Assessing Family Leadership – Determining Who is Ready, Willing, Able and Accepted to Lead

 Succession Planning for any business is an incredibly important yet commonly avoided process.  The odds of avoidance are higher, however, in a family business.  There seems to be an assumption that trust and understanding are implicit in a family, that of course everyone has the same goals in mind.  The unavoidable reality is that all business leaders at some point yield to age, illness, loss of mental capacity and/or death.  There are several potential reasons that less than a third of all family businesses make it to the second generation, and a lack of succession planning is surely one of them.

Taking an Inventory of Your Family Members - the Willing

When trying to make a game plan, one must look at the players, from drafting the rookies to the leaders of the team.  In a family business, this starts with a baseline assessment of your family, and in some cases extended family members.  Start with who is willing to participate, and eventually to lead, by assessing many of the following:

• Is the family member accepting of the sacrifice of time, personal life, privacy and some other perks that may be reduced when taking on the leadership of the business?
• Based on the succession plan and all its ramifications, is this person willing to accept the plan as negotiated in its entirety, or could there be hidden agendas that might change the face of the company the moment the power is shifted?
• Is there any chance this family member wants to make the current owner (often a parent) happy, and is only accepting the new role in order to please them? 

Taking an Inventory of Your Family Members - the Ready and Able

Being ready to take on leadership of a business and being able to are related, in that one must be both capable and available.  A good succession plan is written to go into effect hopefully 15 years or more in advance, not something that happens at the last moment.  This cannot always be avoided, as in the case of an unexpected death, and it could be necessary to have immediate leadership, or a backup plan.  Consider who in the family may be both ready to take over the job based on experience, and able to based on their availability:

• Had the family member has sufficient experience in the business up to this point, and an education in the business in all its facets?
• Where technical or other knowledge is required from the outside for the type of business (e.g., HVAC certification, an accounting degree), does the potential candidate have what is needed, or is in the process of such education?
• If the succession plan was needed sooner rather than later, would the family member need to move immediately, leave another position that needs to be filled, have some other commitment that may hamper immediate fulfillment of the leadership?

Taking an Inventory of Your Family Members - Acceptance by the Business

The apple of the owner's eye may not be seen that way by the Board of Directors, the other employees at the family business, or by others who are more objective than someone who is related to them.  In making that tough decision sometimes necessary between what is best for the family as opposed to what is best for the business, consider how suggesting the new leadership of a family business will be viewed upon by others:

• Will other employees including management disapprove, and perhaps even leave the business?
• Will the Board of Directors accept this option if there is no set of proven reasons to do so?
• Will the clients, vendors and other interested parties approve of the named successor, or will this affect the reputation of the business?

Writing a Succession Plan is not unlike writing a will - some will be happier than others with the contents.  But like death and taxes, eventual succession is unavoidable, and made easier and more successful by knowing all the players in advance.