How are you selecting and communicating your choices for future leaders?
The Choices You Make
When considering who should you ask to step into which roles in a transition, you must think carefully about what that role will require for the transition to be enduring and successful. For example, the transition from being one of the siblings working in the family business to being a CEO with sibling shareholders can be a challenging one. And even more challenging when there is more than one contender for the role of CEO as discussed in last week’s blog, ‘Structure and Separation’.
The starting point is always to remember the goals of your transition process, which I define as ‘enabling the compounding of wealth from generation to generation whilst ensuring family unity, individual growth and a sense of contribution’.
Those leading the business must be exceptional businesspeople, and those leading the family must have a heart for the family. And therefore, they are likely two different people who can provide strong oversight and balance between the business and the family if governance is well structured. Look back to the blog, ‘Who Controls The Money’ for a discussion of governance.
This can be a balance between mitigating risk, ego and self-interest on the business side, and wealth plundering and weak compassion on the family side.
Your choices should always be made firstly on character and then competency. And of course, placing a truly independent voice on both sides can bring clarity and conflict resolution to the table.
The Example You Set
The process of selecting the right people for the right job starts from a very early stage in your family business. It starts from the moment your children begin to observe you as not only a parent but also someone involved in leading a business. It is the lessons and examples that you set as a business leader that will create their expectations for what may occur in the transition of leadership to the next generation.
When you sit at the dinner table at night and talk about what is happening in the family business, you very quickly communicate your view of leadership. As you speak about people who work in or with your business, you set not only tone but also character. The way you accept your role as a leader will be replicated by at least some of your children, and likely by those who become interested in business. In short, you can’t act one way and then expect your children to act another way.
Looking to the future, you must be very careful of the example that you are setting for the next generation of leaders to ensure that it will be the right example for them.
Families and businesses grow over time, and as your business transitions to the next generation, it is likely there will be a variety of roles to be filled. Roles which will support and allow both your family and business to endure and compound the well-being and prosperity enjoyed. And that is seeded with the right people in the right jobs with robust governance balancing roles and relationships.
An entirely new level of performance.
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All the best in the success of your business,