The sector of family business has continued to be ambitious, successful, and vibrant even despite the increased pace of change and challenging economic conditions. Family businesses are necessary for the smooth running of the economy. It offers a commitment to long-term stability and responsibilities to its employees, plus the communities they are established in.

However, despite this extraordinary longevity of family firms in society, the average life span across this particular sector is about three generations. Only a few struggle to survive four generations. The inability to transition to the next generation hinders these family businesses from being able to achieve their long-term ambitions. Thankfully, this is where efficient succession planning comes in!

Succession planning is a procedure and strategy in which organizations plan replacements to pass on leadership roles to help the business thrive from generation to generation in the competing economy. Here are some tips for efficient succession planning

1. Start Early


Many times, the management of an organization ignores succession planning till the very last minute. It is a common problem for people not to give succession planning enough thought early enough – except on rare occasions when employees who are approaching retirement force the discussion open. An organization that does not start to plan early misses the opportunity to prepare for a smooth transition in advance.

This inadequate preparation eventually leads to intense pressure amongst the management later on. It would be best if you started thinking and preparing for succession as early as you could, typically, ten years ahead of an anticipated retirement point.

For example, many years before Steve Jobs retired as CEO of Apple in 2011, he groomed his successor, Tim Cook, to take up his leadership role.

2. Harness Your Organization’s Senior Workers’ Expertise

Think about how your senior staff can pass on their expertise and skills, so the skill does not leave your organization when the staff goes. If you are considering a senior manager or business leader’s succession, you can decide to make the successor work alongside the senior manager for six to twelve months before their retirement. Then the successor continues to relate with the senior manager in a mentor-style capacity to support vital decisions whenever required.

Ensure there is enough time for the senior manager or business leader to pass on their business and client insight, contacts, tips, and processes to help smoothen over any issue while they are still around. Older employees at any firm level could also help train and induct new employees. Whether the focus is on utilizing customer service, or equipment, their insight and experience can be invaluable– ensure not to let it go to waste.

Carry out periodic 9 box talent review to identify talents who are ready to be successors for critical roles in your organization.

3. Develop Your Deputies


It would be best if you didn’t assume that succession is only a simple matter of a subordinate stepping up to the leadership position when the senior manager or business leader retires. Sometimes, a deputy can be more used to being in the leader’s shadow and has not had a challenging opportunity in any leadership role before stepping up to the position permanently. Thus, invest in talent development, learning, and leadership training of deputies before that business leader retires. Allow them to be coached by the leader, and make significant decisions, if necessary.

4. Plan To Let Go, When Necessary

One of the biggest hindrances to succession planning is the hesitation many business leaders have in letting go. This is common in organizations where the leader started the business and handled it like their “baby.” If an individual has filled a role for too long, it is easy to assume that there are many tasks only they are capable of doing.

Employing the services of an external consultant to objectively approach issues regarding working by the successor and delegation can be more valuable than you imagined. In a case where emotions are on the high side, thereby clouding judgment, focusing on coaching and passing on information and knowledge becomes difficult. Hence, an objective third party should be able to help keep unnecessary feelings out of the entire planning process.

5. Be Flexible


Your succession plan does not have to be rigid and carved in stone. It shouldn’t be a binding contract but an evolving conversation. Regularly update it as circumstances change. The individual and business concerned will need the flexibility to ease their adaptation.

Final Thoughts

Below 50% of business leaders have a succession plan, and only about 33% of family businesses make it through the transitions due to their inability to plan an efficient succession. For the longevity of your business, utilize the above tips and watch your organization thrive from generation to generation.

Visit our blog to get more tips on finance, jobs & careers, business, etc.