Succession:
Is it time?
Succession planning it’s the perfect
time for the family and other shareholders to evaluate the new mission,
vision as well as the family and business values.
By: MARC A. SILVERMAN
When does the family business need to start
thinking about succession? How
can the entrepreneur know when is the right moment to pass on
leadership? How does one
know if the children possess the necessary competence, if there are
serious flaws in their personalities and if they may harm the family
business?
Victor has been working in the business since
he graduated in Business Administration 25 years ago.
He is diligent, but does not have much entrepreneurial talents,
which has been a blessing since for that reason there has not been many
conflicts between father and son. His
father is 72 years old, and is still the boss.
He is thinking about retiring at a given moment, however is
afraid his son lacks the necessary skills to manage the company.
Hugo, Víctor’s brother, has also worked for
20 years in the business. He is more dynamic and has more of a business
sense, but his difficult character made two managers resigned.
The father has spoken with his son about the possibility of
learning “people skills”.
Although Hugo recognizes that he has a difficult character, in
essence he believes that it is a logic consequence of other people’s
stupidity.
The business is the fruit of passion, endless hours of hard work and
luck. But
lately there had been very little innovation.
Profits have diminished. The
management team is competent although not marvelous.
At the moment the business has sustained itself but has not
grown.
Hugo is thinking of resigning. “ Why should I spend all my life
working so hard? Dad rejects my ideas.
The market now is more competitive.
I have proposed various changes but in the long run Dad always
rejects them. My brother
agrees with me: either Dad
let’s us manage the company or we will both resign.
The father says he loves his sons, but that
they show entrepreneurial immaturity.
He mentioned suggestions given by Hugo that, if they were to be
implemented, they may had caused millions of losses.
The oldest, a better administrator then his brother, avoids
conflicts, a trait that, according to the father, could destroy the
business. The patriarch thinks that the key of long lasting success is
his general wisdom. He
says: “I have delegated a lot to them, when they demonstrate that they
can, I will delegate more”.
It’s pretty late for this company to plan for
succession. The next
generation is getting tired and don’t see their own need to learn in
order to be successful entrepreneurs.
The father wants to continue controlling and at the same time is
blinded to his own flaws. He
governs indulgently, with out pressing upon the preparation of the next
generation and with out a real plan for succession.
To find the right moment is difficult, since there are many factors to
have in mind, such as trusts of banks and investors, identifying
competition for leadership, the personal needs of the founders, and the
motivational needs of the next generation.
A clear plan allows each individual to choose rationally the best
way of participating and determining the abilities to reduce conflicts.
There are no objective valuation among family members, but that does not
mean that the family members have no idea about it, only that they can
not remove their biased opinions. No
successor is perfect, and he will not dedicate himself on only realizing
the founder’s dreams. Almost
all the professional executives are conscious of their limits and try to
truly correct them. However,
if these flaws lead to betray the trust then the candidate is not the
one.
Succession times give the perfect occasion for
the family and other shareholders to evaluate a new mission, vision and
the values of those the family and the business.
Smart family businesses often take advantage of the moment to
build a solid base of love and trust among the family, as well as the
competence and necessary professionalism within the business for the
long term success of all.
Marc A. Silverman, PhD, Marc@strategicinitiatives.net
