Developing a Succession Process

Succession in family businesses is time of both crisis and opportunity. Succession is certainly a crisis in family businesses; only one third make it to the second generation. Successful families in business take advantage of this transition time as an opportunity to develop an objective process that creates an atmosphere of collaboration, lowers the emotionality in the system, and establishes benchmarks for the company, the board, as well as the management. As one of my clients said, as we drafted the succession plan, "I get it; it's first about the process and then the people." And, if the process is fair and transparent, the right people will be selected and the chances for buy-in by all are increased.

The following is an example of a succession process (As you review it, consider how your company is planning or has accomplished succession):

1. The board initiates the succession planning process.

2. The board will activate the Search Committee whose membership will represent the board, the family, the advisors, owners, and business management:

3. The Search Committee then implements the executive selection process, including the following:

a. Agreeing on key competencies and selection criteria for next leader

i. Experience
ii. Skills and abilities
iii. Competencies
iv. Motivation

b. Selecting potential candidates
c. Candidates should not sit on the Search Committee
d. Interviewing candidates
e. Reviewing of data, including Leadership Assessments, candidate's vision for business, and work history.
f. Organizing data and make recommendation to the Board or the nominating committee of the board.

4. The Board makes the final decision and plans for the support of the new CEO and resources for a smooth transition process.