Succession plan starts with self-evaluation

Succession planning is critical for smooth transitions of wealth and also leadership positions in a business. While wealth and asset transitions may be tad easier, transfer of ownership in a family business is challenging. This is primarily because giving up and passing on the rein is a major and a life-changing event for the Founder. A robust succession plan, when implemented well through proper planning, paves way for the business to grow in size and reach, retain and continue family legacy and also help in achieving philanthropic goals.

But did you know a succession plan starts with self-evaluation rather than evaluating apt contenders for the role? As a Family Office Principal, I asked myself a few questions that helped me in formulating a plan

1.?Are you willing to give up?

~Give up control and gain control~

George Knudson

A founder sets-up a company with a particular purpose, great passion and dedication, such that the business itself becomes one’s identity. In such a scenario, handing over the rein becomes equivalent to giving your life to someone else. How comfortable are you doing that? You may choose to groom the NextGen while remaining in the leadership role or step back into an advisory role or bow out completely and turn the business over to other family members or outsiders. Irrespective of the choice, the successor should be empowered enough to take the business to the next level.

2. Who will take over the business - family member or professional?

In an event when the immediate NextGen is not interested in joining the business, it is critical that the best manager – and not the best manager who happens to be a family member – be elevated to higher management roles. This arrangement can occasionally lead to conflict, especially when there is a clash of vision or philosophy between the new leader and the family owner/ members. Closing all gaps of communication and expectations is important here to ensure a smooth continuity of the business.

3. Identify early

Succession planning has 2 variants- Ownership and Leadership /professional Management. While Ownership is right of possession and involves legal matters, succession planning for leadership & management refers to identifying and grooming NextGen or a professional for leadership roles in the family business. The successor should not be just a caretaker but someone who would take the family business/ legacy forward with the same vision and family values. Hence, both types of succession planning call for early identification and mentoring for an easier and phase-wise transition. This also builds in time to accommodate unexpected changes, if any.

4.Will the new leader be accepted?

All the above mentioned efforts would be futile if the employees do not accept the new leadership. In addition to inducting the leader to the business & family values, effective and frequent communication between the family members and also the employees are critical in aligning the business and new ideas. The successor should be flexible enough and build a culture of innovative leadership.

Succession planning isn’t as stressful as it is projected to be. Everyone who gets it right got it right because they started at the right time in the right way.?

In our #CampdenInteractiveSeries, I had the opportunity to understand perspectives from a Principal and a NextGen on their respective beginnings in succession planning. While Sunil Dhawan, Managing Director, SSF Plastics believes in nurturing relationships for a sustainable growth, Pradeep Gupta, Managing Director, Jagson International believe members of all generations have to adapt as per changing times.

Watch full interviews with Sunil Dhawan and Pradeep Gupta and understand how each generation approaches succession planning.