In his insightful book Keeping the Family Business Healthy¹ to which readers are referred, John Ward provides some valuable advice to family business owners contemplating the issue of succession.
Ward argues that both parents and offspring hold the key to the future of the family business. Working together they can lay the foundations for revitalising the family business and plan for its continuing growth, profitability and family leadership.
For the succession process to be successful, it is critical that both business owners and their successors approach the exercise with the correct attitude.
The role of parents.Parents - as the outgoing generation - give successors their start with a wide range of practices ranging from childhood lessons to strategic planning.
Parents can facilitate the transition process by:
- Setting the tone and pace of succession
- Responding at length to successors' questions
- Allowing successors time to pursue developmental plans
- Planning what they will do after letting go of control and showing enthusiasm for the period ahead
- Relinquishing their hold on the business in a graceful and timely way - the ability of a business owner to 'let go' is the ‘final test of greatness’
- Supporting successors' assumption of responsibility and their efforts at strategic implementation.
The role of successors.It is incumbent on successors as the incoming generation to take responsibility for their own growth and to design and embark on personal development programs that will enable them to acquire the skills and self-confidence necessary for them to lead the business.
Showing respect for the business' past and its corporate culture (collective beliefs and values) is also advisable since building a business typically calls for evolution not revolution.
A deep commitment to the philosophy of stewardship is also considered to be an essential attitude for the next generation of the family business.
Critical factors.The following attitudes and approaches on both sides will help successors fulfil their new role of promoting a strategy and vision that will pave the way for the company's revitalisation:
- founders who are enthusiastic about passing on the business
- successors who deserve authority at a young age
- trust between business owners and successors, and
- a firm commitment to work things out together.
Solid organisational succession planning increases the economic value of the family business.
¹ Source: Ward, J., 'Keeping the Family Business Healthy', 1987 Jossey Bass Inc., Publishers at pp.208-9