Written by Paul Hopwood.
For further information on Paul Hopwood Consulting Limited, please visit: www.paulhopwoodconsulting.co.uk

Succession Planning - Has it Finally Hit the Radar?

By Harry Kras, Family Business Facilitator

The thought of stepping back and handing over control of their business is a challenging issue for the current generation of baby boomer leaders. Why would any sane, successful person want to step out of the lime light and into the shadows? It seems that every one of them has a friend, colleague or relative, who died within six months of retirement, which is not a major selling point!

A key statistic that lured me into the family business field in the late 1990’s was the 1997 Australian Family and Private Business Survey, which identified that –
• The median age of owners of Family Owned and Managed Businesses was 52
• 60% of them planned to retire in the next 10 years, yet
• Only 12% had a documented succession plan

Though nearly a decade and a half has passed since that report, the latest survey has found that less than 1 in 5 has a succession plan.

These statistics are mirrored throughout the western world. A research study recently conducted by Prince & Associates in Europe titled ‘Protecting the Family Fortune’ investigated the wealth planning habits of ultra high net worth business-owning families. It found that the majority of these family businesses are not implementing succession plans, don't have asset protection strategies and are not updating estate plans. US statistics indicate that 55% of CEO’s due to retire within the next five years aged 61 or older, have not yet chosen their replacement.

So though we all know that business transition is inevitable, it has proved to be very difficult to get decision makers to put it on the agenda.

The challenge, is that those with the passion for change (in a family business that is generally the members of the next generation), do not have the power to implement it. Those with the power, the current leaders, don’t have the passion. As we know, change is best lead from the top. So without the active support and drive of the leader, implementing a succession plan will just not happen.

So what are some of the key challenges to starting the succession planning process?
Though the reasons vary from person to person, some common themes are:
• A reluctance to step back from the work of a lifetime, into an uncertain
future.
• Concern for financial security in retirement – this has been exacerbated
by the GFC and its impact on business values and retirement savings.
• Hesitation surrounding the selection of the next leader – particularly in a
family business where non-business consideration often come to the for

The challenge for a family business board, their advisers and members of the next generation, is to find what will motivate their current leader.

Interestingly, in the past year or so the attitude to succession seems to be changing. Social researcher Michael McQueen of the Nexgen Group has pinpointed mid 2009 as the time when succession became a reality for baby boomers.

So if we are at the point where succession planning is about to gain some momentum, here are a few things to help make it as a seamless process as possible.
1. It takes longer than you think. Set realistic timeframes that allow sufficient time to get all stakeholders
onboard
2. Create positive energy around the process. Work together and develop a common, uniting vision of the
future for the business and for each of the key people involved.
3. Check in with everyone regularly to avoid misunderstandings and ensure that you stay on track.

Transition is as an opportunity for growth and regeneration of the business. If those with the power to implement this change recognise the same opportunities for themselves, it can be a positive experience for all.

Harry Kras from the Family Business Resource Centre is a family business facilitator who works with successful business families to help them harness the power of the family to maximise the rewards of business ownership.

Written by Harry Kras
For further information on the Family Business Resource Centre, please visit: www.fbrc.com.au


3 Key Ideas for Business Success in 2011

1. Quality versus Quantity
Whether its relating to meetings, your sales process, marketing, customer calls, your website or the way you use social media in your organization quality will always win over quantity. For example, many business people fall into the trap of doing more marketing if sales are dropping or having more meetings if a strategy isn’t being implemented effectively. However this can have the opposite effect of compounding the issue. Those business people who focus on quality over quantity in areas such as their marketing and meetings will typically uncover the real issue blocking success whilst also freeing up a large portion of their time for more customer or strategic opportunities.

2. Simplicity versus Complexity
There are millions of business articles and books in circulation covering various insights around leadership, business, strategy, sales or personality profiling however most publications have only succeeded in making a simple issue much more complex. In such a volatile business environment keeping it simple and getting to the root cause of an issue is critical to success as most business people are in information overload mode. Using One Page Business Plans, focusing on 3 key issues, having simple processes and problem solving approaches are just some approaches that can be adopted to assist in keeping things simple. If you are finding your strategy development and implementation process is too complex stop and ask the question of what can be done to simplify things further. Complexity will only cause frustration and confusion.

3. Listening versus Telling
Having genuine empathy and being a good listener when dealing with customers are two traits of great sales people (rain makers) that are often over-looked. It is perceived that the most successful sales people have all the answers, are confident in front of customers and have an amazing sales process that makes their life easy when it comes to converting new opportunities. Post the Global Financial Crisis however having genuine empathy and listening skills are traits which are more critical than ever to help businesses in challenging times look for ways to fix the real issues or grab hold of new opportunities where your products could assist. Pitching a product or service without first listening genuinely (so telling a customer what they need) will only lead to very poor conversion rates.