Important Succession Planning Tips for Family-Owned Businesses.
The majority of family-owned businesses are run by baby boomers, which makes the need to have a well thought out plan for leadership transition essential. Some business owners are fortunate enough to have the next generation ready to take over and lead the entire organisation (whether they have the skills and determination to grow the business is another matter!
I have worked with family businesses within manufacturing that have continued to thrive as offspring have been taught over several years, in readiness to finally take over the family reins.
I’ve also worked with and heard of family businesses in which the sons or daughters, once they have taken over, have made the wrong decisions and consequently, those businesses were not as profitable as they once were.
Finding the right leader should be a top priority. Succession planning can be a challenge, which is why we have compiled the top tips for effective planning. You can preserve your legacy with an effective succession plan.
So as head of a family run business, what should you do?
You have to determine from the outset, whether your children are serious contenders to run your business. Ask yourself honestly, if they truly have the soft skills as well as the business knowledge to grow the business after you have stepped down. Are they willing to learn from you? It’s one thing them working for the family business but quite another them actually taking over the responsibility of a company.
Tip 1. Begin the Process Early - This is a time-consuming endeavour but will pay-off in the long run.
The earlier you plan for a leadership transition, the more effective it will be when the time to handover leadership arrives. To prepare:
If you have identified potential successors, which could be relatives or other people in the business, assess what gaps they have and create a personal development plan to prepare them for their future role. The better prepared they are, the easier the transition process will be.
2. Identify and Define the qualities needed in a future leader - This is especially important if you will be hiring somebody from outside of your business.
Alike to when you hire a new employee, it is crucial to define the necessary skill-set and experience for the role. But more importantly, define the personality and values that the candidate will need in order to preserve the current culture and legacy of your family business.
3. Invest time in a thorough interview and evaluation process - Don’t solely focus on skills, cultural fit is just as important.
Carefully plan out how you are going to determine the right fit through interviews, assessments, previous experience, references etc.
It is just as important to have the right interviewers. Who knows you and subsequently, the values of the family and the business? Having external advisors who will have a more holistic view of your business may help you make the right decisions when hiring.
In my experience, finding the right person for a family business is all about cultural fit. Are they going to fit and get on with the culture and the values of your family business?
4. Long Term Incentive Plans (LTIP)
You don’t have to completely give away the family business that you have worked so long to create, but an LTIP will be necessary to retain your future leader and preserve the family business.
Identify what truly motivates your high-potential employees. Unleashing the full potential of your key-employees and keeping them motivated will ultimately be the key to successfully preserving your legacy.
These top tips can help you to plan and develop your succession plan, preserving your legacy with the right leader.
If you are currently planning ahead for your manufacturing family business, contact Recruitment Director, Phil Walker, on0116 254 5411 or email email@example.com who has several year's experience recruiting senior hires for family business and offering honest, simple advice to help move your business forward.