Guidelines for Choosing a Successor

Here is what should be kept in mind while choosing a successor for your family business:

• Give priority and importance to the issue of selecting a successor of the business, well in advance. Succession planning is not only urgent, but it is important. Every visionary entrepreneur must consider succession planning well in advance. It is one of his important duties to ensure continuity of the business he has created. Future of the owner family and a lot of other people associated with the business depends on it. Silence can be interpreted in more than ways as per the convenience of different people, so it is not advisable for the owner(s) to remain silent and let time take its own course in such important matters.
• Don’t avoid conflicts. It may be uncomfortable in the beginning, but facing it and handling it will bring a lot of clarity and peace of mind to you and to everybody else. Handle it with determination. Take the help of some other responsible and understanding individuals or professional advisors, if needed.
• In the matter of business leadership, the eldest is not necessarily the best. Be objective in the selection of the successor. Give importance to the ability to handle and grow the business and not to the age or seniority of the successor. Take the help of some proper evaluation methods to determine the aptitude and suitability of the right candidate among the probable candidates in the family. The business’ continuity and progress should deserve more importance than family pride or individual egos.
• If necessary, look beyond the family. Look at the extended family. Or, take the help of professionals to run the company. Safeguard the ownership and interest of the family members, but don’t leave the business management to them, if you know they can’t handle it or lack passion for it. Choose merit. Business successor should be chosen on merit alone. In the longer run, it will be good for everybody. Also, if the person chosen for succession is not ready to take up the responsibility, some interim arrangement can be made, in which some professional caretaker or manager may take temporary charge on behalf of the successor.
• Communicate. After you make your choice, try to take all the family members in confidence. Explain to them that only one person can head the business and explain the rationale behind your choice. If some of them can’t be won, give them an option to move out from the business related responsibilities after assuring and ensuring that they get their due share. Be assertive. Don’t allow others’ emotional immaturity to harm the business. If this is not handled in time, eventually it will crop up and cause the damage later. Keep the business interest in mind. If the business is run properly, it will also serve the family interest in the long run.
• Ensure that the chosen person is at least as interested in and is as passionate about the business it as you are. Also make sure that she appreciates the potential of the business and shares your vision. If she doesn’t, don’t hesitate to choose another captain for the ship.
• If there are multiple aspirants for the top position, we may try one of the following options for choosing the successor:

a) Consensus

All aspirants are convinced and agree to one person as the successor. This is the most advisable option to provide continuity. Consensus may be difficult to obtain. But, proper communication and persistence may bear result. So, try if all the aspirants can arrive at the name of one single candidate and accept his leadership.

b) Giving Each One an Independent Charge of a Separate Division

If all aspirants can’t work under one single leader, there can’t be a consensus. In such a situation, it is advisable to split the business into some distinct divisions and give independent charge of each division to one person each. We must ensure minimum overlap or interdependence among various divisions to avoid confusion or conflicts. However, such a division is advisable only if it is feasible and the business has reached the required size and scale.

c) Rotating Leadership

Here, all the aspirants are given a chance to lead the organization for a fixed number of years and then the next one is handed over the charge on rotation basis. Some companies have implemented such rotating business leadership process. Business leadership requires continuity for a long term. If there are frequent changes at the top, continuity suffers and finally the organization has to suffer. So, this option can be considered if the business can withstand such regular leadership changes without losing momentum.

• Finally, one person must be the leader of the business. Or if required, the owner(s) can form a family council consisting of the leading members of the family. This council may act as a body to guide the business by taking some important decisions collectively. But, it must give autonomy to one person (just like a managing director or CEO) to take some decisions single mindedly. If for every decision the council needs to be consulted, the decision process will be crippled. No powerless leader can lead a company powerfully.

Put your succession plan on paper. Formalize it with the right legal process by taking the help of experts. The transfer of leadership of business should not be left to the misinterpretation or whims of some people, because in addition to the ownership, a lot of people’s careers and future are also at stake in this matter. One should not hesitate in formalizing the succession plan.

---

(Expert advice to GROW your business wherever you are, whenever you want.

SMEBusinessGuide.com… https://goo.gl/E3pfoQ)

---

WHAT YOU CAN READ NEXT