Wednesday, May 20, 2020
What’s the Plan?
Will this plan unite or divide the family when Mom and Dad are gone?
A recent survey by the National Bureau of Economic Research’s Family Business Alliance found that only 15% of family enterprises had anything in place that resembled a succession plan. What’s a family to do?
How does a family business owner avoid reaching the golden years, having worked as hard as he or she did, with no plan for transition? It starts with the three basic questions: where are we now, where are we going, and how do we get there.
As owners, families need to chart out their plan for success and be willing to adapt as they go. The competitive advantages of a family business are many. The family culture is one distinct advantage, and a well-functioning family is grounded in trust. This includes trust between the generations, between family branches, and with non-family employees. Survival of an organization, and more specifically a family business, is dependent on this trust.
First, the family needs a vision. What will success look like for the business? What does success look like for the family? Are family members willing to let go and let new people innovate to keep maximizing the use of the family’s resources? Part of this includes talking about who you are. Your identity and core values are bigger than the business and bigger than its success or failure.
Second, the family needs to work through how each family member wants to be involved (or not) in accomplishing that vision. Is anyone in the family interested in the business? Are the interested family members qualified for the roles they want? What other strengths do family members bring to the table to help maximize and manage the family’s resources?
Finally, as you go out and pursue that vision, remember to be flexible. Part of what makes a business successful is executing a plan but staying flexible to adapt as you go. Be comfortable, as a family, operating at the nexus of the strategic strategy and the emerging strategy.
Success may be different for each family member. Define what success looks like for the entire family and begin charting a path to get there. Develop a plan, communicate the plan, and keep asking:
Will this plan unite or divide the family when Mom and Dad are gone?
Wednesday, May 13, 2020
Moving an enterprise forward requires the right people, doing the right things, in the right place, at the right time. Like strategic thinking and planning, succession planning starts with where the family’s and staff’s abilities are now, considers where they need to be, and determines how the enterprise will help them get there.
Effective succession planning is a process that can make or break the future of an organization. A survey by The National Bureau of Economic Research found over 40% of Family Businesses have not adopted a Succession Plan. In a separate study of family-owned enterprises, it was found 78% have no transition team and 83% have no written transition plan.
Implementing a transition team of key internal members and non-family advisors will have the ability to determine the Knowledge, Skills, and Abilities needed for the future. As we experience the continuance of today’s volatile business and social environments it is critical now, more than ever, to determine the model for the future leadership of the business.
Succession planning cannot be limited to the rising generation of family members. It is essential to create a deep bench of leaders throughout the enterprise that support the family ownership, understand and endorse the family mission and values, and have the interpersonal skills to lead
There are a number of factors to consider in effectively planning for succession:
1. Roles and Responsibilities. Accurately determine what roles and responsibilities are essential for the organization, difficult to replace, and will need to be transitioned in 5 – 10 years.
2. Knowledge, Skills, and Abilities. Define the knowledge, skills, and abilities needed in those positions both now and in the future.
3. Current Talent Pool. Examine the current talent pool of individuals in the family and the business to understand potential options for future leadership.
4. Development. To be effective, development plans require thoughtful planning, diligence, and follow-through.
5. Preparation. Help the future leaders earn the respect of the family, the business, and outside stakeholders.
Grooming the next leader in advance can help ensure the transition will be smooth, effective, and successful. By beginning this process now, it allows for the ability to identify and address critical business needs for the business moving forward. The early beginning of building a process and system can also ensure proactive continuity of senior leadership and it may minimize a potential of post-succession executive turnover.
Thursday, May 7, 2020
Preparation can give a competitive advantage.
As we begin planning an exit from this lockdown, there needs to be a plan created without panic. As a family business leader, being either extremely optimistic or extremely pessimistic may put us at risk. There will be opportunity for those that develop a good foundation, have a good foundation, or are building a strong foundation for the business. Strong systems and processes with clearly articulated values and principles will help guide your team through these rough waters.
In a survey by Statistics Canada, private companies with Advisory Boards, particularly ones with non-family members, produced significantly better results after instituting the Advisory Board than before. The study found sales growth increased three-fold in the three years following the introduction of the advisory board compared to the three years prior to instituting the advisory board, and productivity rose an average of 5.9% compared with 3.2% in the previous three-year period.
One tool to help guide the family business after the lockdown can be their Board or Advisory Board, or Advisors. Outside Advisors are a powerful tool to help business families build their legacies, grow ROI, increase innovation, form new networks, and develop key strategic initiatives.
During times of uncertainty, expertise, support, and unbiased in-put when you’re facing big decisions becomes a necessity. Outside Advisors will provide counsel, advice, knowledge, skills, and abilities that typically go beyond the organization’s management team. Advisory Boards are an informal brain trust to help think through the investments, innovation, staffing needs, and plans. Non-family advisors must challenge the family’s assumptions, which often remain unquestioned in times of crisis. This can prevent decisions from being made as a result of the herd mentality. The non-family advisors can also provide the ‘safe space’ for the leaders to share their doubts, concerns, anger, anxiety, and insecurities.
An Advisory Board should always provide value to the family, the organization, and the leader of the family enterprises. Advisory Board members, who serve at the pleasure of the organization’s leadership, are selected for their experience, insight, wisdom, ability to ask the right questions, and ability to be a focused sounding board for the CEO. As a Family Business leader, this is essential to recover from a downturn.
Too often, growing, privately held companies get stuck and don’t take advantage of the invaluable resource Outside Advisors can be. An Advisory Board tailored to your business will help you lead for the future and build a healthy business.
Preparation will give a competitive advantage.