4 Essential Succession Planning Tips for Family Owned Businesses
Succession planning takes a lot of thought and time if done right. Inside a Family Owned Business, it can be even more of a challenge.
With 63% of family owned businesses being run by baby boomers, the need to have a game plan for leadership transition is very real. Some are lucky enough to have the next generation ready to take over the family business; however, in most cases, one of two situations arise:
- The next generation isn’t quite ready to take over, will never be ready or will want to lead the entire organization
- There are no other family members working in the business
If either of these two scenarios are present, finding the right leader and/or leadership team should be one of your top priorities and it’s not an easy endeavor.
4 Tips for Efficient Succession Planning
Start the Process Early– This will take time to do, but the payoff is enormous.
- Assess your current leadership team for potential successors.
- If you have internal candidates, define what gaps they have and create a development plan to get them ready.
Take the Time to DEFINE What is Needed for Success – Especially, if you need to look outside of your organization.
- Defining the necessary experience and skill-set is important, but more critical is defining the right personality and motivation to safeguard the current culture and preserve the legacy of your family.
- Design an executive compensation package that appropriately attracts, retains and motivates desired behavior.
Interviewing and evaluation is key- Not just for the skills but cultural fit.
- Plan out who and how you are going to determine the right fit through interviews, assessments, references etc.
- Some of the best interviewers will be your external advisers who know you and subsequently know what’s important to the family and the business
Long Term Incentive Plans (LTIP)
- You don’t have to give away what you worked so long to create, but a LTIP will be something you need to attract and retain your future leader that will preserve the family business for future generations.
- Identify and be aware of what truly motivates your high-potential employees. Unleashing the full potential of your key-employees will ultimately be the key to successfully preserving your legacy.
These four helpful tips can help shift your Family Owned Business focus from planning to development, laying a firm foundation for a strong future.
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- How Companies Can Prepare for a Virtual Interview in the Wake of Covid-19
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