Five Steps to Successful Business Succession
The great majority of family businesses in North America are still owned and operated by descendants of the founder. The business acumen that these first, second, third, and sometimes fourth generation managers possess largely determines how much longer the business will remain under family control. To perpetuate a business, the current owners and managers must first identify and then prepare a successor to take the reins. There are exceptions, of course, but most owners have difficulty developing their own offspring into qualified managers. They're usually too emotionally involved. And don't forget mom; she has more influence over how the kids are dealt with than most owners would ever be willing to admit. Some of the most effective owner managers I've known are not nearly as adept at teaching management principles as they are at implementing them. Let's face it, some of us are simply better doers than we are teachers. But when this is the case, the successor and the business frequently suffer. If you are the current leader of a family business and you have yet to name a successor, here are my recommendations based on the most successful management transitions I have observed. 1. Don't allow offspring to join the family business as full-time employees until they have achieved measurable success in another business. Take it from me -- a son-of-the-boss myself -- no matter how hard your kids try, and no matter how effective they are, to the other employees they will always be the owner's kids. It's an old saying, but extremely applicable here, that "It's difficult to be a prophet in your own land." The same concept holds true for taking over the family business. The employees who were coworkers last week (the same ones who "taught you everything you know") are suddenly subordinates. In one fell swoop, the "kid" makes the leap from part-time summer worker to full-time executive. Ask anyone who has ever done it and they'll tell you that it's not an easy transition. Before joining the family business, insist that each potential successor get a job in a highly profitable, well-managed business (with a similar product mix and similar customer mix of your own business) in another city. Most importantly, resist the temptation to use your professional relationships to get the job for them. Five years in this "training ground" is approximately the right length of time. If the potential successor can earn two or more promotions in a non-family environment, the odds increase that he or she has developed the confidence and the "right stuff" to successfully take over the management of the family business. 2. Before promoting a successor to CEO, insist that he or she first achieve measurable success in purchasing, sales, operations, and financial planning. Until an owner actually observes potential successors performing key job functions, it's difficult to determine where their talents lie. Depending on the size of the business, even the president may be required to personally perform one or more key jobs in the company. On the other hand, general managers of larger companies usually have the luxury of concentrating almost exclusively on top management tasks. 3. Recognize that while ownership is inherited, management skill may not be. When you select a successor, make sure your business goals are clear -- to perpetuate the family business. Just because your children are your flesh and blood doesn't mean that they possess the natural talent or inclination to manage the family business. It's no disgrace for potential successors to come to the realization that they would be happier teaching school, coaching football or playing music for a living. Everyone loses should the owner use guilt to entice family members to make a career choice that they will forever regret. 4. Don't allow your ego to kill the golden goose. If a family member is currently unavailable to assume the top job, be realistic enough to hire a professional manager to run the business in the interim. This choice will allow the business to perpetuate while a family member develops. In this situation, it is also wise to make the development of family members in training as part of the professional manager's job description and accountability. You want to make sure that the professional manager you hire understands his or her role from the outset. 5. Set a retirement date. If the owner doesn't possess the personal discipline to set a retirement date, succession rarely occurs in an orderly manner. Don't be guilty of hanging on so long that your successor loses the fire in his belly and never has an opportunity to implement changes in the organization. Bill Lee is president of Lee Resources, Inc., a South Carolina-based consulting and training organization and author of Gross Margin: 26 Factors Affecting Your Bottom Line. $29.95 + $5 S&H. blee@mygrossmargin.com.
Related News
|
 |
|
|
RELATED ARTICLES
Making Powerful Requests That Launch People Into Action
Do you ever wonder why people do not simply do the things that you want them to do? Well, instead of waiting for things to happen, decide to take responsibility for making them happen. The way to do this is often as simple as making an appropriate request.
Tales from the Corporate Frontlines:Choosing an Effective Employee Recognition Program
This article relates to the Recognition competency, commonly evaluated in employee satisfaction surveys. It tells the story of how one company found the right recognition program by paying attention to employee feedback. This competency also explores what type of behavior is appreciated and rewarded within your organization. Studies show that employees who receive regular recognition and praise are more likely to increase their individual productivity levels, increase engagement with their colleagues, and stay longer at the organization. Evaluating this competency can be especially useful if your organization is experiencing low productivity levels or ineffective teamwork.
Group Meeting Disrupters
MEETING DISRUPTERS: If two participants are carrying on a personal discussion that interferes with a meeting, direct a clear and simple question to one of them. In order to avoid embarrassing them, address them by name before asking the question. An alternative is to restate a previously expressed suggestion and then ask them for an opinion.
The New Five Truths of Employee Motivation
Motivation is a term that is so widely used, yet many managers know little about how it really works. But it doesn't have to be confusing-in fact, it's quite simple. Treat your employees as valuable assets and you will reap the rewards. Here are five truths to pay attention to in motivating your workforce.
Culture Management and Creativity
Many concepts in the fields of managing creativity are very much applicable to culture management in general. The same concepts that foster creativity and innovation also maximise human capital potential, increase productivity, reduce costs and maintain competitive advantage etc. Some of the many commonalities between culture and creativity management follow.
Data Delivers Credibility
Over the past couple of days I've been setting up visitor counters, so people in another organization can accurately count the number of people who visit their event.
The 20/60/20 Rule Of Leadership. Dont Go Solving The Wrong Problems
Several decades ago, a passenger jet approached a Florida airport with the pilot and co-pilot struggling to fix what they thought was a malfunctioning landing gear. The landing-gear light was on, signaling that the gear was deployed; but both men did not hear it actually deploy.
Why Would Anyone Do That in My Meeting?
Imagine that you open a meeting by saying, "We need to talk about the budget."
Leadership Skills Means Turnover is Not a Problem
"Ha!" you say. "For someone to make a statement like that, they obviously haven't worked in the real world and certainly have never had to run a company." Well, let me assure you. In my past I've not only run companies, but spent many years in one of the most notorious industries for turnover ? the restaurant industry.
Three Professional Services Resolutions for 2005
With client expectations higher than ever before, and the gradual industry recovery ahead, consulting firms will need to focus more than ever on carefully identifying and serving the right clients.
Using, Choosing, and Using an educational consultant
Introduction
Muggers in Our Midst - When Rumour and Gossip Pay You a Visit
'I heard it on the grapevine' the old song goes. But the grapevine has the potential to cause your business strife, misunderstanding and ruin! In effect the rumour mill and gossip are dangers you cannot ford to ignore. People who indulge in these behaviours are like muggers ? they leave you feeling you have been robbed!
Hiring Great People And How to Be One Yourself: Five Secrets
Bad news.
Knowledge Management - Leadership Behaviours Which Encourage Knowledge-Sharing
The concept of knowledge management or knowledge sharing makes intellectual sense to the leadership teams in most organisations. Why wouldn't we want to learn from our successes and failures, and translate that learning into value?
How to Enhance Quality in Your Business
Every business must strive to provide quality products and services to customers. To achieve that objective the company must draw well thought out policies and procedures to ensure 100% achievement of the targets.
Boost Your Leadership Skills By Disciplining Yourself In The Way Of The Question Mark
I'm often asked to come in to organizations and give a motivational speech to their employees. I reply that I'm not a motivational speaker. Never have been. Never will be. Don't want to be. I do something else. I teach their people how to become motivational leaders. That's a far more productive endeavor.
Managing Change in the Workplace
Change is exhilarating. Change is terrifying. Change is badly needed around here. Whatever your attitude is to change, it is the most reliable companion you will likely ever have. It will always be with you so are better off making friends! Here are three tips on managing change in your workplace:
Problem-Solving Success Tip: Whatever You Do, Do It on Purpose
Decision-making shows up throughout the problem-solving process. The decisions may be difficult or unpopular, so it's very tempting to ignore some of them. Imitating an ostrich, however, is a wimpy way to decide not to change anything-and is quite likely to leave you making awkward explanations later.
Knowledge Management - Capturing And Structuring Knowledge Into Reusable Assets
Many organizations have an approach for identifying and recording lessons learned, perhaps as part of a post-project review or similar process. Unfortunately, lessons learned reports have a tendency to end up on a shelf gathering dust, or lost in the un-chartered corner of a fileserver somewhere. Let's get real. How many people will really trawl diligently through a number of lessons learned documents in order to glean some key point? The reality is, if you can motivate employees to initiate any kind of "learning before doing" activity, then you?re doing pretty well.
Process and Procedures Investments - How to Get Money Back
In September 2004, President Bush signed the $146 billion tax cut bill restoring the recently expired business Research & Experimentation Tax Credit. The 18-month renewal of the research and experimentation tax credit, which expired June 30 2004, was the most expensive item with an expected $7.6 billion cost through 2014.
|
