It all starts with open communication and builds from there.
In previous articles on succession planning, I talked about the major roadblocks that keep CEOs of family-owned businesses from overseeing a smooth transition of power, including lack of trust, clash of visions and the inability to let go.
A smooth succession requires, first and foremost, the ability to be honest with yourself about your goals and desires for both your business and your life after retirement. Once you have a clear and honest vision established, it's time to implement a detailed plan and tactics that will help succession go as smoothly as possible. What does that look like? Here are a few examples.
Increase Lines of Communication
Communication is at the center of any family business succession plan. Always be open — and always be painfully honest. Lack of communication can cause rifts among family members and valued employees, and can cause resentment to grow. Establishing increased lines of communication among all players, and drafting conflict resolution parameters, can help nip issues in the bud and lead to a smooth succession.
Develop a Governance Structure
Lack of information and direction can sabotage a company from the inside. In the period leading up to your succession, there will likely be confusion and fear about the future of the company. Long-term employees who have been instrumental to the success of your company for many years will wonder where they fit after your departure — and some will hold strong beliefs that they, not your children, should take the reins in succession. Creating a clear hierarchy and governance structure in the months and years before your departure will eliminate confusion and clarify the company's structure going forward.
Create a Family Mission Statement
In many family businesses, there are multiple family members involved. Even if you have chosen a clear successor, your other family members still hold sway and will want to have their opinions heard. Often, visions between siblings or among parents and children will clash. The best way to rectify business disagreements among family members is to have a family mission statement and charter that clearly lays out the goals of the family business. This mission statement can be used as a guide to steer all decisions towards achieving the shared goals, rather than satisfying personal desires.
Establish an Advisory Board
Not every family business dispute can be settled in house — at least not quickly enough to prevent it from negatively affecting the business. Establishing an informal advisory board to help arbitrate disagreements and guide decisions can go a long way toward creating a smooth succession. This independent advisory board should guide decisions based on the family and company mission statement.
Hold Monthly Family Meetings
True, open and honest communication isn't an event — it's a practice. Information changes. Feelings change. Unforeseen events happen. That's why it's a good idea to establish a standing monthly meeting among family members involved in the business. This will allow you to address concerns, communicate initiatives and deal with issues as they arise. It will also give your family members a scheduled, open forum in which to speak their minds.
When establishing a succession plan for a family business, communication should be at the center of your strategy. The more openly and honestly you communicate your intentions, the easier your transfer of power will be — and the more successful your business and your legacy will be going forward.