21 Ideas for Succession Achieving

by Bill Granda

Since 1991, as consultant, business coach, and advisor with Paradigm Associates, Bill Granda has been helping businesses and individuals improve their ability to overcome obstacles and get results. He engages with key players and teams, particularly those in or approaching important transitions, to develop and execute practical business and transition strategies. Clients have found him especially helpful when they recognize they have to do something different, but don't know exactly what that is, or they know what is needed but aren't sure how to best get it done. Many of his clients are closely-held and family businesses, non-profits, and professional firm owners who put a premium on professional competence and really helping their clients.

At Paradigm Associates, we make a distinction between goal setting and planning and goal achievement. Setting and planning are necessary, but not sufficient to bring about the desired results. Think about succession the same way, i.e. succession achieving instead of succession planning.

Two over-arching thoughts: (1) if you generally hit what you aim at, doesn't it make sense to get clear and focused on your target? and (2) the best time to develop a game plan is not in the middle of the game. We just don't make good decisions in the line of fire unless we've done a lot of thought and learning ahead of time.

Aren't the goals of succession planning usually to preserve the wealth of the owners and to ensure the continued success of the business? Ownership transfer and preservation of wealth aren't my areas of expertise, but I've seen enough to know the risks of putting off planning till you get around to it. Retirement comes too quickly. And what about when the unexpected happens? The tax consequences alone can be huge. Owners can't retire as they wanted because agreements with successors weren't codified long before retirement. So if you own a business and don't have an estate and business succession plan, do your self and your family a huge favor - find a good CPA and attorney and get them done. If you'd like some names of CPAs, attorneys, insurance professionals, etc. to choose from, contact someone at Paradigm Associates in your area.

In management succession an attorney can create an operating agreement and succession plan that spells out the management structure and transition process. Yet the operating agreement and succession plan are necessary for smooth transition, but not sufficient for the business to continue to thrive. Max DePree in Leadership is an Art distinguishes between contracts and covenants. Contracts spell out the minimum requirements for a relationship or transaction. They don't address what's necessary for the business to really thrive and succeed. Attorneys add real value in the contract arena. My goal is to bring value on management succession in that "covenant" area.

Let's start with questions to help clarify where you want to end up. As an owner thinking ahead to turning the business over to the next generation:

• What do you want them to face when they take over?
• How prepared do you want (or need) them to be to run the business?
• What's at stake here if they do well or if they don't?
• What if something happens to you suddenly? Will the business run without you? Can they start running it without missing a beat?
• Has your business outgrown its entrepreneurial start? Will that require different leadership than that needed on your watch?
• If it will, how will your successors learn that?
• Is the next generation right to run the business?
• Should they just own it and hire someone else to run it?
• Should you just sell it and find another way to pass on your wealth?
• How important is it to you and your family to preserve what you built?

Here are suggestions to get the next generation ready, whether family members or others in the business:

• Consider a structured strategic thinking/planning process that involves you and your successors in discussion and definition of the future of the business. There's probably no better way for them to learn about the entire business and what really makes it succeed. A professional facilitator can keep the discussion productive.
• Determine what skills, talent, knowledge, and attitudes your leaders will need to create the future you defined. Necessary skills include technical, interpersonal, influencing, and leadership/management skills. Remember as one moves from "front line" into leadership, success depends more on the people" skills and less on the technical.
• Create a development plan for the successors and make sure they follow it.
• Consider individual assessments in your development process to give you a clearer idea of the talents successors bring to the job and how that matches up with job requirements and identify areas to be developed in that person.
• Consider requiring that potential successors acquire practical experience in another company or industry. It will give them a chance to mature away from home and gain other perspectives on best ways to organize and manage a company.
• As successors develop sufficiently, consider taking a long vacation. It's important for you and them to see that the business won't fall apart or go bankrupt without you.
• Figure out what you're going to do after you retire. Not just keeping busy. Find something meaningful that you can put yourself into.
• Once you leave, leave. There's no faster way to tear down what you've built than to keep looking over shoulders.
• Talk with others who have successfully implemented the succession process in their business to see what worked well and what didn't for them.

The real keys to succession achievement are in clarifying what you and your successors want to happen and how it will happen. Then get the agreements down in writing. Use professionals to help you do it right in financial, legal, strategic, and leadership/management transition areas. It can sure save you much stress and money before, during, and after the transition.