Five Steps to Succession Stability

Case Study: Succession Planning Process

I met with Carl three times in less than times weeks. He really wanted me to “experience” his business, show me how great they were doing and what an exciting client company this was going to be. He had two sons and two nephews in the company, all anxious to prove they were the right fit for the senior leadership team. He was full of energy, high tales of business adventure and plenty of bluster. His sons vacillated between being proud and energized by their dad and slightly embarrassed by his grandiose personal testimonials.

Carl wanted help to finalize the plans for transitioning the business to the next generation. However, I saw plenty of warning signs that this wasn’t going to be a smooth or successful transition:

1. Carl was still making most of the key decisions.
2. The employees saw Carl as the boss – and always went to him for guidance and advice.
3. His sons and his nephews knew that any decision they made or idea they had could be easily over-ruled by Carl.
4. Most of the key business relationships with stakeholders, customers and other professionals were maintained with Carl.
5. Although he made a lot of decisions, was the ‘design guru’ and keeper of the company’s history, nothing was written down. Everything of importance was kept in Carl’s head.
6. In planning meetings, the focus was generally on short-term objectives and rarely, if ever, on long-term goals.
7. Carl really didn’t have a clear vision of what he wanted his transition to look like – he just knew that this was something he was “supposed” to do.

If we were going to create a successful and sustainable company that could weather the transition of such an inspiring and influential figure, we needed to take a different path.

First, I explained how businesses tend to grow and change over time when owners are aware of what it takes to build a strong and successful family enterprise.

Secondly, we talked about what it would take to move the company from the Entrepreneurial Phase to the Consolidation Phase – ensuring that the next generation was taking over something that could thrive. Here are the 5 key points we identified as our objectives:

1. Develop a strategic plan to ensure the company has a few long-term goals and measureable objectives that can be shared across the company. This also gave the next generation an opportunity to be involved in the planning, identify their role in bringing the plan to fruition and to learn how Carl had traditionally figured out the best way to grow the business.

2. Create a professional development plan for the members of the next generation to assist them to evolve from “helpers” to “leaders.”  These young men were still “yes” men. They rarely stood up to Carl or offered their own ideas. This meant that it was difficult for them to build respect among their employees or to gain the confidence they would need to lead the business someday. In building the professional development plan, we identified the necessary competencies for leadership and located coaching and learning opportunities.

3. Actively engage in being a business mentor. This meant working diligently to change Carl’s role…in baby steps, from that of a strong leader to a focused mentor and coach. He would need to begin to unpack the way in which he had traditionally made decisions and lead the company so that he could teach these things to others.

4. Identify and build the senior leadership team. We used the strategic plan as a basis for identifying the roles and competencies we would need at the top of the organization. Then, we had to align the selection of family members (or non-family members) with the appropriate roles based upon their skill set.

5. Document key processes. The company needed to stop relying so heavily on Carl to be the font of all knowledge. We had to create standard operating procedures, identify ways to improve quality and empower others to solved problems and design solutions.

None of this was easy, and the succession planning process took over two years to complete. However, by the time the five steps were complete, Carl was finally able to see how the company might run without his day-to-day involvement. He gained much greater confidence in his management team and his relationship with his sons and nephews improved. Most importantly, with a more empowered and knowledgeable workforce, the company was much more stable and professional–laying a strong foundation for the future transition of ownership.